Good Intentions, Damaging in Practice

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A guest blog entry from Donna Aldrich, a mortgage broker:

HVCC the ‘Home Valuation Code of Conduct’ went into effect May 1st of this year and was purportedly passed to protect the consumer. HVCC has created intermediary companies (AMCs) to separate mortgage brokers and lenders from the appraisers. The idea behind this was to be sure that appraisals are completely unbiased and consumers are protected from unscrupulous appraisers.

Unfortunately, these intermediary companies often send appraisers who are not familiar with the local market to give a valuation. San Francisco appraisals are now often done by an appraiser from the East Bay who doesn’t know our neighborhoods and housing types. At the same time, the prices of appraisals have gone up. These intermediary companies are keeping a portion of the fee. So consumers are paying more for appraisals that are of lower quality.

Recently, I had a client who needed cash out on a re-finance for an important legal matter. This was not a piggy bank situation and they were limited to a maximum of only 60% of the value of their condo which should have been $650,000 - $675,000. This appraiser valued an identical unit in the same building at $650,000 but the subject property at $600,000. Similar unit, similar amenities, similar views. That doesn’t make sense on any level. The borrower paid for this shoddy appraisal but can’t get what they need from the loan.

Some experts fear that with higher Fannie Mae and Freddie Mac loan limits HVCC will carry through to our former “jumbo” markets, leading the country even further into recession as it further devastates home values.

There is a ray of hope: Representatives Childers (D-MS) and Miller (R-CA) introduced legislation (H.R. 3044) requesting an 18 month moratorium on the Home Valuation Code of Conduct (HVCC). H.R. 3044 now has 22 co-sponsors and now is the time to forward our petition to every person you know and every representative in the country. Read some of the comments in the petition (link below) and you will soon understand the harmful nature of this horribly misguided code. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule. HVCC needs to be permanently reversed in order to restore lower costs to the consumer and to protect the thousands of real estate transactions stalled by this horribly misguided code. 

Please sign and forward the following petition and forward to everyone you know in the industry and ask them to forward to their representatives:

HVCC Petition


Donna R Aldrich, CMPS