Tim writes and points to a number of problems he sees with the Home Valuation Code of Conduct (HVCC). Fair enough. Let’s look at what he offers:
>>>Instead of a majority of valuation assignments going to appraisal managment companies we now have virtually ALL assignments being controlled by these joint venture arrangments. Notice how the market is doing?
There is a certain irony here. The worry pre-NVCC used to be that lenders and loan officers would pressure appraisers to come up with the “right” valuation. Now the worry is the cost and speed of services. Here’s a concept, why not let the borrower — who is paying for the appraisal — select the appraiser from the names on a local roster approved by the lender? The list would have to have at least 50 names for properties within a major metro area. No management companies would be needed.
>>>These appraisal managment companies, usually someway affiliated with First American Title, will have data on almost every home in America through their data collection process. Taken right from the appraisal reports, floorplans, interior and exterior photos, upgrades all the data that can be misused, abused but most importantly; resold. Because thats what its all about.
This is not really an HVCC problem; rather this is an issue which now confronts many professions: How do we deal with technological change? Many in real estate plainly believe there will be lower appraisal fees and fewer revenue opportunities for appraisers in the future. Many also believe that reduced appraisal costs should be passed through to borrowers and not used to pump up profits elsewhere in the lending process. As always, it pays to follow the money.
Automated appraisals may well work when you have a thousand identical townhouses with three models and lots of recent sales. The problem is that if an appraisal is inaccurate the lender is safe because it’s risk is spread among thousands of loans. The borrower, however, typically has one house — for the borrower an errant appraisal can be a disaster.
I think, though, that borrowers are better served when appraisers physically see the inside of a property and borrowers are certainly better off with a full appraisal when a property is in anyway distinctive — think of a homes in an older neighborhood with no common model or a house which has been unusually well maintained (or not).
>>>Just another line of easy profit by our big banking system. We should never have bailed them out, they have not demonstrated any gratitude to the taxpayer. Rates are still to high, credit is way to tight and no loans are being modified. Refinancing is not even an option. Best way to purchase is cash if you want to close in less than two months.
I suspect the dawning conclusion among the public is that bank reform is urgently needed. Let’s start with a Consumer Financial Protection Agency that can subpoena records and documents and let’s allow state regulators to finally have a real voice in the banking system.
>>>So how is this HVCC deal working out ?
Not badly enough that the entire idea should be “suspended” for 18 months. Fixed and made better, sure.
We thank Tim for a great post.