I'm annoyed today. I received two conflicting pieces of information on what has been going on with the HVCC. The first came from an appraiser friend in Maryland, who received an email from their state board representative who was at a national meeting of the appraisal foundation. That email said:
I know you are all concerned about the HVCC that resulted from the FannieMae/FreddieMac agreement with the State of New York.
From what I could learn at The Appraisal Foundation’s Board of Trustees meeting, it is highly unlikely that the HVCC will go into effect on January 1 of next year. We know that Fannie and Freddie have a new Federal oversight manager, which will certainly want to review all their policies and procedures and is unlikely to simply tell them to keep doing everything they have been doing – especially since the head of one of the Federal Financial Regulatory Agencies, the Comptroller of the Currency, sent a comment letter saying the agreement exceeded their authority because it allowed one state to set policy for banks throughout the country. Furthermore, mortgage legislation passed in the house that affected appraisals had not yet gotten through the Senate when the current financial crisis hit big time and pushed everything else onto the back burner. It is not likely to be taken up until Congress resumes after the holidays. When it is revisited, it is highly likely that the HVCC will turn out to be much different than originally drafted, if it survives at all.
As of a few days ago, Fannie Mae and Freddie Mac were still waiting to hear from the Federal Housing Finance Agency if there will be a revised Home Valuation Code of Conduct released and if so, what the time for implementation will be. The last public comment made by FHFA Director James Lockhart – that indicated FHFA was planning to release a revised HVCC sometime in October – is the last thing the GSEs have heard, according to agency representatives.
So, good news for us all, right? But later that day I got an email from a loan officer that sent me a message she got from Wells Fargo, essentially stating that if she wanted to send loans to Wells Fargo, she had to use an AMC.
As our industry evolves and new requirements unfold, Wells Fargo Wholesale Lending is committed to working with our clients to institute necessary changes that will restore confidence, maintain integrity, ensure fair and responsible lending and help sustain the mortgage lending business long term.As we look ahead, one such potential change stems from the Home Value Protection Code, regarding procurement of appraisals. There is uncertainty around timing and the ultimate requirements that may result from the code, and we are diligently working to clarify those issues. Preparing now will help ensure a smooth transition for all of us later.In anticipation of these changes, the preferred process we are establishing allows you to request appraisals through RESdirectSM who will order appraisals from one of four approved Appraisal Management Companies (AMC) that you select: Rels Valuation, LSI
It also goes on to say that you can use your own appraiser, BUT:
On and after Jan. 5, 2009, if you register a conventional conforming or non-conforming loan but do not obtain an appraisal through RESdirect using an approved AMC, we will accept the appraisal outside of this preferred process, however, we will require an additional review at your cost to verify the adequacy of the collateral value. The cost of the additional review will range from $265.00 to $315.00. The additional collateral review will be ordered through our current established process.
So feel free to use your own appraiser, but be prepared to explain to your borrower why they are paying an extra $300 to have someone review that appraisal. The great part, of course is the review appraiser will get paid, what, maybe $120 for the review? So the AMC makes $150 - $180.
So the AMC's are making a big push to use fear and uncertainty to get this done regardless of whether it will actually happen, and whether or not it is even legal. I think it is important to let all of your customers know that this is NOT a done deal by any stretch, and that they should not make any plans at this point to set up an account with an AMC. We desperately need to PUSH BACK!!!! Let your clients know that until the new administration is in place and FHFA has had time to review the HVCC and determine if it is enforceable, they should be "business as normal", and relying on you as opposed to some appraiser they don't know who is willing to do work for half price (with less quality) and push values for the AMC so as not to get kicked off of their list.
I've been staying in touch with all of my clients on this issue, and have not lost one yet. And I have no intention of doing so. If the HVCC goes through, I may go down in flames but not without a fight. Maybe some appraisers are willing to do 5-10 hours worth of work for 1/2 price so that someone who does 15 minutes worth of work can make the other half, but that is not me. We need to continue to fight this!