Will Conservator Repudiate HVCC Agreements?

This is a follow up to our previous post on What Will Happen to the HVCC?
Speculation is running rampant regarding the future of the Code. We are hearing everything from the HVCC will be implemented with some changes to the HVCC is effectively dead. Rather than try to create my own I’m going to share information on somebody else’s speculation. The folks at K&L Gates are calling into question the viability of the code given the appointment of the Federal Housing Finance Agency (FHFA) as conservator of Fannie Mae and Freddie Mac.

Section 1145 of the Housing and Economic Recovery Act of 2008 authorizes the appointment of a conservator. This section allows the conservator to disaffirm or repudiate any contact determined to be burdensome by the conservator. K&L then asks the next logical question “Why wouldn’t the conservator repudiate the Cooperation Agreements?” The agreements certainly change the standards of whom may perform appraisals. Let’s not forget that Fannie and Freddie are to pay $24 million to fund the Independent Valuation Protection Institute at a time that both GSEs are reviewing every financial decision they make, including charitable contributions.

K&L Gates appears to be offering their opinion rather than speculating on the future of HVCC. They don’t necessarily recommend the repudiation and they make no mention of “inside information” that would indicate it is going to happen. They do raise valid points regarding the agreements, including that the GSEs don’t really need the HVCC to improve the quality of home loan appraisals. At this point it’s all just water cooler talk but it beats talking politics, right?

  1. Very interesting.
    I guarantee the FHFA is using their “repudiation” power to get Cuomo to settle his lawsuits against Fannie and Freddie as cheaply and easily as possible.
    I suspect all parties involved are looking for some solution that allows Cuomo to save face, and yet doesn’t infringe on Fannie and Freddie’s ability to provide liquidity to the market.
    My guess is a significantly watered down version of the HVCC. But we’ll see.

  2. Rob

    I own an appraisal company in Texas and have been appraising for roughly 11 years. I’m well established with numerous ethical clients that have taken years to obtain. Now my family and I are worried that HVCC will put us out of business, or at best bankrupt me because I’ll have to take a 50% pay cut. We’ve already down sized and had to get rid of receptionists and offices, and have moved into home offices due to the increasing costs of gas, insurance, and the general cost of doing business. Appraisal fees have been virtually the same for 11 years and we have not received any cost of living increases to keep up with the “COST OF LIVING!” Now we’re supposed to take another pay cut? How are we supposed to do business!?!? And all to correct a problem that doesn’t exist!
    While there are problems with the appraisal industry (as in every industry), THE MAIN problem IS NOT the appraisal industry. It’s the lending industry.
    Does it really take a genius to figure out that when you sell a home to a buyer with questionable credit, nothing to put down, and provide them with 100% financing that you’ve doomed them to failure unless they experience personal financial success? Or that when you give them 100% financing on an ARM that you put a nail in their coffin? You can’t refinance them at $100%, and they can’t sell a home with no equity because of 6% to 8% realtor commissions. What do you think the home owner will do when their taxes go up? Or when something significant needs repair or replacement (like an air conditioner, furnace, or roof)? Or when they lose work due to any hardship related circumstances? They give the home back to the bank. And now, HERE WE ARE with more foreclosures and vacant homes than ever before in our history. Most of those homes were worth what they sold for when they were appraised. Today they’re not. Not because of fraudulent appraisals, but because the market is flooded with foreclosures and short sales.
    Hmm I know how we’ll fix it. I have the solution! Let’s create an AMC (as another unnecessary level of bureaucracy with an empty pocket to fill) that will steal half of the fees from the appraiser so that lenders can no longer communicate with the appraisers directly. That will fix everything.
    What are we paying the people that come up with this nonsense for?!?!?!?

  3. jeanne

    I’m a small shop, but I had a good and honest business, with reliable clients who valued my service. With the impending HVCC my clients were pressured to join an AMC. I went from supporting my family and paying my bills, to facing foreclosure and bankruptcy and public assistance. This is what the HVCC has done for me.

  4. Jeanne Brown

    I am in agreement with the appraisers offering comments. I,too, had a successful Appraisal business. Even with the real estate downturn, I still held my own because I ran an honest business, and had long-term relationship with Mortgage Companies and Bank. Now, I’ve had to let my staff go, rent out my house and move in with my daughter because I can’t pay my mortgage. In the meantime, my former clients are getting inferior service from the AMC. This is justice??

  5. Ginger

    The Cuomo lawsuit is against an AMC- eappraiseit- for over-valuing properties and submitting to lender coercion. And now the solution is to force all appraisal business into AMC’s. How can this possibly make sense to even a bureaucrat?

  6. The Answer: Class Action Lawsuit
    We are already seeing a dramatic drop in cash flow as lenders have converted their operations to meet the HVCC January 1 requirements.
    As appraisers deserve to be compensated for losing their careers.

  7. marc savitt

    Cuomo was a paid director of an AMC and now he’s forcing an agreement on the housing industry that will only benefit his friends.
    The National Association of Mortgage Brokers, is fighting this. Contact them at Namb.org to find out how you can help.

  8. Mark Street

    Any suit against HVCC or the AMCs ought to mention Sherman and Clayton. If this nonsense isn’t a conspiracy in restraint of trade, the phrase has no meaning.

  9. Mike

    I’m along with my colleagues. I have been in the business for 17 years. I have built relationships over that period of time that I will lose. This will wipe me and my family out. I’ve had to let staff go too. I have always done business with the highest integrity.