The High Road Papers - Latest Comments in HVCC: Who Is The Least Interested?

Re: HVCC: Who Is The Least Interested?

mk_109 — Fri, 23 Oct 2009 16:34:02 -0000

The problem is that if HVCC keeps going too long, too many of these AMC companies will feel "entitled" to their position in the industry. They are taking money from appraisers and from borrowers and doing what exactly? A professional appraiser has to give up over 1/4-1/2 of his pay while he is still doing all of the work and then some extra. Its a ridiculous scam to make a middleman and the banks more rich at the expense of the appraiser and the borrower. Should there be rules to help against mortgage fraud? Of course! But this is not it. Anyway, if the AMC companies and banks are going to feel the profits of HVCC for too long, they will not go out without a fight (political lobbying , etc) and remain leaches to the profit from the work of others. Does anyone know what the time frame of HR 3044 is of going through congress, and what exactly will happen if its passed? (..by the way I am a CA mortgage and real estate broker. My mother has had her own independent appraiser business for over 10 years and has always performed with integrity and quality in the industry, and has to settle for huge commission cuts and more work requirements from her AMC companies that she uses. I just passed the appraiser trainee license and had planned on going into the appraisal business with her). Imagine if you had a professional business you invested your life into and were making 60k-100k per year and suddenly someone came in and mandated your pay be cut to 35k- 60k per year and you had less decision making power, and more work to do for less money- and keep in mind this is work which is so important to the whole industry and economy.

Re: HVCC: Who Is The Least Interested?

justinmchood — Sat, 19 Sep 2009 02:36:01 -0000

Thanks.

Your check its in the mail for saying such great things!

Justin

Re: HVCC: Who Is The Least Interested?

shollenback — Fri, 18 Sep 2009 15:22:40 -0000

Justin, this is an outstanding post with a great perspective of the "downfalls" of HVCC. You hit this one out of the park.

Re: HVCC: Who Is The Least Interested?

appraiserusa — Mon, 14 Sep 2009 13:26:50 -0000

Thanks for giving the public a small bit of insight into the raw deal that appraisers were handed with HVCC on May 1st. For more information on the topic of HVCC and how it is also raping the American homeowner visit www.investsmart.com

Re: HVCC: Who Is The Least Interested?

jamila1 — Thu, 10 Sep 2009 05:29:47 -0000

I think that many appraisers predict that the profession cannot continue to attract competent professionals, capable of producing reliable reports, given the relentless pressure for lower fees and faster turn times from appraiser management companies (AMCs): the most competent and talented will migrate to professions that are more profitable and satisfying, goes the prediction.

Re: HVCC: Who Is The Least Interested?

justinmchood — Wed, 09 Sep 2009 21:23:49 -0000

@Mortgage Industry Pro,

Excellent points and insight. Thanks for sharing with everyone.

Justin

Re: HVCC: Who Is The Least Interested?

Mortgage Industry Pro — Tue, 08 Sep 2009 09:28:35 -0000

Justin,

Good post. You make a lot of valid points. Most important is the one that you start with: the appraisal management companies don’t have a financial stake in the transaction, and that’s a good thing. In fact, the same could – and should – be said for appraisers in general.

The emotional aspect that datadude mentions is a very influential component in any real estate transaction, one that in no small part led to artificially inflated prices bringing the bubble to the point of bursting.

One thing that troubles me about this whole controversy is the way in which all AMCs are being painted with the same broad brush.

There are quite a few large and reputable AMCs that have been in the business for decades and whose business model and assignment criteria haven’t changed one iota since HVCC. They only use certified and/or licensed appraisers and use geographical competency as the primary assignment criteria.

I know several appraisers who work for these companies, and they’re extremely capable, knowledgeable folks who work hard in markets they’re intimately familiar with. Their pay scale hasn’t changed post-HVCC, nor has their commitment to USPAP, nor their professionalism.

Of course, HVCC has created a financial opportunity and incentive for a lot of new AMCs to enter the business, and some of these may indeed be randomly selecting appraisers from a pool and assigning them without enough consideration as to their experience level or geographical competency.

The real lesson here is that lenders shouldn’t be shopping out appraisals to fly-by-night operations, but should instead be steering that important work out to AMCs that have proven themselves reliable over many years.

Like the blog. Keep up the good work.

Re: HVCC: Who Is The Least Interested?

A_Morris — Mon, 07 Sep 2009 10:59:45 -0000

Good article. The HVCC seems to be just feeding the big banks that own stakes in the AMCs at the expense of a lot of good appraisers.

Our house mysteriously dropped $34,000 right after the HVCC was handed down in May. The two appraisals were required to purchase were only a few weeks apart - $10,000/week in price drop? I find that hard to believe.

We couldn't believe that it blew out our deal and that the 'review' appraiser was from Phoenix and compared our house to foreclosed disasters in bad neighborhoods with only minimal adjustments for condition. Knowledge of the area - no way. I really hope that HR3044 gets passed soon. Cuomo screwed the pooch on this one.
http://oursazlife.blogspot....

Re: HVCC: Who Is The Least Interested?

justinmchood — Sun, 06 Sep 2009 17:31:43 -0000

Greg,

Thanks for the comment!

The third paragraph about many appraisers you know are planning to get out of the business -- I can tell you that I also see that as well. HVCC gave all of the appraisers in America a "boss" and a big part of the reason they were appraisers in the first place is that they liked the idea of being their own boss.

And don't forget that the "new boss" doesn't really make any sense. The first thing the new boss did was to reduce everyone's pay. Then he took away their ability to talk to most of their customers. Then he changed the rules so they really can't go solicit new business except through him. And lastly, he decided that even if they do a great job and customers love their work, they won't promise them more work unless the "boss is in the mood" to give them more.

No wonder they are leaving the business!

Re: HVCC: Who Is The Least Interested?

gregdallaire — Sun, 06 Sep 2009 17:21:04 -0000

Justin,

I'm new a reader and subscriber to your blog. I really feel like you hit the nail on the head when explaining some of the true problems with the HVCC program.

When someone is forced to have a 3rd party company control everything and have their wages and business impacted immediately you can tell that there will be a significant decrease in quality of appraisals.

The appraiser's i've had relationships with for a long period of time are planning on getting out of the business if they already hadn't. It's not because they weren't doing there job's it because they have no control over getting business other than submitting themselves as a slave to some random computer system.

Re: HVCC: Who Is The Least Interested?

justinmchood — Sun, 06 Sep 2009 00:12:16 -0000

Hello E-A-S-T Coast!

It amazes me that appraisal management companies think it is a good idea to "import" an appraiser from a different area.

I suspect that it is an issue of lazyness on the part of the AMC -- they are probably just picking someone who is the easiest to contact rather than do their research and get someone who is familiar with the area.

Just a guess -- but the "importing of appraisers" is a problem -- and it sounds like it is a bi-coastal problem... not just out west.

Thanks for stopping by and commenting!

Justin

Re: HVCC: Who Is The Least Interested?

justinmchood — Sun, 06 Sep 2009 00:09:55 -0000

Tracy,

It sounds like you are seeing first hand some of the same problems we are here in AZ. As soon as some of the super-thinkers down here come up with a solution that we can get some legislator to sign off on, we will be sure to let you know.

Justin

Re: HVCC: Who Is The Least Interested?

justinmchood — Sun, 06 Sep 2009 00:08:35 -0000

Tiffany,

Thanks for stopping by!

One of the frustrating things is that there is no feedback loop for what is working and what is not working regarding the HVCC rules. As with most things, there are some good things about it (I really like the fact that people can't expect me to get an appraiser on the phone and "fix" an appraisal that comes in low) and some bad.

But there isn't a process of continual improvement to evaluate what is working and magnify it while throwing out the part that isn't working.

But it should be interesting to watch over the next year how it all plays out. If nothing else, it will be entertaining reality TV.

Justin

Re: HVCC: Who Is The Least Interested?

justinmchood — Sun, 06 Sep 2009 00:04:30 -0000

Trang,

"...Seems like every month, I get surprised with new formalities."

Well said.

In my experience, in real estate over the last 18 months - only one thing is constant: change.

Justin

Re: HVCC: Who Is The Least Interested?

Baltimore Homes — Sat, 05 Sep 2009 23:03:10 -0000

In the Baltimore Real Estate market, the HVCC is the worst thing to happon to the industry since the advent of exotic mortgages. The "division of parties" between the lender, real estate agent, and appraiser has limited the successful execution of several deal in the Baltimore city and County. The main reason is that we have appraisers comming into our area from Virginia or individuals who have no clue about the area.

Re: HVCC: Who Is The Least Interested?

Trang Dunlap — Sat, 05 Sep 2009 18:04:34 -0000

"The seller wouldn't do a short sale so is letting it go to foreclosure" WOW, sounds like the most stubborn seller ever!

I've had a few appraisals re-introduce the negotiation process once the appraisal came back low... but what do you expect? it's real estate, Seems like every month I get surprised with new formalities

Re: HVCC: Who Is The Least Interested?

Brian @ Blythewood Real Estate — Fri, 04 Sep 2009 23:40:12 -0000

Yes, the HVCC has good intentions but put yourself in the appraisers shoes. For example, what if the same scenario happened with real estate agents. What if you had to kick out 1/3 or 1/4 of every one of your commission checks to a "management company" to evaluate your contract and tell you that you need to supply more information. Appraisers don't make much money considering their scope of work. Sure, it is an opinion of value, but it has to based on some factual information. Maybe the appraiser, banker, agent, and/or closing attorney pitch in to pay the mediator? The entire system was screwed up. Appraisers shouldn't be responsible. I still say responsibility should fall upon the lender, it's their money they are lending....or is it?

Re: HVCC: Who Is The Least Interested?

Tracy Ca Homes — Fri, 04 Sep 2009 22:42:24 -0000

This new appraisal rule has really caused us allot of issue her in Tracy Ca, Homes are being over bidded due to the supply and demand issue we are having. The appraisers are not giving us the values even when they are there.

Re: HVCC: Who Is The Least Interested?

Tiffany Cloud, AZ Realtor — Fri, 04 Sep 2009 21:10:55 -0000

There was too much 'talking' going on between loan officers and the appraisers that were supposed to be unbiased. Abuse happened. HVCC is a reaction to that abuse. Is it an over-reaction? Possibly, but it's going to have to play out for awhile before we can determine that for sure and adjust. Just like the banks over-reacted with ridiculous restrictions on lending good people money because they had dug themselves into a hole with too lenient lending practices, the appraisal restrictions are in place to address the obvious. I am not convinced HVCC is all that bad yet, might need some fine tuning - but I like the idea. (FYI - yes I have been on the wrong end of an appraisal that came in 16k under what the buyer and seller had agreed was a fair price. We worked around it - still like the idea) Thanks for the dialogue!

Re: HVCC: Who Is The Least Interested?

claudiajordan — Fri, 04 Sep 2009 02:11:53 -0000

Recently I had a sale fall out due to an appraisal coming in $25k low. In addition to the house, there was a casita (625 square feet with a full kitchen built in 2000) and the appraiser gave it $0 value because he couldn't find a "casita" comp. Needless to say, the buyer cancelled his $445k offer. The seller wouldn't do a short sale so is letting it go to foreclosure. Wow, that really helps the neighborhood values.
I live and work in the county NE of Scottsdale city limits. Rio Verde Foothills has over 1000 homes that are custom and semi-custom and predominatly horse properties, every single one different. We're dealing with appraisers who don't know the value of wells, barns, paved roads, mountain views, etc, etc. Whenever possible, I meet the appraiser at the house to answer questions.

Re: HVCC: Who Is The Least Interested?

Brian @ Blythewood Real Estate — Thu, 03 Sep 2009 23:41:59 -0000

Appraisal management companies in my area are a big problem. Most of these people don't anything about real estate or appraisal(although there are exceptions) and are taking money and creating obstacles for appraisers who treat their job with dignity and professionalism. There comes a time when you have to trust the professional. Appraisers didn't create the real estate market to failure. Heck, I considered opening an appraisal management company since there was no licensing, no education, and no responsibility. Maybe lending institutions should be more aware on what they are lending money on before they pass the buck.
Hopefully there will be some adjustments to solve this problem.

Re: HVCC: Who Is The Least Interested?

justinmchood — Thu, 03 Sep 2009 19:19:22 -0000

Ralph,

What, you mean that there is a difference in market between QC and Sun City?

Haha.

Yeah, I have seen that same thing happen.

Thanks for taking the time to comment!

Justin

Re: HVCC: Who Is The Least Interested?

justinmchood — Thu, 03 Sep 2009 19:18:21 -0000

Tyler,

Thanks for taking the time to comment. I agree that it makes everything a bit more complicated -- but the thing that is worse is the randomness of it all. I find that the randomness is what drives people more crazy.

Great point about the people putting it in place probably had good intentions -- I don't disagree with that. I think much of what we see can be attributed to the "law of unintended consequences".

Justin

Re: HVCC: Who Is The Least Interested?

justinmchood — Thu, 03 Sep 2009 19:15:16 -0000

Doug,

Thanks for sharing - I think you bring up a good point about appraisers being "scared" for whatever reason. Replace that word with "overly-cautious" if you want, it is splitting hairs.

Great point!

Justin

Re: HVCC: Who Is The Least Interested?

orange county moving companies — Thu, 03 Sep 2009 16:56:57 -0000

You're right, this is a crazy situation. In some cases it seems clearly unfair, and surely if the buyer and seller both agree on a price and are ready to go there should be no one in between them to prevent them from doing so.