NAR_grey_logo-01

Early Reports Indicate HVCC Driving Up Fees

It started this past weekend with Ken Harney’s article in the Washington Post “New Appraisal Rules Come with Costs“. Mr. Harney reported that the cost of an appraisal for the consumer increased approximately $125 (from $325 to $450) as of May 1, 2009.

Now news from Silicon Valley is trumpeting a similar tune. According to an article by Sue McAllister the average appraisal runs $350-$600 up from $250-$400.

Lenders can implement the HVCC in a variety of ways. The most common way is to hire a third party AMC to manage appraisal services. An AMC is a business and a business costs money to operate. It’s fair to say that some of the costs are passed on to the consumer. Of course, lenders could implement firewalls internally and still maintain compliance with the Code. This cost might too be passed on to the consumer – though it’s not clear what this cost would be for the consumer.

Comments
  1. Certified General Appraiser

    AMC Rip-OFF!
    AMC’s gouge the appraiser’s fee 30% – 50% while adding an additional $100 – $150 to the lender/borrower cost.
    Then they “shop” the appraiser market for the lowest fee and 24 hour delivery… which typically results in inaccurate appraisals by cheap, corrupt, novice appraisers -or- inaccurate appraisals by professionals rushed to meet a ficticious deadline.
    Thank Attorney General Cuomo and the US Congress for turning the financial industry wreckage into a full blown melt-down!

  2. David

    How could fees not increase?
    Forced use of AMCs with a blessing from Congress. A brilliant scheme on the part of banks.
    In the words of the immortal gangster Bugsy Siegel “Racketeering Ain’t Cheap”.

  3. Well it is May 22nd, and I can now report the effects of HVCC. The business relationships I have spent the last decade or so nourishing, GONE. I can’t even speak to my “friends” the lenders anymore because it is against the law. I have known some of these people for 13 years or more and now I can’t talk to them? Not that I have any work to talk to them about; they have to send their appraisal orders to some AMC in Nevada to be performed by some Johnny-come –lately to the appraisal business who doesn’t even know where Daddysville is much less if it is in NC, but he’s going to the appraisal for $225. We did 80 reports as a company last month, and so far I am on track to do maybe 30. Thanks Cuomo!
    I have a husband, two homes, two kids, and two cats to take care of, what am I supposed to do now????
    I have been a certified real estate appraiser for 13 years and I have never seen a market like this, where a rule imposed by a non-federal agency has taken over the sanity of an entire country.
    I think I will become a dental hygienist. At least then I might have a job future, I don’t think they will federally mandate dental hygienists out of a job.
    I refuse to work for AMCs who want to pay me peanuts, when just a few days ago I was getting $400-450 per appraisal. AMCs want to do nothing, make me do all the work, make me take all the liability, and pay me a paltry $200-275 for my hard work. No thanks! I will sit at home first.
    I am disgusted with the state of the appraisal today. It is appalling that decent hardworking individuals, who have done nothing but live a good and honest life, can have their entire livelihood knocked out by one misinformed individual that turned a case against FNMA into a federally mandated “bandaid”.
    As for fees going up, the few that we do get I went up $50-100 to make up for all the ones I have lost!

  4. AMCsBETTERthanGREEDbrokers

    people need to stop whining and accept the fact they are going to have to work faster and SMARTER.

  5. David

    I agree with the comment from “People Need To Stop Whining”. I completely agree…appraisers need to stop whining and find new careers. They were too lazy to do something about HVCC…now they need to either agree to do twice the work for 1/2 of the fee or find new careers.

  6. AMCsMAKE THINGSWORSE

    Sounds like a couple of salespeople above. I hope you get the green, out of town cut rate appraiser for your deals- you’ll have to work harder, for no commission!! Long live FSBO’s !!

  7. David

    If you are a Realtor, Appraiser, Mortgage Broker, or borrower who has just been screwed over by HVCC please visit the following website and sign the petition to have it dropped:
    http://www.petitiononline.com/hvcc/petition.html

  8. Bill

    Appraisers, Realtors and mortgage brokers are whining about the wrong cause of the problem that led to HVCC. It was the corrupt appraisers, Realtors and mortgage brokers and weak Appraisal Boards that gave us HVCC. Too much cheating went on. Where were all of these complaints prior to HVCC? There weren’t any complaints, just silence. Appraisers allowed this to happen and therefore shouldn’t be complaining about anything but their own benign neglect to self regulate their own profession in the first place. Prior to leaving residential appraisal for commercial appraisal 3 years ago, all of my lender clients were flat out demanding that I inflate values if I wanted to continue working for them. Too many lenders, Realtors and appraisers had gone over to the dark side by mid 2006. Is it any big surprise that we have a credit crisis and mortgage meltdown now? Did Mr. Cuomo cause this or did all of the corrupt appraisers, Realtors and lenders cause this? Lets put the blame where it belongs, on ourselves. So suck it up like a man and go fix the problem of corrupt appraisers and weak, slap the hand, take another class Appraisal Boards.

  9. Cory Gore

    The HVCC is NOT a law and it was implemented due to unethical LENDERS not Appraisers. It is their ruling not the Appraisers. As usual, we are relegated to educating the Lenders (and Realtors) on the Lenders own ruling. Sad, but true.

  10. mark freitag

    The author is apparently unaware that as of May 1 the new MC addendum became a required form by fannie and freddie. That is the primary reason fees went up.

  11. Fee increases? What fee increases! Not to the appraiser, the AMC maybe, then they still look for the cheapest prostitute, I mean appraiser, to do the job.
    I refuse to work for any AMC unless I get my full fee. Appraisers we need to stick together and tell the AMC’s to kiss off.
    We can choose to not work for them. Then let’s see what they do and how the Government will handle that situation.

  12. Sharon

    We have had our own company for 15 years and have cultivated a good client base in that time. We have been able to do honest appraisals and tell brokers/lenders why the value is not where they want it to be and still be able to retain their business because they have come to respect our professional opinion and rely on just that. Sure we felt some appraiser pressure but did not succumb to it. We, ourselves, were not part of the problem. We were actually “fired” by a lender when we rejected 3 appraisals (all with the same broker and appraiser) that were sent to us for review. They claimed that they had never had an appraisal rejected. They then decided that they could review Texas appraisals better from Atlanta. The appraiser of those appraisals and the broker were eventually caught in a scam and are doing time…the appraiser got 17 years. The lender just wanted a rubber stamp! They did not get it from us! Guess what…they are now bancrupt! What about lenders own due diligence??. The appraisers who provided honest & accurate appraisals are now paying for the greedy lenders and encouragable appraisers. We are now actually doing almost twice the work for 1/2 the money in 1/2 the time to provide quality appraisals. What was once our profit is now lining the AMC’s pockets. We are moving back to the bedroom, letting our secretary and the rest of our appraisers go. More people in the employment line. And as more and more professionals leave the business it will be left with less experienced and qualified appraisers. To top it off the consumer is paying more and getting less.

  13. Dan Boor

    HVCC needs to Change!!!
    The actual impementation of the Home Valuation Code of Conduct (HVCC) appears to be counter productive to the Obama Administrations position because the Administration is spending Billions of Constituent Dollars to stabilizing home values!!!
    We must try to change this appraisal nightmare created by HVCC before it destroys any chance of stabilizing home values in all neighborhoods, whether they are very stable neighborhoods with very few sales comparisons, or neighborhoods riddled with “REOs” and “Short Sales”. Thus, delineating a historical sales market composed of a few willing Sellers, but mostly liquidators (i.e. REOs & Short Sales).
    Jim Amorin’s, president of the Appraisal Institute, reflected the need for change
    before the U.S. House of Representatives’ Financial Services Committee when he said: “The Institute believes HVCC has too many shortcomings”.
    HVCC appears to have fostered appraisals which are nothing more than glorified automatic valuation model-generated (AVM) estimates of value because their being done by appraisers from outside the local neighborhoods who have at best a limited knowledge of local issues affecting value.
    My 38 years in the Real Estate Industry has provided some insights I’d like to share to help mediate the glaring short comings of the appraisals currently being performed under the HVCC directives:
    * ALL REAL ESTATE MARKETS ARE LOCAL:
    Assign only local Appraisers when possible.
    * ALL COMPARABLE SALES ARE NOT EQUAL:
    Appraisers adjusting for local issues effecting comparable value
    Appraisers adjusting for types of non-comparable sales, i.e.:
    “Market Value” is determined between willing Buyers & Sellers.
    “Market value” isn’t determined by “as is” REO & Short Sale liquidations.
    “Market Value” has to be adjusted by the systemic risk of a “hold
    harmless” agreement in REOs which is being reflected in the Market.
    * LOCAL MARKETS NEED MORE COMPARABLES TO CHOOSE FROM:
    Increase the 90 day comparable window back to at least 6 months.
    * CURRENT APPRAISAL MANAGEMENT COMPANYS (AMC) ARE PART OF THE ISSUE:
    Assigning appraisers by rotation with no regard to proximity to property.
    Adding time to appraisal process – providing less time for the appraisal.
    Reduced fees to Appraisers resulting in inaccurate appraisals by rushed professionals or assigning cheap, novice Appraisers.
    Driving honest Appraisers from the profession, eliminating competition, increasing costs to consumers and reducing State & County revenues.
    Selection of appraisers causing value inconsistencies, time delays and increased costs because of “rate lock” extensions or higher rates
    This continual appraisal battle is creating great stress and financial hardship to all our constituents, whether they are refinancing, selling or purchasing!!!

  14. Mike Wardle

    The Fed Reserve states home sales need to rebound before any turnaround with the economy can occur. Rates need to stay low and costs need to come down. In Utah you rarely paid more than $350 for an appraisal. Now we are paying upwards of $650, waiting up to one week or more and then being charged an extra $110 for the appriser to go out and see if a cover for the A/C has been installed. If the appraisal is wrong there is no way for you to challenge it. The appriser remains unknown and the AMC states they have no control over the appriser. Who do you talk to? The lenders are saying their hands are tied. We all want this market to turn around and the $8000 from the feds helps but new buyers are being priced out on costs. The NAR has it right, we need to stop this rip-off by the AMC’s.

  15. Barb Torres

    PLEASE help me get the word out to as many agents as possible!
    OUT-OF-AREA APPRAISERS ARE VIOLATING APPRAISAL STANDARDS AND VIOLATING THE HVCC! The AMC’s who send them are violating the HVCC!The lenders are using appraisals that violate the HVCC!!
    So farm the AMCs and the lenders are ignorant of this – and why should the green or unethical appraisers inform them? They’d just lose work.
    Every Buyer, Seller, Listing Agent, and Selling Agent has the right to demand that a LOCAL appraiser be used, so that the appraisal does conform with the HVCC! It is not only your right, but your ethical obligation to REFUSE to deal with the out-of-area appraiser who doesn’t produce an HVCC compliant appraisal.
    The HVCC requires that licensed/certified appraisers be used, and that they conform to the Uniform Standards of Professional Appraisal Practice (USPAP). Those standards PROHIBIT an appraiser from leaving his own market area, unless he/she discloses what steps were taken to adequately inform themselves. (Such as working with local appraisers, local realtors, obtaining local MLS data, etc.) And that disclosure is required to be in the written report.
    So, if an out-of-area appraiser shows up, contact the AMC and the lender immediately! (preferably in writing as well as via phone, so that the violation may be documented.) ALL parties involved should contact them and INSIST that the appraisal be done by someone familiar with the local market!
    INSIST ON HVCC COMPLIANCE!

  16. A licensed sales agent

    The AMC is not the solution to the current problems we are all encountering in this market. As appraisers and real estate agents, we saw this coming years ago. It was all the corrupt, dishonest lenders, brokers and even appraisers that contributed to this mess. The problem is the use of AMC is also severely hurting all the people in the industry who were and still remain honest hardworking business men and women. It is not the proper solution and to be honest, I don’t know what is. What I do know is that many long standing, honest business relationships that we have worked hard to build and maintain over many many years are now gone. I agree with the writer above that stated “I can’t even speak to my “friends” the lenders anymore because it is against the law”. We too, have known some of these people for many years and now cannot talk to them. We are seeing out of area appraisers come in to our local market, they have no knowlege of the market, and produce poor quality, inaccurate appraisals (which causes problems and sometimes ruins a deal). You now encounter some appraisers who will accept low fees because they need the work, and the appraisal quality is horrible. Addressing the comments about appraisers not taking a stand prior to all of this—The Appraisal Institute and other similar associations are more about governing themselves and work more for bettering the appraisal process itself—they do not have the same focus, pull, power, like NAR does. Try to take a stand in NY, and watch your company get “investigated” by the attorney general’s office.

  17. Bayron Binkley

    Two recent appraisal requests for customers of Bank of America return two of the worst appraisals that I have seen in many years. The appraiser did not use the best comps at all and pick up only some random houses not even close to the subject property. The appraisal was nearly $200,000 off both properties which were in the same community. We’ll all be out of business if we cannot inform the bank, that they have a bad appraisal based on poor comps. The Appraiser just filled in some blanks. This has to be corrected.

  18. beverly mcnulty

    I have been an appraiser for 40 years About 10 years ago i chose to work exclusively for an AMC because I was tired of pressure from lenders for value. the fact that appraisers are not “making value” under the new rules tells me that many were succumbing to pressure before. Under USPAP appraisers are required to be competent in the market. If an agent or borrower feels one did a poor job, the appraisal should be sumitted to the state appraisal board for review I have a feeling many of the complaints will be rejected because the appraiser did good job but did not “make the deal” My AMC allows for reconsideration of value with additional comps provided. In 10 years I have only had one which provided data for a slightly higher value.

  19. WHEN ARE YOU GOING TO ALLOW BLOG UPDATES TO THIS CRITICAL TIME SENSITIVE BLOG?
    IS SOMEONE AT NAR FIDDLING WHILE THE U.S.A. BURNS? THE HVCC RULE HAS TO GO AND REALTOR OPINIONS NEED TO BE AVAILABLE FOR THE PUBLIC WE SERVE AND THE POLICY MAKERS WHO HAVE MADE A MASSIVE BLUNDER (AGAIN).

  20. I have just had a HVCC appraisal come in at $50,000 under a $450,000 property. I am basing my price on the accurate area updated Comps I used. The home Apprised for $555,000 in 2006. The appraise didn’t make any down stairs adjustment for the 2 bedroom theater room bath. They listed a 4 bedroom 3 bath home as a 2 bedroom 2 bath home. The home was gutted rebuilt from the studs in 2004 with all new construction All that was kept was the studs and a 15 by 30 addition was added. It’s essentially a new home. He used non-updated old lath and plaster bad comps. This home has a $45,000 custom kitchen in it. He comps with 1980 kitchens and made no adjustments. This rule has taken away any accountability of the appraiser to the to the people that own property. Their advocate is Realtor. That is there voice. My client paid $506 I pay my FHA appraisers $350 which I can still order my self. This rule is bad a Joke and hurting people I wish our association would stop being politically correct and use the Voice and big stick we have in Washington to just get this ended now with Votes on the bills to put it to sleep. I want a class action lawsuit on Fannie and Fredi Mac Making them responsible for there agreement on this. The $506 with the AMC taking $256 and the appraiser getting $250 is a RESPA violation. The AMC did nothing for that appraisal. Lets get off our grandstanding and start taking action File a Lawsuit Have a Press Conference and tell Our politicians and Lobbyist we want a VOTE on the BIll to set this aside for 18 months.
    salt lake homes for sale

  21. susan schulz

    i don’t have time to read this blog often, but reading all the comments today, i see again the mess we’re in. we as appraisers have to have a more effective governing board, a more effective way of reporting each other, and do it. we don’t. nor do many other people involved in this industry. we pay excessive licensing fees, and take so many expensive classes, we should get more out of them. realtors don’t need to regulate us, they need to regulate themselves better, and let us regulate ourselves. yes, the ams’s are bad, but who regulates them?-no one. therein lies a great deal of the problem. we, as appraisers need to get ourselves organized, or we will continue to have problems and loss in our industry. everyone i spoke to years ago, saw this mess coming, with the rapid increase in values, when realtors expanded from their expensive communities to those of lower value, but inflated the prices of the lower value communities to match those of the more expensive one. i have seen the value in a farming county double, and more, when realtors from a county with no rural areas came north to list and sell. a good third or more of the home in this rural county are in forclosure, or short sale, cutting the value of all homes. other people, besides appraisers, need to take their share of the blame. now, though we have got to find people in all areas of this industry who are trustful, and honest and work together to get rid of those who aren’t. enough said. thanks.

  22. Steven Anderson

    It’s easy to blame the appraisers for everything which has been the case most of the time. The HVCC was put onto us by crooked lenders lending over 100% of a property’s value, and lending to borrowers who they knew could never pay back the loans with special financing programs. In addition to that, the real estate market got over inflated by investors who ran up the stock market, then pulled out and invested heavily in real estate causing the same affect. Alot of the foreclosues in any one given new subdivision were owned by the same investors who would purchase multiple properties in the same neighborhood. Alot of the investor purchases were cash, requiring no appraisal. Many times when a loan was involved, and the appraisal would come in low, the investors would go to the table with cash difference and the loans would close anyway. This also helped to over inflate the market despite the appraisal. We now have alot of near empty subdivisions as the investors are now gone, and the few remaining residents were the real purchasers of homes who have had to pay for all of this through tremendous losses in property values over inflated by the investor frenzy. Now the realtors want to blame appaisers for undervaluing. The realtors do not realize what is now being required of the appraisers mostly by amc’s, which are tying the hands of the appraisers, so much for appraiser independance. Many of the lenders who caused alot of the problems in the housing industry, are now content to sit back with their new rules in place and watch the realtors, appraisers, and mortgage brokers fight it out among themselves, and thanks to the HVCC, can no longer work together.

  23. I started in business in 1944. I am a Realtor Broker and Cetified Residential Appraiser. Have slowed down in recent years but still active. My appraisal business has practicaly disapeared. Was originaly licensed when Colorado first licened appraisers, July 1, 1991. Had a good client list. averaged 30 to 40 appraisals a month. In the past 4 or 5 years the client list started to disapear. I refused to be pressured to give unrealistic appraisals. When I wouldn’t give higher appraisals I just didn’t receive any more orders from that client. All of you in business no the costs of runing a office, Licenses, affiliations, computer software and annual licensing fees, etc. I have refused to join the management companies and so I know do not do enough business to continue with my appraisers license and plan on dropping it at the end of this year. I will continue by Real Estate business and still be active. I have been active in my community, served on the Denver Board of Realtors, was a elected to a six year term on the Denver Board of Education and a past president of a Realty Board. Continued to run my business all during these years. My office has had as many as 30 sales associates working for me. I am not just a Johny come lately but refuse to give all of my time and labor to the benifit of a HVCC.

  24. I started in business in 1944. I am a Realtor Broker and Cetified Residential Appraiser. Have slowed down in recent years but still active. My appraisal business has practicaly disappeared. Was originaly licensed when Colorado first licened appraisers, July 1, 1991. Had a good client list. averaged 30 to 40 appraisals a month. In the past 4 or 5 years the client list started to disapear. I refused to be pressured to give unrealistic appraisals. When I wouldn’t give higher appraisals I just didn’t receive any more orders from that client. All of you in business no the costs of runing a office, Licenses, affiliations, computer software and annual licensing fees, etc. I have refused to join the management companies and so I do not do enough business to continue with my appraisers license and plan on dropping it at the end of this year. I will continue by Real Estate business and still be active. I have been active in my community, served on the Denver Board of Realtors, was a elected to a six year term on the Denver Board of Education and a past president of a Realty Board. Continued to run my business all during these years. My office has had as many as 30 sales associates working for me. I am not just a Johny come lately but refuse to give all of my time and labor to the benifit of a HVCC.

  25. GWS

    For all of you putting the blame on appraisers. What about Fannie/Fannie? This(coerced)agreement came about by way of AG Cuomo threatening to open the books of both GSEs. What are they hiding. Also, AG Cuomo was elected to the board of an AMC back in 2004.No conflict of interest there, is there.
    He is also in litigation with an AMC and major bank for conspiring to inflate appraisal reports. If this was the problem then. Why is it the answer now? Another factor in this entire mess is fannie/freddie were not regulated. In 2005 Sen. Chris Dodd and his buddie Barney Frank had said was no need for regulation. Dodd was just cleard of his sweetheart deal with Countrywide. Any questions?
    Also, those of you who are still blaming appraisers, ask yourself this. How many of these loans that went south were done by AVMs and brokers price opinions? How many loans didn’t require a certified appraiser because the deminimus was $250,000 (not requiring an appraiser)when it used to be $50,000. Lets’ face it, if you had good credit, you got a mortgage. Blame greedy banks(of which we all just bailed out)and the government for not regulating them. Bank lobbyists need to go now…
    And Realtors, I’ve seen many CMAs that weren’t worth the paper they were printed on. In my state, Realtors are not considered to be experts in a court of law and may not tesify, so get off your high horse and stop the accusations. Maybe you all should have done a little more investigation on the value of the subject instead of worrying about getting the listing. There is plenty of blame to go around.
    This situation is only going to get worse with HVCC. Some AMCs are now hiring their own in house appraisers and not even using appraiser rotation. Just think, an AMC controlling an appraiser. Sound familier? Think things are bad now? Just wait. Fight HVCC ant way you can. But fight it.
    Signed,
    Appraiser.Thirty years and proud of it.

  26. Jim Mitchell

    What goes around, comes around…The greed, lack of courage, and incompetence were present in the 80′s on “both sides of the fence”. Banks and S&Ls were eager to get the upfront points on loans, hedging high interest rates on restructured discounted refinancing packages – urged by the federal government, etc. All came tumbling down and nothing was done about it. The RTC was equivalent to a fire sale. The “quick fix” lingered on for 10, 15, 20 years rural communities across the nation that never saw recovery, only a stablized bottom. Noted Economists and scholars starting writing articles stating the obvious, in 1999, 2000, 2001, 2002,right on up to present day that markets were being oversupplied, industries could not keep up with the rapid growth, etc. One example, Appraisers who could not justify a proposed subdivision study based on sound economic analysis subject to the facts before them were replaced with those that would base different conclusions on a trend that had 20 percent of the total participation in the market place.
    Along came the derivatives formulas that were so complicated that most Harvard Graduates could not, would not, but should have taken the time to analyze before placeng their AAA rating on something that has never happened. A pertual, increasing supply and demand scenario.
    Now that TARP is in place, let’s allow BPO’s to be completed by the similar incompetent, greedy, people who lack the courage to make thier decision soley on the market versus the client. What goes around….

ADD YOUR COMMENT