Appraisal Articles

2010~ New Year, New Decade, New Hope...
January 27th, 2010 11:28 AM

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.




Posted by Amanda Rivera on January 27th, 2010 11:28 AMPost a Comment (0)

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Sunset Claus?
January 26th, 2010 7:07 PM

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.




Posted by Amanda Rivera on January 26th, 2010 7:07 PMPost a Comment (0)

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FHA Appraisal Rules: Benefits of HVCC Without the Unintended Consequences?
October 8th, 2009 5:59 AM

 

National Mortgage News reports that the new Federal Housing Administration (FHA) appraisal rules may make HVCC - and appraisal management companies (AMC) - easier to cope with in the industry. While noting that the intent of HVCC was to improve appraiser independence and reduce undue influence, the article notes that in trying to accomplish these goals HVCC has increased the cost of the appraisal and raised questions about appraisal quality.


The new FHA rules will help because appraisers can report their fee on the appraisal report, which will "hold AMCs feet to the fire. FHA's new policy allows the appraiser's fee and the management company's fee to float separately at market rates." Donald Blanchard, chief compliance officer for Lender Processing Services, is ok with this new rule but expressed concerns that this will ultimately result in higher prices for an appraisal.


NAR supports the new FHA appraisal rules because of the fee disclosure, the transfer rules now in place, and because FHA explicitly states that AMCs do not have to be used by lenders. The Realtors are calling on FHA and the GSEs to issue joint guidance in the form of codified frequently asked questions.


Posted by Amanda Rivera on October 8th, 2009 5:59 AMPost a Comment (0)

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HVCC UPDATE- snippet from the NCAB meeting held 08/11/2009
August 13th, 2009 11:33 AM

-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.


Posted by Amanda Rivera on August 13th, 2009 11:33 AMPost a Comment (0)

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It’s a new HVCC day and I am not 100% sure about anything…
July 27th, 2009 8:09 AM

It’s a new HVCC day and I am not 100% sure about anything… To prepare for HVCC, we had made an effort to ensure that all of our clients were HVCC compliant with third party processing, but post-May 1st, they are not being allowed to use their processing!

Can You Believe It?

Most Mortgage Brokers found out from their lender capital source that they would not be able to use their existing appraisers, but that they would now have to use whomever the LC used. In most of these cases, that meant an AMC, and possibly even an LC owned AMC!

Yes, there is less pressure for valuation, but there are also seriously horrific side effects that we have yet to see...

For instance, it no longer matters how you do your job, because it is all on a rotation. HVCC takes away pressure by lenders, but it also takes away the possibility of getting more work. Under HVCC you cannot be selected, regardless of how good a job you do. HVCC has deincentivised the whole appraisal process.

Another downside is that competency, specifically jurisdictional competency, and experience are things of the past. Say goodbye to the days where the most qualified or experienced appraiser got the work, now the lenders can’t choose, so newcomers are doing geodesic domes.

Not that I want to do geo domes; but this mean less work for experienced appraisers. And I am not sure if it will ever come back... Even if NAR and NAMB get an injunction to stop HVCC, most lenders are already on board with an AMC. Can we get the cat back into the bag?

Both NAR and NAMB are fighting the HVCC from the perspective that it is “costing the public” unjustified amounts for their appraisals. Bottom line, less money for all realtors and mortgage brokers.

I don’t know the solution, but I know HVCC is not it.

Your thoughts or comments?



 


Posted by Amanda Rivera on July 27th, 2009 8:09 AMPost a Comment (0)

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reprinted article: New Appraisal Rules Come With Costs By Kenneth R. Harney
May 29th, 2009 7:16 AM
New Appraisal Rules Come With Costs

By Kenneth R. Harney
Saturday, May 16, 2009

How about this scenario the next time you refinance or apply for a new mortgage: The real estate appraisal that used to cost you $325 now costs $450, even though the appraiser doing the work is getting only $175 or $200.

Plus, your appraisal-related charges may now be subject to add-on fees that you have never heard of -- $50 to $100 extra in "no show" penalties if you get stuck in traffic and miss your appointment with the appraiser. Or an extra $50 to $150 if the property is worth more than $500,000.

On top of all this, your mortgage loan officer requires you to pay for the appraisal upfront with a credit or debit card, rather than including the fee with the usual lender origination costs at settlement. In some cases, your card may be charged more than the anticipated cost of the appraisal -- leaving debit-card holders in a potential overdraft situation.

Worse yet, the person conducting your appraisal may be new to the field -- willing to work for a cut rate -- and may not be as familiar with local value trends and pricing adjustments as an appraiser with more experience. If your mortgage application is denied by one lender, you could be forced to pay for a second full appraisal because the new lender may not accept the first one.

That scenario is now reality, according to critics of the new appraisal rules imposed nationwide on May 1 by Fannie Mae and Freddie Mac. Advocates of the rules vigorously deny that the new system is flawed and say any increase in appraisal costs should be manageable for most consumers.

The rules, which go by the name Home Valuation Code of Conduct, are intended to improve the accuracy of appraisals by eliminating pressure on appraisers from loan officers. The code pushes most large lenders to use third-party "appraisal management companies" that contract with networks of independent appraisers around the country who have no direct contact with retail loan officers or mortgage brokers.


Mortgage brokers -- who formerly chose appraisers and kept a competitive eye on appraisal fees -- claim that Fannie's and Freddie's rules are adding 20 percent to 30 percent to consumers' appraisal costs. Jeffrey T. Hawk, vice president of Maryland Mutual Mortgage in Forest Hill, Md., north of Baltimore, said a standard appraisal that previously went for $325 jumped to $400 or more May 1 when he began using management company appraisers.

Some applicants also are balking at handing over credit card information upfront when they're not completely sure what the charge will be. "I lost three clients the first week" because of the credit card requirement, Hawk said.

Buddy McCombs, senior vice president of EverBank, a Jacksonville, Fla., lender that buys loans originated by Hawk's firm and now contracts with management companies for appraisals, conceded "there's probably a little increased cost" with the new system, "but I don't think it's devastating."

"What's terrible is what's happening to [long-established] appraisers who won't work for the low fees," said James Facchini of American Pacific Appraisal in Sacramento. "On May 1, I lost almost my entire customer base" -- mortgage brokers who now can't pick up a phone and order an appraisal from him.

Instead Facchini and other appraisers either have to sign up with management companies or find other employment. What "really bothers me is that the consumer has no idea what's going on," Facchini said. After he signed up with one management company, he said, two borrowers commented to him after he finished his appraisal, "Wow, you really charge a lot."

They were each being hit with $550 appraisal fees, while he was getting just $250 through the management company. As he sees it, that leaves $300 of "slush" somewhere in the process -- some going to the management company, but the rest probably "flowing to the lender for doing absolutely nothing."

Rich Kuegler, a vice president at MDA Lending Solutions, a national appraisal management company, said payments to firms such as his are compensation for creating, managing and reviewing a network of thousands of appraisers -- MDA has 9,000 under contract across the country -- and for the "processing and administrative" costs that have been taken off the backs of brokers and lenders.

As to appraisers' complaints about fees, Kuegler said, "we offer the ability to have a steady stream of work, training and support." In other words, appraisers can expect to make up in volume what they're sacrificing per assignment.

Kenneth R. Harney's e-mail address is KenHarney@earthlink.net.

Posted by Amanda Rivera on May 29th, 2009 7:16 AMPost a Comment (0)

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Realtors Must Read!! HVCC effective May 1st. How Realtors can make a difference right NOW!
May 12th, 2009 7:21 AM
 Hello everyone, just wanted you to know that the HVCC (Home Valuation Code of Conduct) is a reality and you need to take control now in your SALES CONTRACTS.

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!.


Posted by Amanda Rivera on May 12th, 2009 7:21 AMPost a Comment (0)

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Hold on to your hat!
April 23rd, 2009 10:47 AM

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.


Posted by Amanda Rivera on April 23rd, 2009 10:47 AMPost a Comment (0)

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Revised FHA Appraisal Guidelines in Effect 04/01/2009
April 7th, 2009 6:06 PM
Some revised federal guidelines that outline 10 things that appraisers must do or provide for all FHA appraisals done after April 1, 2009:

1. The Market Conditions Addendum (Fannie Form 1004MC/Freddie Form 71).

2. At least 2 comparable sales within 90 days of appraisal date.

3. A minimum of 2 active listings or pending sales in addition to the 3 closed comparables.

4. Bracketed listings using both dwelling size and sales price when possible.

5. Adjust active listings to reflect the List To Sales Price Ratio.

6. Adjust pending sales to reflect contract sales price when possible.

7. Include original list price and any revised list prices.

8. Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales.

9. Absorption Rate Analysis.

10. Known or reported sales concessions on active and pending sales.

FHA also is restating its warning that..."Direct Endorsement Lenders are reminded that if the appraiser they selected provides a poor or fraudulent appraisal that leads FHA to insure a mortgage at an inflated amount, the lender is held responsible equally with the appraiser for the integrity, accuracy and thoroughness of an appraisal submitted to FHA."

If the above appraisal guidelines look foreign to you, that's okay, because this update is intended for Appraisers and Underwriters. I sent this to you so you can take the following actions below to make yourself an FHA resource in your market."

NOTE: The extra work is required when properties are determined to be in a declining market based on the conclusions of the 1004MC addendum. Ruth Lambert @ REV Mag says, "The FHA/HUD announced as of today that they will also REQUIRE the new Fannie Mae 1004MC form "on all appraisals done in market areas that are declining." Their date is also APRIL 1ST for compliance."

Posted by Amanda Rivera on April 7th, 2009 6:06 PMPost a Comment (0)

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Use of supervisory appraisers.... As a supervisory appraiser, do we have to inspect everything???
February 18th, 2009 9:38 AM

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?


Posted by Amanda Rivera on February 18th, 2009 9:38 AMPost a Comment (0)

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