Post-HVCC Implementation: Are appraisers still feeling the pressure?

[Brian Davis]

As most of you know by now, the Home Valuation Code of Conduct went into effect on May 1st. Its primary purpose is to insulate the appraiser from outside influences that would apply pressure to the appraiser to inflate values.

Unfortunately, I have been receiving complaints from our members (ICAP) regarding lenders and AMC’s asking appraisers to reconsider their values. Some of the lenders and AMC’s have even created a form for this purpose. It appears that these forms are being completed by lenders agent or the borrower in most instances. Clearly the borrower is unhappy with the value conclusion and they are looking for a higher value.

QUESTION: HOW IS THIS NOT PRESSURE

ANSWER: IT IS!

The HVCC allows the homeowner to now receive a copy of the appraisal before the closing.  I’m afraid this has added fuel to the fire. In some instances, the homeowner has a legitimate complaint if they feel the appraiser made an error or omission regarding the improvements, but others are going so far as to rewrite the appraiser’s sales comparison analysis to show the appraiser how to get a higher value. Although as appraisers we appreciate all the help we can get when gathering data, this is going a little too far.

I am also being told that certain AMC's are sending the appraiser a list of sales, calling them comparables, and asking the appraiser to write an explanation as to why they did not use any of these in the appraisal. This list usual shows up after the appraisal has been completed not before, so it is not part of the original scope of work, such as in relocation appraisals.

I have been corresponding with Fannie Mae regarding some of the new problems that the HVCC has created.I would like to provide them with examples of this latest form of pressure aimed at appraisers. I can only assume that lenders are trying to skirt around the requirements of the HVCC by having their agents or their clients (the borrower) engage the appraiser. In politics this is known as plausible deniability.

The lender should be filtering this information and determining what should be passed along to the appraiser. Requests to an appraiser for corrections, additional comments, more explanation and additional market data in the form of sales, listings, etc. has always been acceptable practice.

However, I am concerned about the lender, AMC or homeowner who is sending the appraiser sales data and asking the appraiser to consider using them in the appraisal and if not, provide an explanation as to why the appraiser did not use these sales instead of those reported in the appraisal.

Please email any value dispute/reconsideration of value forms you have received to [e-mail]  and I will pass them along to Fannie Mae. We need to work together as an industry to stop this before it gets out of hand.

AUTHOR: TJ McCarthy, SRA - Tim (TJ) McCarthy serves on the Illinois Real Estate Appraisal Board This email was originally sent to members of the Illinois Coalition of Appraisal Professionals – ICAP.

[Cynthia]

Hi Brian

Pressure is not the only issue but yes the pressure is just as bad if not worse. When dealing directly with a lender it is easy to say "values not there." dealing with an AMC which provides or can provide a larger portion of the work and getting calls from 5 different folks with demands for reconsiderations within 24 hrs and explanations of why these "10 comps" were not used in detail is much worse.

I meet with a realtor this week on a job and she told me of a sale they had in their office of a million+ dollar home in a very complex area of our county and the AMC sent out a licensed appraiser from 2 1/2 hrs away -mind you this is SACRAMENTO where there are many many appraisers who are local and certified. The appraiser did not know the sale was over a million nor did he have any access to MLS services and to his eventual credit he told the agent at the home he could not do the job. The next appraiser they sent out on the same job came from over 5hrs away (why would anyone do that?) and again this appraiser did not know the area, had no access to the MLS system and the agent spent over 5 hrs driving the appraiser around to show him the area, gave him comps and explained the ins and outs of our market.

This is appalling! I explained geographical competence to the agent and that neither appraiser should have accepted the job UNLESS they had disclosed they did not know the area and agreed to get assistance from a local appraiser to have access and knowledge of the area. Unfortuantely the agent "did not want to make waves" as long as the deal closed that was all they cared about.

Agents I have meet seem unwilling to get too involved, understandably they are protecting their business and reputation. Not understanding our business it could appear to them to be acceptable tho undesireable what they are experiencing.

I have explained the HVCC when I get the opportunity (what I do understand of it) and refer them to Fannie Mae's faq which clearly states AMC's are not required. This comes as a surprise to them.

WHAT IF agent decided to stear their business to lenders that used in house round tables of appraisers that are local, knowledgeable and fairly compensated? Agents can have a very positive effect on the industry as a whole if they understand the HVCC better and the appraisal process better AS IT IS NOW. Many are not aware of the vast changes in what we do.

BPO's last I heard from an agent allows "comps" up to 18 months old, they do not have the restrictions appraisals have and often agents are under the mistaken belief this is the same criteria appraisers can utilize.

As long as appraiser's take a confrontational stance with real estate agents it will not allow for the open lines of communication needed to make a cohesive positive change to our industry. These are our business partners, many do what they do out of the mistaken belief that it is ok and not understanding the rules. Yes, some understand and still abuse and this has always and will always be the case. But I believe the majority are not like this. They want a professional business that runs smoothly. If we can educate them on how using local appraisers in a round table system greatly enhances their business I believe they will want to steer their business in that direction.

Anthony Young preaches - make the effort to understand the other person FIRST - it is only then that you can make yourself understood. Thank you confusious!

[Gregg Wynn]

I've only received assignments from one AMC since the implementation of HVCC. Probably because I won't work for slave wages. Anyway, on the 3rd appraisal the manager sent me a three page rant on why I should have used the owners' sales comps. I'm an independent appraiser, and I know my job, so I told her to F*** O**. Lender pressuring is now worst than ever, because if you refuse their tactics, you'll lose a major client, instead of one in a million. Anyone who accepts HVCC is either making money from it, or just plain stupid.