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Let us take a look at the Home Valuation Code
of Conduct (HVCC) as of 12.01.09
1. Question: Does the HVCC do a better job a protecting the public interest?
Answer: No, most often the lowest priced appraiser with the quickest turn
around time is selected for the appraisal assignment.
I believe those appraisers providing quality appraisal reports lose out
under this formula. The public fails to benefit under this system.
2. Question: Does the HVCC stop appraisers from being pressured?
Answer: No, residential appraisers are being squeezed since there are fewer
opportunities to generate new appraisal business.
3. Question: Do appraisers feel additional pressure to make the deal or receive
no future appraisal assignments?
Answer: Appraisers know that a dozen or so companies control about 75% or
more of the residential appraisal business. There are numerous ways
appraisers are under pressure (fees, vendor agreements, comp
checks, turn times, being a team player). What is an appraiser to do when so
few
control the work that is out there?
4. Question: Does the HVCC create a true separation for appraisers from loan
production?
Answer: No, there is only an illusion of appraiser independence from loan
production. Appraiser pressure has moved for the loan officer to the AMC.
5. Question: Does the HVCC protect the public / homeowner any better?
Answer: No, the homeowner pays higher appraisal fees for most likely a
less qualified appraiser. The public interest is not best served in this
manner.
6. Question: Are Appraisal Management Companies (AMCs) regulated at either the
state or federal level?
Answer: Most states do not regulate AMCs. There are a few states that have
recently started regulating AMCs. Presently there is no regulation of
AMCs at the Federal level.
7. Question: Are many well qualified appraisers, unable to make a decent
living, leaving the appraisal profession do to the affects of the HVCC?
Answer: Yes, many well qualified appraisers are leaving the appraisal
profession. AMCs, many of which are owned by the banks and /or mortgage
bankers,
are there to make a profit. It only makes sense for AMCs to use the
lowest priced provider of appraisal services. This provides the AMCs
with a
better margin spread for each appraisal assignment. AMCs are one of the major
beneficiaries of the HVCC. Residential appraisers and protecting
the public
interest are the big losers.
8) Question: Is the IVPI set up and operational as of 12.01.09?
Answer: No, the IVPI is still not up and running six months after the HVCC
went into effect. This sends a clear message to appraisers about the HVCC!
The residential appraiser was thrown under the train wreck with this
agreement. Again, the American taxpayer will most likely pick up the tab in
years to
come.
9) Question: What is the outlook for residential appraising?
Answer: Yes, there will be a need for residential appraisers. The immediate
outlook for residential appraisers does not look promising. Additional
pressures by third parties, a reduced number of potential clients, lower appraisal
fees, one sided vendor agreements, comp checks, non-payment for
appraisal
services rendered, all make the outlook look bleak for the residential appraiser
until changes are made to the current system. Hopefully
changes will be made to
correct the flaws in the system.
10) Question: Will we find the implementation of the HVCC to be one of the
major reasons for the next financial crisis?
Answer: It is to early to tell since we are currently in the middle of a
severe recession. What I do know is that the homeowner is paying additional
money for
less service. Qualified appraisers are leaving the profession in droves.
Pressure is still being applied to appraisers. Banks own or control
many of the AMCs. My
best estimate is that the HVCC will be named as one of the main reasons
for our next financial crisis. What is sad is that
the next financial crisis
could be prevented if only current guidelines would be better enforced.
Update: 05.01.2010
It is now one year since the HVCC went into effect. Where
is the IVPI ?
I can be reached at 770.916.1074 should you have any questions.
Charles L. Drecksler
Drecksler & Associates, Inc.
www.RealEstateAppraiser.com
Tel: 770.916.1074
Appraisals@RealEstateAppraiser.com
Let us take a look at the Home Valuation Code
of Conduct (HVCC) as of 12.01.09 posted 12.23.09
The Home Valuation Code of Conduct (HVCC)
Other Articles by Charles L. Drecksler
Appraisers Under Pressure posted 2001
Appraisal Report Integrity in Jeopardy posted 2007
"What are they
thinking? is in Reference to "The New Appraisal Agreement" - (HVCC)
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