What Happens Now with the HVCC?

Given that the Federal Government has recently placed Fannie and Freddie in Conservatorship, many appraisers are wondering what impact this will have on the Home Valuation Code of Conduct.

My guess is that this recent take-over will either kill the HVCC or will severely reduce its impact. Cuomo still has his potential lawsuits he can use against Fannie and Freddie. And thus, Cuomo still has some pull in getting the GSE’s to agree to a Final Code. However, Fannie and Freddie are clearly in such a precarious position that I can’t imagine any Federal Agency is going to allow them to agree to something that may potentially harm them financially. And thus, any Agreement is going to have be written in such away as to have a limited impact.

But that’s just my guess, anyone else have a different take?

  1. Tim

    I don’t think so. There will be an HVCC of some type. After the S&L bailout is how we got State Certification for appraisers in the first place. But whatever a revised HVCC would be some things are now considered typical in the market. Unregulated Appraisal Mangagment Companies will still order out appraisals from appraisers who are “on the list” and cover a couple hundred miles of territory for a reduced appraisal fee of $175-$200 and the borrowers will still be charged a full fee with no portability of the report to try and negotiate a better rate or terms with another lender. Use of these conmpanies by lenders will increase because its doesn’t cost them a dime and puts them in line with the regulators (and/or future regulators)and of course locks in the borrower to them. This system has all of the apperance of some type of “firewall” or appraisal independence but in reality, now lenders can influence hundreds of appraisers at a time with specific instructions to the appraisal managment companies on what acceptable appraisals will be for them.
    The future is already here as the market has been conditioned that cheap, fast and slanted to the lenders appetite for risk, prevail. Get used to appraisers comming in from the next county or two over to conduct an appraisal report that will be completed before you know it and they will not have the time to go looking for additional comparables or research specific market or property conditions. So maybe the HVCC will be revised, maybe not, but the main thing is that the business model has changed
    and probably for the worse.

  2. Interesting point, Tim.
    It does seem that the appraisers who hate the HVCC are ultimately really angry at AMC’s.
    Perhaps I’m too optimistic, but I think one benefit of the current real-estate crisis, is it is making lenders look extra close at the appraisal. And since it’s difficult to get a quality appraisal for $200, I tend to think Lenders will start moving away from AMC’s and back toward wholly owned appraisal companies. Thus Lenders will be paying much more for an appraisal, but they will also be getting get a much more data rich appraisal.