FHA Appraisal Rules: Benefits of HVCC Without the Unintended Consequences?

National Mortgage News reports that the new Federal Housing Administration (FHA) appraisal rules may make HVCC – and appraisal management companies (AMC) – easier to cope with in the industry. While noting that the intent of HVCC was to improve appraiser independence and reduce undue influence, the article notes that in trying to accomplish these goals HVCC has increased the cost of the appraisal and raised questions about appraisal quality.

The new FHA rules will help because appraisers can report their fee on the appraisal report, which will “hold AMCs feet to the fire. FHA’s new policy allows the appraiser’s fee and the management company’s fee to float separately at market rates.” Donald Blanchard, chief compliance officer for Lender Processing Services, is ok with this new rule but expressed concerns that this will ultimately result in higher prices for an appraisal.

NAR supports the new FHA appraisal rules because of the fee disclosure, the transfer rules now in place, and because FHA explicitly states that AMCs do not have to be used by lenders. The Realtors are calling on FHA and the GSEs to issue joint guidance in the form of codified frequently asked questions.

  1. John

    The FHA has moved the HVCC in the right direction. It is now up the the GSE’s to parallel the separate fee reporting (appraiser’s fee not embedded in the AMC “appraisal” fee) to their environment. Then, the public will get a better idea if the appraiser they’re getting isn’t being gouged by the AMC, and that they’re getting quality valuation services at a fair price. Disclosure is good!

  2. David

    I have probably spent more time fighting HVCC than any appraiser in the country. I closed my business in retaliation against this insane regulation. I believe FHA’s alteration is a step in the right direction. I have one problem with it however. They say that the appraisers must be paid market for their fee. Who determines what market rate is? If it’s left up to the AMC we already know what the end result will be: $150 regardless of complexity and location.
    Put FHA in charge of the market rate and you may be onto something. Otherwise you’re simply wasting your time.
    I strongly support a national appraiser’s strike. Now THERE is a quick solution to a problem that everyone has finally become aware of.

  3. David

    People think I’m insane when I discuss an appraiser’s strike. Is is really that crazy of an idea? Personally I would prefer to endure a month or so of extreme discomfort to a slow agonizing death. Anyone with intelligence should realize that as long as AMCs are allowed to accept the lowest bid it will only get worse. Seriously folks…the end result should be obvious.
    Why not organize a grass roots strike and take back control of your professions. It’s not like I’m saying appraisers should relocate themselves to Mars. In the age of the internet this is not an impossible feat. Take at look at the online HVCC PETITION. They did an amazing thing is 4 short months.
    Just a little food for thought.

  4. Harold

    Since when is an AVM the hallowed benchmark for measuring appraisal accuracy? AVM’s take ALL sales, mostly from the public domain, which has no clue as the the condition, locational, upgrade, concessions, etc. differences between the sales, and lumps them into one muddled mess. Beaurocrats helped to creat this mess, and now continue to perpetuate it.

  5. Robert Burkley

    Received a call from AMC I reluctantly work with asking the price and turn time for a drive by appraisal. I looked up the property on MLS, 1.5 mil new construction, foreclosure. Difficult assignment really. However I work this market, am a certified appraiser, 10+ years experience, 4 year college degree, things are slow, quoted a $250 fee ( deal right). Never heard back. I bet it went for 150. Or a $50 BPO.