Confessions of an appraiser

It's unlikely the HVCC will improve anything or relieve the pressure on appraisers. With over 30 years appraisal experience, I believe pressure is not new and it's up the the appraiser, and no one else to resist succumbing to it. There is mounting evidence the HVCC will make the appraisal less reliable and increase the cost of obtaining a mortgage loan. The National Association of Realtors is seeking a one year delay in the implementation of the HVCC.

For a number of reasons, a delay is in the best interest of every party concerned:

One of the pillars necessary for implementation of the HVCC is the Independent Valuation Protection Institute. Without the IVPI there is no enforcement mechanism, hotline, or means of verifying compliance. Delaying implementation would allow creation of the IVPI or establishing an alternative framework

Many state legislatures are in the process of enacting laws to regulate Appraisal Management Companies. In other states, the regulatory agencies are in the process of promulgating rules and procedures to deal with Appraisal Management Companies. Delaying implementation would allow these states to finalize their actions.

To this day, the fact that the HVCC resulted from improper influence on appraiser independence by a Federally regulated lender and a rogue Appraisal Management Company cannot be reconciled with the apparent endorsement of unregulated Appraisal Management Companies as the “protector” of appraiser independence by the HVCC. Delay would allow a reconciliation of this glaring conflict.

Fannie Mae has adopted policies that protect the brokerage fees from downward negotiation in certain transactions (short sales). Delay of implementation would permit efforts to protect appraiser’s fees from downward negotiation by Appraisal Management Companies. At the very least, it would allow time to arrange for full and transparent disclosure of valuation related fees in closing documents (AMC fee, Appraisal Fee, etc)

a friend of mine is a very high income mortgage broker in Boston, and he says his appraiser is the best "number-hitter" of all time...

I am a little vague / naive regarding how appraisals are done. In the case of a refinance, then it makes sense to look comps as the house is neither being bought or sold. This should be the hardest situation as there is no objective value for the house.

However, as people have repeatedly said in these blogs, a house is only worth what someone will pay for it, no more and no less. So in the case of a sale, why does the appraised value not always equal the sale price? Put another way, what assessment should carry more weight than a buyers willingness to buy a house for that price?

I'm not sure what the new regulation will do to reign in rogue appraisers. But I personally think the market would have corrected the current situation without new regulation.

In practice appraisers are hired to do one of two things: 1) render a fair estimate of value, or 2) hit a number. If the goal is to hit a number this is obviously never spelled out in the engagement letter. But most of the time the intention is pretty clear by the client. Therefore, I say the responsibility for bad appraisals ultimately lies with the banks. With a wink and a nod, many lenders acted against their long-term financial self interest and pressured appraisers to hit numbers. This happened either directly or indirectly through mortgage brokers. But either way, the banks dropped the ball... Appraisers were just doing what their clients wanted.

That said, I think banks have learned their lesson for the time being. Regardless of regulation we can expect better oversight and more conservative lending in the future.

I too have long term experience as a residential appraiser. I like to think that I perform and compose high quality appraisal analyses. I have cultivated a nice following of clients, who appreciate the type of service I provide. I specialize in upper-end properties, most likely much lower values than what you see in Boston, but higher than most in these parts. However, I inspect and appraise all types of properties in all different value ranges. I sometimes perform fraud review work for certain clients as well. On May 1, 2009, I lose all that I was able to build over the course of 16 years, as management companies will now dole out appraisal assignments to those appraisers who both sign on and who accept the approximately 25-35% less fees they offer. Please understand that the consumer will pay the same if not more, it is just that the management companies, both created and/or promulgated by this HVCC, will keep the balance. Relationships and friendships cultivated over years will be gone, in an instant.

If FNMA and FMAC had not been bullied into signing onto this “agreement” (to avoid threatened lawsuits by the NY Attorney General), perhaps some other type of rational ideas could have been adopted to help straighten out the industry. If hearings had been conducted, and experts from all sides of the spectrum had been allowed to address the issues, perhaps a more cogent solution could have been found. Unfortunately, because all was decided without following the Administrative Procedures Act, no such airing of ideas was allowed.

Consider if, to rectify perceived fraudulent activity on the part of attorneys, for example, an “agreement” was forged whereby all attorneys would be “assigned” cases by being the next lawyer on a long list at some management company or clearing house. If by chance the next offering was a criminal case, and the next attorney in line was a specialist in divorce work, well, tough luck for the consumer. Similarly, maybe stock brokers should be herded into a similar scenario due to Madoff and other crooks. Don’t forget that those attorneys and stock brokers might also be working for approximately 33% less, in an instant.

In truth, not all attorneys are “bad”, nor are financial brokers, but neither are all appraisers. If you do not believe that such would be fair, as not all attorneys and/or stock brokers are crooked, then the same should be felt about real estate appraisers.

Now, you want positives? No appraiser will ever have to bear whiny mortgage brokers ever again. However, if anyone thinks that “aimed for” values will not still be part of the system, forget it. Every homeowner knows what is “needed” to make a financial deal work, and readily offers such even at the time of first contact for appointment. Do I ask? No. Do they tell? Yes.

Negatives? Many. Besides the inherent unfairness and forced democratization of every appraiser, reputation, experience, quality, service, etc. will all be sacrificed as assignments will essentially be offered to the “next one on the list”. Good luck John Q. Public. Appraisals will most likely not be portable; hence, if the borrower decides that a certain lender’s terms are just not right, a new appraisal will most likely be necessary for the new lender. Unregulated management companies will now run the show. Too many hands in the works, and the sheer size of some of these management companies, is sure to slow down the processing of loans, resulting in lost rate locks. Many small businesses, owned by good Americans, may be forced out as their fees are slashed and the realization that the “performance rating” of an appraiser will no longer be research, effort, education and market expertise, but rather the 3.08 days computer calculated turnaround time and the fees accepted. What was once earned will now be mandated, and less of it (I have already prepared my family for what is coming, even my son who is scheduled to enter college in the fall).

No, the system as proposed is not right. In point of fact, there are already mechanisms in place to punish and get rid of the bad appraisers and bad brokers. The problem has been that the oversight folks have been slow to pull the trigger and clean-up the industry.

Please pray for those appraisers who are perhaps not as urbane, or not fully cognizant of what is about to happen, as they awake on May 1, 2009, barren of the clients and business they had the day before. Pray for the public, who might end up bearing a large part of the newly created load. But no prayer will be necessary for the management companies, who now will reap huge rewards, the result of this “agreement”.

a man is known by the company he keeps -

Fair enough, but I've seen numerous Appraisors who simply "Copy & Paste" their last appraisal report, substitute certain numbers, plug them into the Formula and DONE! All of 20 Minutes worth of work (NONE of it based on science or logic) and they are paid $550...

There is no doubt that there are "number hitters" and "copy & Paste" appraisers out there, but the key to getting rid of them is enforcement. The lack of establishment of the oversight function of the HVCC prior to implimentation is testimony to the fact that the HVCC is not really designed to regulate the industry.

I've been a full time appraiser in the north shore of Massachusetts for over 17 years.  Regulation of appraisers has been nothing but a big nightmare.  It added millions upon millions to state coffers in the form of $400-$600 recurring licensing fees for appraisers.  And it helped up the cost of what citizens have to pay because the appraiser is hounded by the state for fees, and made to sit through costly (time consuming & money consuming) redundant mandatory education classes every year for license renewal. I’ve already done just about every appraisal course offered in this state; and find myself having to rotate through the same courses sometimes 3 times since 1993, because the state insists on so many continuing education hours.
 
Like the original writer here, I was never a “numbers hitter”.  Proof of the pudding was that I relied on “out of blue telephone calls” from mortgage loan officers all these years.    And I never stayed with any mortgage company for more than 3 years.  There was a built in “double check” honesty system already.  And that was it.  The way it worked was you’d go along appraising, and getting loads of work from some mortgage companies – but sure enough it would always happen that bad luck would strike – and you’d get maybe two jobs in a row where the numbers didn’t work, and the loan officer (and real estate agent/broker) didn’t get his/her loan (commission).  So you’d never hear from that loan officer again.  But because you did the right thing, you’d sleep very well at night.  But just wake up the next morning—always wondering if the phone would ever ring again.  But it always did, due to ads placed all over the internet, in appraiser directories.
 
Now with this new HVCC the rules of the “game” have changed for both appraisers and homeowners (and other borrowers).  Work will be farmed out from the lender to the Appraisal Management Company (AMC).  There will typically be a one day extra delay as the AMC assigns the job, and another day delay as they receive, process and deliver the job.  For this, they’ll want a hefty price per appraisal.  For 17 years I’ve been charging $250 - $275 for a single family appraisal.  With the AMC wanting a huge cut, homeowners will now need to pay $350-$450 for the same single family appraisal.
 
It just got even worse for appraisers.  Remember I told you, when the numbers didn’t work 2 or 3 times in a row, I’d expect to never hear from that loan officer again?  Well any appraiser is mistaken if they think that AMC’s aren’t under the same sort of pressure to make mortgage companies & their loan officers happy that Cuomo thought he was relieving appraisers from.  So when an appraiser shows up on an AMC’s “radar” as not being a “game player” – and that appraiser doesn’t get phone calls from that AMC again – then the appraiser no longer has those “out of the blue” phone calls to rely on, and they may just as well pack up shop.  AMC’s are already “playing” greed games.  Right now they collect $350-$450 for that $275 appraisal I’ve been charging – and they try very hard to sweeten their “pots” even more by making appraisers bid on jobs.  If a hungry appraiser with a freshly minted license bids $225 for say a refinance job in Lynnfield, and the experienced one with say over 10 years experience on the north shore bids $250.  The job will go to the inexperienced one, just so the AMC gets a bigger slice.  And the AMC doesn’t care if that inexperienced appraiser who lives in Worcester, and has never before even been closer to Lynnfield than say Weston/Wellesley.
/signed/
Had almost enough. Ready to retire. Bored stiff of “over-regulation”...
Steve K, Methuen Appraiser

Why haven't I read about a single case where the National Association of Realtors, or the equivilant for appraisers has kicked-out a rogue member of their organization for un-professional conduct? We do hear about attorneys being dis-barred when they are found to act in a clearly unethical manner.

Until I start reading about those examples, I frankly suspect that a large percentage of both professions are ripping people off and acting with questionable ethics.

Go ahead and let appraisers maintain their current business relationships. But have an independent and anonymous audit board review 10% of all appraisals and penalize those who appear to be off target.

Do you use information from the Uniform Residential Appraisal Report? My understanding is that an appraiser is not to include a finished basement in the GLA - Gross Living Area. The appraiser is to include only the finished area of the home that is above grade. Is this what you were taught and how did you calculate GLA?

Im putting a HAMMER AND SICKLE on all my appraisal reports

Thank you Comrad Cuomo

The bank or other lender is making the loan. If they kept the financial risk, they would have an incentive to get an accurate appraisal. Instead, they are just originators who resell the loans. Therefore they have an incentive to generate as many loans as possible. They don't want an appraiser to get in the way of that.

Rather than this HVCC non-solution to the problem - what really needs to happen is to get the risks aligned again, so that lenders don't have an incentive to make bad loans.

The individual who appraised my property as it was under agreement to sell created a short sale. He valued the property substantially lower than the agreed sale price without the benefit of comps. because there simply aren't any. So, he is forcing a situation where I will have to go to the bank and ask them to take a loss on the property while in the meantime I had a qualified buyer who was willing to pay more. How is this in the best interest of anyone? Let's face it. Appraisals are a subjective process based on shaky data and marginally qualified people. What is the formula for using a short-sale as a comp? Answer: None exists. The process is just not that sophisticated and in the meantime regular people are getting hurt

The quality of work by real estate professionals is highly variable. Consumers need to be able to choose which professional they would like to use via research and recommendations. Limiting choice via management companies is not right. A better solution is to be able to have appraisers rated and have the rating periodically updated to reflect current performance. This would cull out the bad apples and help consumers get fair and impartial appraisals. This should also be done for all other real estate professionals.

More regulations. More and more regulations. It is a never ending cycle. We go through the "we need more regulation" stage and then will come the "de-regulation" stage. The regulations requiring more mortgages were the regulations that got us into this situation. The free market would correct the situation. Now we are in the stage that the govenrment things they need stricter regulations to solve the problems. What happens when appraisals in less desirable neighborhoods start coming back with lower values? There will be a cry that things are done unfairly.

I recently had an appraisal done and it seemed as if the appraisers prime interest was to be as conservative as possible to avoid any perceived red flags by the bank. In my case, he appear to be responding to the over conservative stance that the banks have now. If they are audited, they waste time having to explain themselves to the bank in order to justify their appraisal. They are never going to get audited for a number thats too low. So even if they know a higher appraisal is possible, its in their interest to low ball it given today's climate. Why waste time having to potentially justify anything when there is no extra money in it for them.

I say this because a very comparable neighbors home was sold recently. It was in horrible condition and needed to be gutted inside. Repairs of this magnitude would easily cost 80-100K. My home is in move in condition. Yet, I only received 20K in adjustments. ???

Appraisal value is the opinion of the appraiser, based on the research of the subject's market area data. Here is the problems. 1. Will the appraiser do the
proper research? 2. What is the subject's market area? 3. What is the market trends, ie number of sales, and values for all properties, in a residential market the research should include all residential properties not just the subject's type. 4. What was the subject sales and mortgage history? What is the market sales and trends, for the past 2 years, past 4 quarters? What were the market values at the time of the subject last purchase? Was the appraiser's value opinion at that

time in line with the market values?
Above is the research that should be done before selecting the comps.
In the grid if one comp has a positive adjustment then if possible there should
be a comp with a negative adjustment on the same line.
The appraisers who will do this type of research please raise you hand.

with the market value?

Before the report "Comp

I am curious if anyone knows the answer to this. A small town in Western, MA recently doubled the tax bill of a property based on a realtor giving a description of it. In other words, hearsay. The assessors office has not gone to the property or been in it. Is this legal? My research shows it is not, but I'm not an expert.

I'm looking to buy a place soon and I don't see a huge value in appraisers and really do not care all that much about coming changes in appraisal regulation. One look at the prices in the greater Boston area and it is obvious that either no appraisal was used to set prices or the appraisers were often just trying to hit numbers.

Whatever the case (from this end at least) the market does a pretty good job correcting right now. Overpriced properties rot on the market and their prices drop quickly to meet the market value (often below it as buyers can see the pricing history).

Obviously from some situations the appraiser is very valuable but from the perspective of a potential home buyer they're largely a lot of hot air in this market. Homes are worth what people will pay and people are usually paying much less than what people initially set their asking price at.

Wow, what an objective article.

"There are some readers who blame our current problems on appraisers, lenders, and agents instead of irresponsible borrowers that eagerly availed themselves of the opportunities that a poorly regulated system presented."

It takes two to tango. The vast majority of the houses being foreclosed on may have been bought by "irresponsible buyers", but they were financed by irresponsible lenders, appraised by irresponsible appraisers, and sold by irresponsible lenders.

@#6: The power of Microsoft Office. rofl

So in the case of a sale, why does the appraised value not always equal the sale price? Put another way, what assessment should carry more weight than a buyers willingness to buy a house for that price?

bv, the purpose of an appraisal is to ensure that the collateral on a mortgage loan will fetch enough on the open market to cover the amount borrowed, if a foreclosure becomes necessary some day. So it doesn't matter a whit what the current buyer and seller think the house is worth. They won't be buying the house from the lender in a foreclosure. What matters is what the next buyer will pay. And if everybody else is paying X for a certain kind of house, that's the price the lender can prudently expect, even if the current buyer is paying X+20%.

The HVCC will only force most lenders into using management companies. The lenders now have a closed loop process where the appraisers working for them through the management company cannot be scrutinized by thier peers as they are supposed to be. In addition, the management companies apply pressure to the appraiser to cut fees or they get no work which means the only appraisers working for management companies are the less skilled, those that can't get quality clients, or those who have been kicked off all the other lists, so the quality of appraisals will continue to decline, and we will all be right back where we are now in the future.

The day of reliable good quality appraisals is gone, and the career of appraiser may also be limited in its future.

Can anyone tell me why is my home appraised higher with my town, then it has been for the last three appraisals I have had for refinancing. There is a $30,000 plus difference each year. My town is accessing unfinished spaced at 80% complete, even though there is no insulation or sheet rock. My land value within five year grew from 130000 to 175000. I have abated my taxes three times with little success. Who can I turn too?

I am former mortgage loan officer, and used to also work as a wholesale lender rep.

Don't blame the borrowers or homeowners. The mass public, as a general principle, is ignorant. Most people can't comprehend the concept of amortization, and don't understand the process. The fault is the industry who failed to regulate itself. I blame the DIS-HONEST realtor, mortgage officers, appraisers, and banks.

Wholesale bank reps used to come into our office and TEACH US how to skirt their guidelines and loopholes. Realtors are another batch. Realtors were a somewhere between used car salesman and the crack dealers on the corners of the ghetto.

I love how the appraisers blame the banks, the banks blame the realtors, and the realtors blame everyone else. It was a Sh*tstorm, and we all caught in the middle. Too many thieves working the industry.

Sure, some of us were honest, but the most weren't.

I have both a mortgage as well as a home equity line on my condo in Boston that I have owned for almost four years. I recently received a letter from my bank that holds both the mortgage and home equity line that I would no longer be able to draw from my equity line because the value of my property dropped significantly (according to them).

I am able to appeal this by obtaining an appraisal (which I have to pay for), but my bank will only accept appraisals from a company that they have chosen to conduct these assessments. The fee for the appraisal is about on-par with typical pricing, but my concern is that the appraiser will be working in the bank's interest and not as a neutral party.

Has anyone heard of this happening to anyone else? Can my lender force me to both use their appraisal company and pay the fee for the appraisal in order to appeal?

I am shocked, shocked to learn that appraisers are against new regulation. Who would ever have thought that a "profession" that proved such an epic fail at self-policing would object to adult supervision?

Meanwhile, the forked tongues of appraisers continue to slither. I'm pretty familiar with properties in certain areas, and happen to know of multiple sales that went through despite the fact that they were nothing like their MLS descriptions. E.g., a house with a basement toilet and no door compared to 2-bath houses; rooms with no closets approved as bedrooms; unheated attic space included in GLAs.

Once ethics disappear from a "profession," it's impossible to get them back.

We refinanced a 3 million dollar property, and because the loan was only for $ 729,000 it was approved, despite the appraisal coming in at $1,750,000--this demonstrates the appraiser's caving-in to the banks to give highly conservative, indeed, inaccurately conservative and unfair lowball values to fine properties--all to protect the bank, not the owner, in case of default.

If you don't want the banks to rely on appraisers' opinions, save enough cash to buy your house outright. Most appraisers do a good job. Some are terrible. But more often than not, people think the "appraiser killed the deal" if the number is too low, when in reality it should be a wakeup call to the buyer that they're overpaying.

In 9 years in the business, not once when I came in with a number lower than the homeowner or realtor thought I should come in at, not a single time, did they provide me with any comps or other information that would justify a higher value. Realtors don't know what they're doing and don't care. They're on commission. Appraiser make the least out of anyone in the entire real estate transaction and their opinions are the ones most heavily relied upon. Not their fault. That's on the lenders.

I have my home for sale and just opened a realtor's market analysis of homes listed and sold in my village. One is a comp for my home, all the others are either nowhere near my property, mine an antique Greek Revival, her comps ranchs, one is even an affordable housing 'sold'.

It makes the business very untrustworthy to say the least. Now brokers are wanting listings for so much less to sell. They are the ones who placed these skyrocket prices on properties and now they expect way undervalue.

An appraiser should not know what the selling price(Offer) is on a piece of property. It's amazing to me how they come bck 99% of the time justifying a price when they know what they need to come in at even when the offer is much higher than comps. They will find a way to justify their existence even if it mens the lender makes a bad loan and the buyer gets a bad deal

I left the appraisal industry in 2000 after 15 years and holding an MAI designation. We closed the family practice because it was becoming increasingly difficult to practice in an environment that rewarded the dishonest. Many other honest appraisers were driven out as well. Nothing will change in the appraisal industry until the lender (bank, mortgage company) actually holds a substantial financial interest in the loan that they stand to lose if the loan goes south. Otherwise, it is a game of deception and the real estate market is manipulated as well unless everyone associated with the lending has "skin in the game."

Mr. Frank Gregoire in post #1 pretty much voice any comments I would have made. (FTR, I've known him for many years [cyberwise] from forums and from his previous work with the FREAB and I highly respect him). The implementation of the HVCC was not permitted to have the minimum required "comment time" as mandated by the federal government, yet it still is planned to be. One comment I might add is the fact that the AG of NY at, or immediately before, was on the board of directors for an AMC - how come NO ONE has investigated that? How come NO ONE finds it strange that the "agreement" effectively mandates the use of AMCs? Makes one wonder.

Another consideration, as pointed out by another poster, is the lack of experience for the ones who will be performing the appraisals for the AMCs. I have seen my mortgage finance work drop dramatically due to the AMC use - I am not on AMC lists. That, from the more recently licensed appraisers I've talked with, is a clear indication that they are going for the "cheaper/faster/hit the number" crowd. This should not surprise anyone one in the USA or the world for that matter. The more experienced and educated apraisers have moved on from that aspect - look what that leaves you!

I'm working (or was working) towards getting a trainee license. If you're not in the field, you have no idea how hard it is to become an appraiser. After 70 hours of classwork, the trainee needs to complete 2,000 hours or appraisal work in a minimum of 2 years time, under the supervision of a licensed appraiser. And, as other writer have stated, there is relentless, expensive continuing education required by the state and the professional board (Appraisal Foundation)

Of course, it's virtually impossible to find an appraiser that wants to take on a trainee. If the business is good, they have no time to bother with a trainee; if it is bad, there is little to share. They also all have experience with a trainee who later becomes their competitor.

Most appraisers have milked this business for many, many years and made a lot of money. If the new guidelines result in appraisers leaving the field, that’s probably a good thing for us folks who want to enter it. I’m actually thinking of forgetting about getting an appraiser license and, instead, forming an AMC and make a buck off of every appraiser working for me.

Regardless of what anyone says, appraisals are not an exact science. Have your realtor do a BPO (broker price opinion) or CMA (market analysis). Key components are similar living area inside a mile of the subject. Next you look at age, lot size and interior and exterior condition compared to the subject. It is possible for two very competent appraisers to come up with different numbers in this scenario. If you have appropriate comps to back up the numbers there should be no reason to have them take another look as long as the back up information is there regarding the comps.

I have been in the appraisal business for 35 + years and agree with what you had to say for the most part. I, for one, have been edged out ot the business over the past several years because I am not a numbers cruncher. Several major banks and other lending institutions removed me from their appraiser's list becuse of my ethics.
My thoughts on the banks working with mgt companies is pretty simple..It is just another way of controlling appraisers to suit their needs and reduce fees. I have experienced this first hand and will not do business this way.
B A Spinney

As a seller/buyer..not an appraiser...Why don't we appraise the house as part of the sales process...Give a $10,000 range of what the appraised property is...Wouldn't this take out the guess work and eliminate the pricing process...Then if market demand for the house is hig, people will know they will have to come up wiht cash on top of mortgage price. Makes sense to me...I got into a bidding war on my current house in a competitve market...I ended up bidding $12,000 more than asking price, then I paid that cash at closing not in my mortgage...It ********, but I liked the house.

if anyone can help to stop this, everybody complaints but nothing is happening.

TRANSCRIPT from the Florida assocaittion of Mortgage Brokers,

Pursuant to the Home Valuation Code of Conduct (HVCC), on May 1, 2009 the GSEs will no longer purchase loans from lenders "accepting appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any third party."
Lenders will only accept appraisal reports from a pre-approved list of appraisers or appraisal management companies.
Impact on Consumers

The HVCC negatively affects consumers by increasing the costs of an appraisal, reducing consumer choice and adversely impacting a consumer's ability to obtain a reliable and quality appraisal.

The HVCC increases the time to fund loans for consumers which necessitates longer rate locks or extensions of existing locks thereby increasing costs to consumers. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing the time to fund.
The HVCC creates a heightened risk for consumers by requiring the use of unregulated Appraisal Management Companies (AMCs) for appraisals. The original investigation that prompted the HVCC's creation was of an AMC and Washington Mutual Bank alleging that they engaged in practices of pressuring appraisers on behalf of Washington Mutual.
The exclusive use of AMCs limits competition in the marketplace, leaving the consumer at a disadvantage.

The AMC model is flawed and will produce poor quality work that will create a continuation of the declining housing market.
Regulation Z addresses Inflated Appraisals
In July 2008, the Federal Reserve Board issued a final rule through reforms to Regulation Z prohibiting all mortgage brokers, mortgage lenders and their affiliates "from coercing, influencing, or otherwise encouraging appraisers to misstate or misrepresent the value of a consumer's principal dwelling."
The final rule by the Federal Reserve, which addresses appraisals and appraisal guidelines set forth by the federal regulatory agencies, prohibits improper influence on appraisers and works to ensure appraisal independence.
The final Fed rule was subject to the Administrative Procedures Act (APA) and Regulatory Flexibility Act (RFA). The HVCC did not go through the Administrative Procedures Act (APA) or the Regulatory Flexibility Act (RFA) as required of rules issued by administrative agencies of the federal government.
The HVCC changes the standards of who may perform appraisals -- something the Federal Reserve decided against when reforming Regulation Z. During consideration of the appraisal standards set forth in the Regulation Z final rule, the Board addressed this issue and declined to find that "any particular procedure for ordering an appraisal necessarily promotes" fraudulent appraisals. Rather, the Board found that "coercion of appraisers" whether by lenders or brokers "is an unfair practice," and determined that the appraisal provisions in Regulation Z should apply equally to lenders and brokers alike.
The Federal Reserve's appraisal standard implementation date is October, 2009.
Considering the negative impact on consumers and the Federal Reserve's recent regulation on appraisals, the HVCC should either be repealed or delayed for 12 months. Contact your Florida Representatives in Congress today and ask them to sign Congressman Miller's letter! Help stop HVCC today!

If banks maintained the mortgages they wrote and didn't sell them off, they would be a lot more responsible. Bring back local banking.

If mortgage brokers are against the regulation, it must be excellent! It's like Al Capone complaining about tax policy.

Thank you for bringing this to our attention. Everyone, flood Washington with your letters of support. I've already emailed my representatives.

I own a nationwide AMC and the HVCC is going to be one of the best things that happens for the industry. The results are going to much different than most think and actually improve the position of the appraiser in the industry.

The purpose of the code is not to rip off the consumer or to put brokers out of business, but is to ensure the integrity of the transaction. The person who is responsible for loaning the money should be the same person who is responsible for the appraisal process. This makes total sense.

In regards to restriction on ordering appraisals brokers are the only ones severely affected by the code. They will have NO say in the appraisal process at all. All others in the industry from lenders, banks, credit union, mortgage bankers and correspondents can use whatever appraiser or appraisal company they want.

What the lenders really want is the brokers to switch to correspondents or to get warehouse lines and lend there own money. This no doubt will happen. At a rapid pace loan officers are moving to lenders and banks because they are put at such a disadvantage when compared to a lender.

The appraisal process is just one of many problems faced by brokers on a daily basis. They face extremely long turnaround time, the worst pricing and are at the total control of the lender. Brokers can not compete if there not going to become lenders.

Soon enough the broker will be no more and appraisers will be hired for how accurate they appraise not for the numbers they hit because its the companies money thats being lended.

I realize that to many lay people out there that simply if a buyer and a seller agree to a selling price, then that equates value. However, it should be pointed out that this is not always the case.

In some cases, a buyer is motived to overpay for a property for whatever reasons they may have.

In addition, there are frequently fraudulent transactions put together in order to obtain 100% financing for the purchaser, where purchase prices are inflated in order to accomplish this end.

as a successful Las Vegas appraiser for 17 years, I applaud the HVCC. I also deplore AMC's who steal my fee. Not all do.
Remember folks ....you get what you pay for. Read the fine print. Demand a "designated appraiser." See the Appraisal Institute for a list of the more qualified in your area. Caveat Emptor.

"Designated appraisers" is one of the biggest hoopla's in the appraisal industry. It's like believing a Realtor is any better than a non realtor. When I was a realtor. The only difference between me and a non-realtor was that I sat through a 30 minute Realtor lecture and affirmed I'd first try to settle any disputes I had with other realtors - within the realtor tea party. Being a reltor gave me no edge as a sales person, whatsoever.

With mandatory yearly appraiser education since the early 1990's, my bet is now, and will always be on a long-time experienced appraiser - over any designated or even "state certified" appraiser. The appraiser with over 10 years experience, simply has 2-3 more times appraiser education, and usually much more experience than any new designated or even state certified appraiser with less time. I look at appraiser designations, much as I do Realtors. They both pay yearly fees to get to "blow their horns". In the final analysis, they simply use their designations & certifications to fool the public into believing their designation and/or certification means they are better suited/educated, etc.

Designated appraiser give me a break. The Institute is a joke as many of these so called SRA and MAI's are the worst of the worst and if you do not know that then you obviously do not do much review work. Some of you designated clowns obviously feel that you can put any number you want on a report, and no one can question your conclusions.

Mr. Cuomo has effectively steered the maority of the industry towards his defendants eappraseit. This is absurd. Whats next for Andy mandatory community service at daycares for pedi

Question: A friend of mine recently purchased a house for 400k. They closed today and I was able to visit and get the scoop. The bank had the house appraised for 460k. What does this mean? I go back to Marcus' response #23, and ask again, why doesn't the appraised value match the sale price? In this case, I would imagine that Marcus' response doesn't make as much sense. Clearly, the bank cannot fetch $460 on the open market since the house was only able to fetch $400k.

So should the appraised value always be equal to or less than the sale price?