Appraisal Articles

We can only hope that this year will be better than last year. You don’t want to say that it could not possibly be worse, because karma like that is not something to mess with.

Can You Believe It?

And it has certainly been a memorable decade, from the highs of the refinance bubble of 2003 to the abysmal lows of the last year to now… We can now say in retrospect that it was a bubble, because we are on the back side of it. But back then it seemed like the orders would never end. Who would have predicted that one day they would end? Unfortunately I think that day has already come for some appraisers.

When HVCC took effect May 1st, 2009, no one, least of all me, could have predicted that AMCs would virtually engulf the entire appraisal industry. However, this is what has happened. Whether an intended consequence or not, AMCs own the lion’s share of the appraisal business today and I am not sure that we can reverse this fact. Even for instance, if HVCC ended tomorrow, I do not believe that banks would revert to the pre-HVCC condition of ordering appraisals themselves. It is too far gone for that...

So what do we do about it? We need to regulate AMCs, period. These AMCs are not going to go away, so if we are going to have to deal with them, there should at least be a level playing field.

I don’t think HR716, poised to go before the House of Reps in NC, is a panacea; it will not fix everything. But it will help.

For some appraisers who have already lost their business it will be too late, but for those of us still doing appraisals it may be just enough to keep the ‘independent appraiser’ alive…

Comments? Email me.

Welcome to the ongoing HVCC nightmare that continues until next Christmas… From what has been said, HVCC is here to stay, or until someone in Congress pulls a rabbit out of their hat, we are stuck with it until the Sunset Clause, 18 months from 05/01/2009. So maybe next year we will have a chance for a Merry Christmas...

Can You Believe It?

I keep thinking that someone will see the damage that HVCC has done and is doing, but no one outside the lending community seems to care. As appraisers with a large customer base, at Creekside, we have made it... barely. But I know many other appraisers who have had to leave the business, because all of their business is just gone…

It has been a rude awakening for many of us self–proclaimed “independent fee appraisers”, the few of us that are left. More and more it has been necessary to sign on with various AMC groups just to have any of the FNMA business back. Not that it is much worth doing, since the fees are structured so that the AMCs take the lion’s share of the money for doing next to nothing and having “0” liability.

But seven months into HVCC and I am anxiously looking forward to next Christmas and the potential end to this mess. I think the concept of HVCC has merit but the application in the Banking world has been fraught with lack of education, lots of misunderstanding, and all around general misinformation.

We can only hope that the cost of our “freedom from coercion” does not end our freedom to run a successful independent appraisal shop.

So until then I wish you and yours a very Merry Christmas and a Happy New Year. Hang in there…

And hurry up Sunset Clause...

Comments? Email me.

-The HVCC was discussed. It was proposed and encouraged (by NCAR) to the NCAB to take an official position on the HVCC. Rep. Travis Childers from MS and Rep. Gary Miller from CA have recently proposed, in the U.S. House, HR-3044, an 18 month moratorium on the HVCC. It is a simple two line bill/amendment. It has bi-partisan support with presently, 54 co-sponsors. The NCAB voted unanimously to take an official position of supporting the 18 month HVCC moratorium.

I am glad that the NCAB has the wherewithal to release an ‘official position’.

Many may think I am too outspoken on this issue. But it is my opinion that HVCC will be the death knell of the appraisal profession in its current format; HVCC seeks to turn appraisers into “rubber stampers” and will inevitably eliminate the independent fee appraiser. All appraisers will be forced to sign on with AMCs for cut rate fees and crappy rules. And we can’t even count on NC legislature to help since they changed the AMC legislation to take effect in 2012. If any of us are left by 2012, we will be so numbed down as to not care whether or not the legislation will be in place or not.

If you have never heard of HVCC...You are in for a rude awakening!

In a nutshell, this new HVCC law starts now in May, so Mortgage Brokers, Realtors, Buyers and Sellers will have NO control over the appraisal process. Brokers can no longer order appraisals directly from appraisers. Realtors, Buyers and Sellers can no longer order an appraisal and then bring it to their lender or bank for a loan!

Banks are the only ones who can order the report directly from the appraiser or a third party will do the ordering hired by the Banks. These third parties are what we call Appraisal Management Companies (AMC's). The banks are hiring these companies to puts a layer in between the banks and the appraiser for more independence and less lender pressure on the appraisers to "make the value".

**Any of the above individuals CAN order an appraisal directly from the appraiser if their reason for the report is not for a LOAN, IE; to determine a listing or sales price, to obtain current value, a divorce, estate, tax rebuttal appraisal, PMI removal, etc. That is NOT prohibited and is actually encouraged in this ever changing market ***

But here is where REALTORS, buyer and sellers DO have control. Just the other day I was talking to an appraiser at Lake Lanier property in GA, she told me a condition that they add in the sales contract under the special stips page was the following statement ( change the language to suit your area then pass it on to other realtors):

"Buyer shall have all the rights and provisions manifested by the Appraisal Contingency provided that the appraiser the buyers lender selects has COMPETENCY to perform an accurate Lake Royale Property appraisal and has completed at least 10 appraisals on Lake Royale waterfront properties within the past 3 years. Said qualifications of any and all appraisers hired shall be provided to the Listing Agents in writing upon request."

This is an awesome idea! I would suggest SELLERS rights are also protected in the contract, by stating that if the buyer signs an appraisal contingency in the contract, they should also REQUIRE an experienced appraiser in the property be it Lake, Golf Course, even a particular neighborhood. I would also suggest that in the case of a special property like Lakefront that the experience be even greater at least 10% of their work is completion of this type of appraisal over the past 1 year, not 3 years as things have changed over the last year as you well know. Many lenders are requiring that the property appraised by the appraiser is no more than 30 miles from the appraiser's office. I would suggest that you narrow that down and state that the appraiser must live in the SAME COUNTY as the property being appraised.

I can't tell you how many times a lender sends someone from Raleigh to Lake Royale to appraise a property, and unless they have considerable experience on this lake, which most do not as their primary work is somewhere else, then you have a disaster waiting to happen when it comes to the appraisal!

So you DO have control and you need to start adding this type of language to every sales contract and making sure the banks comply because it is in the binding sales contract. Trust me when I tell you that Banks and especially the Appraisal Management Companies do not care about competency of the appraiser. They select the one that can do it the quickest and the cheapest and if that happens your DEALS will fall apart on a regular basis.

Please pass this along to every Realtor you know, repost it, blog about it NOW. If you do then you can take control back on this HVCC law when it comes to appraisals on your sales deals.

If you have any questions about this new law, let me know, it is time to take control of your profession back and make sure competent appraisers are used!.

Massive changes are a foot in the appraisal industry. Hold on to your hat and put some spring in your step!

Can You Believe It?

Most appraisers I talk to are leery of the new changes about to take place. I, for one, think you have two ways to look at things. Either you can drag around and go “woe is me” or you can actually start doing something. I have been taking classes and learning about the 1004MC. I have been reading up on lender compliance with the HVCC. I choose to do something that will help me get ahead in my profession instead of waiting for someone else to fix what they think is wrong. Will we all have jobs after the May 1st date? Yes, but from whom? I have no idea.

Will it be AMCs that take over the appraisal ordering? If so they are going to have an uphill battle with the new proposed draft legislation to regulate AMCs. Mind you I don’t care one way or the other, as long as they pay us our full fee, disclose their fees, and pay within 30 days (all of which is in the new NC legislation!)

Will it be third party processors? Are the banks loaning money out to mortgage brokers going to accept third party processing meets HVCC compliance and continue letting them borrow money to write loans… Or will they dictate that mortgage brokers must now use their list of AMC appraisers?

Will 40 to 50 percent or more of the independent Mortgage Brokers be out of business because they cannot compete on a local level with Banks who don’t have to work under the same set of rules?

Or will NARs attempt to delay the start of the HVCC help to parlay this mess into next year?

Truly only time will tell, good news is we only have a week or so to find out.

Comments? Email me.

This is the passage in question and here’s my interpretation of what this is saying.

Use of Supervisory Appraisers

Selling Guide, Part XI, Section 101.03: Use of Supervisory or Review Appraisers

Fannie Mae defines the appraiser as the individual who personally inspected the property being appraised, inspected the exterior of the comparables, performed the analysis, and prepared and signed the appraisal report as the appraiser. Fannie Mae allows an unlicensed or uncertified appraiser who works as an employee or subcontractor of a licensed or certified appraiser to perform a significant amount of the appraisal (or the entire appraisal if he or she is qualified to do so)—as long as the appraisal report is signed by a licensed or certified supervisory or review appraiser and is acceptable under state law. This policy is updated to now require that if a supervisory appraiser signs the appraisal report as the appraiser, the supervisory appraiser must have performed the inspection of the subject property.

Many appraisers with trainees are concerned that this might be interpreted to mean we have to go and physically inspect every property for FNMA, that a trainee would be the appraiser on. My interpretation is that if you are signing the report as the appraiser, you sign on the left, and of course you would have to have seen the property. But if you are the supervisory appraiser, you are not signing as the appraiser. You would be signing as the ‘supervisory appraiser’ and signing on the right, and therefore checking ‘did not see’ is appropriate and still acceptable.

Any thoughts?