CNC Mortgage Blog

As of May 1, 2009 almost all banks have adhered to the Housing Valuation Code of Conduct ( HVCC) that was suggested by the federal government. This new law has been a headache for mortgage brokers, appraisers, even banks and does not seem to benefit consumers.

As the law stands now appraisals must be ordered through the bank’s Appraisal Management Companies ( AMC) who in turn choose from their pool of appraisers.

Before this new measure came into effect the rates being charged to consumers for a regular appraisal were $325. If we were in a hurry we could get an appraisal in 24 hours.

Now the least expensive appraisal we have from the AMC’s is $340, most are from $390 to $410. The appraisal is taking at least 10 days and I have heard complaints that the appraisals aren’t well done.

I have also heard that the AMC’s are picking the least expensive appraiser, who might be the least experienced one. And these new appraisers are pricing houses conservatively so that the bank’s underwriters will easily accept the value.

Previously the appraisal was made in the broker’s name; we could use it at several banks. Now the appraisal is made in one bank’s name. If the first bank declines the customers then the appraisal must be reassigned (probably for a fee) to another bank. One of the banks we work with will not accept appraisals that were not ordered on their system so who should pay for the second $400?

When we had contact with the appraiser we could ask the appraiser for estimates of value on a property when we were meeting with a customer, before we ordered the appraisal and spent the customer’s $325. If the appraiser’s initial estimate came in too low, we could tell the customer and save them the money. Sometimes when the appraisal was ordered the appraiser would get out to the property and determine at first sight that it was not worth the estimated value. At that moment we could call off the appraisal and reimburse the customer their $325.

Let’s go back to the origins of this problem. Several years ago, Elliot Spitzer, the New York Attorney General sued Washington Mutual for pressuring appraisers to come up with higher values on properties so that loans could be approved. So the purpose of the suit was to remove banks and loan officers from appraisers so that they would not be pressured to come up with higher values.

So now the banks are ordering the appraisals!!!! What is the benefit of the HVCC?