NAR President Charles McMillan sent a letter to Federal Housing Finance Agency (FHFA) Director James Lockhart addressing the agency’s recent guidance on the Home Valuation Code of Conduct (HVCC). In the letter, Mr. McMillan applauds FHFA for its efforts to address misinformation surround the Code but disagrees that the HVCC is appropriately dealing with the controversy surrounding the appraisal process.
NAR cites survey data that seems to indicate that the Code is creating negative unintended consequences. “According to a survey of our members, 76 percent of respondents said the length of time to obtain a completed appraisal report increased after May 1, 2009. More than one third of REALTORS® have lost at least one sale because of a delay in the appraisal process. At the same time, respondents who identified themselves as appraisers said their time frame to submit an appraisal report has decreased and half of these respondents say this impacts the quality of the appraisal report.” At the same time, the cost to the consumer is increasing.
The letter also references Professor Emeritus at the Wharton School, Jack Guttentag whose recent commentary in the Washington Post stated that the HVCC is causing more problems in the real estate industry. Mr. Guttentag said the “HVCC ‘cure’ for the appraisal problem of overvaluation has been implemented in a market in which the problem has become undervaluation, and the code is making that problem much worse.“