By posted by Rick Soukoulis, Chairman & CEO of The Loan Source
Who moved my cheese is the title of a great little book that deals with change. If you have you haven’t read it, I highly recommend you get your hands on a copy. It’s a simple story about surviving change and in this market, change is the one constant in the universe.
This article is about a relatively minor issue that seems to have too many people unnecessarily worried. It’s the issue of new appraisal rules. Yes it is a big change but it is being applied evenly to all.
You may have heard all the scare talk about HVCC and how it’s going to change everything on May 1st.
First, let’s define it. HVCC stands for Home Value Code of Conduct. It does not, as I heard one person say, have anything to do with Heating, Ventilation, and Air Conditioning. That’s HVAC, something totally different.
At its heart, it addresses the issue of loan originators, both at banks and brokerages pressuring appraisers to increase the value of a given home. And I think we all know that there have been abuses in this area.
Certain loan originators would select appraisers they knew they could pressure, and sometimes even threaten appraisers that they’d never give them business again unless they came up with a higher value.
The solution is that loan officers will no longer be able to select the appraisers they want to work with. There will be a pool of appraisers at an AMC (Appraisal Management Company), and when they place an order, the AMC will randomly assign them an appraiser. This holds true for ALL banks, mortgage banks and mortgage brokers. In essence the collateral for the loan will be evaluated independently of the borrower ability to repay, sounds logical.
How will Realtors be affected? The answer is, virtually not at all.
Realtors are not barred at all from talking to appraisers. In fact, Realtors always have been and always will be very critical to the appraisal process.
Many Realtors know a neighborhood better than most appraisers, and they will continue to provide appraisers with different comps to consider, information on neighborhood changes, listings, and other types of information that are so important in helping an appraiser do his job.
How loan officers select appraisers has changed, but Realtors will still be able to work with these appraisers.
In fact, Realtors will not only be able to, but will still be needed, to help produce the best possible appraisal and maintain the integrity and accuracy of appraisals.
This is not to say that over the next few months while the industry digest this change there won’t be problem, there will… but in the end it will be business as usual.
See Also
- The Loan Source
Your one-stop Loan Source – with so many loan options and programs, as well as commitment to excellence in customer satisfaction, we can help you achieve your financial goals. - Fannie Mae: Home Valuation Code of Conduct – FAQs
- Freddie Mac: Home Valuation Code of Conduct
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Dick Gaylord
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Palo Alto is home to many Eichlers, mid-century single story homes with walls of windows, tar and gravel roofs, wood siding, radiant heat, and a concept of indoor/outdoor living. In the 50’s these homes were considered modern, quintessentially Californian, or fire traps called 7 minute Eichlers because they could burn to the ground in 7 minutes or less. The mahogany walls had no fire retardant properties so the homes burned quickly if there was a fire.
Palo Alto is home to many Eichlers, mid century single story homes with walls of windows, tar and gravel roofs, wood siding, radiant heat, and a concept of indoor/outdoor living. In the 50’s these homes were considered modern, quintessentially Californian, or fire traps called 7 minute Eichlers because they could burn to the ground in 7 minutes or less. The mahogany walls had no fire retardant properties so the homes burned quickly if there was a fire.
