HVCC effective May 1st. How Realtors can make a difference right NOW!

Reblogger Kent Simpson
Real Estate Agent with Tierra Antigua Realty - Downtown AZDRE# SA582422000

HVCC is going into effect on May 1st, 2009.

While the intent of the legislation was to protect consumers, it is a misguided attempt and threatens the very integrity of the appraisal process that it was intended to enhance.

Through the power of the contract language, it is my hope that at least a minimum level of competency can be assured - but without specific language, our clients can be harmed in my opinion.

I am going to speak to my broker about approaching our company's attorney concerning this law, and how to best protect our clients best interests.

Here is one appraiser's take on the issue:

Original content by Mary Thompson CR004373

Hello everyone, just wanted you to know that the HVCC (home valuation code of conduct) is soon going to be a reality come May 1st, 2009 and you need to take control now. you need to take control now in your SALES CONTRACTS.

If you have never heard of HVCC...You are in for a RUDE awakening! PLEASE READ ON....

 

 I hope the powers that be here on Active Rain make this a featured post because this information is critical to your sales DEALS not falling apart every time due to the appraisals.

In a nutshell, when this new FEDERAL law takes effect in May, Mortgage Brokers, Realtors Buyers and Sellers will have NO control over the appraisal process. Brokers can no longer order appraisals directly from appraisers, Realtors, Buyers and Sellers can no longer order an appraisal and then bring it to their lender or bank for a loan.

Banks are the only ones who can order the report directly from the appraiser or a third party will do the ordering hired by the Banks. These third parties are what we call Appraisal Management Companies (AMC's). The banks are hiring these companies to puts a layer in between the banks and the appraiser for more independence and less lender pressure on the appraisers to "make the value".

**Any of the above individuals CAN order an appraisal directly from the appraiser if their reason for the report is not for a LOAN, IE; to determine a listing or sales price, to obtain current value, a divorce, estate, tax rebuttal appraisal, PMI removal, etc.  That is NOT prohibited and is actually encouraged in this ever changing market ***

Here is where REALTORS, buyer and sellers DO have control. Just the other day I was appraising a Lake Lanier property (our specialty) and I was very HAPPY to see that in the sales contract under the special stips page was the following statement:

" Buyer shall have all the rights and provisions manifested by the Appraisal Contingency provided that the appraiser the buyers lender selects has COMPETENCY to perform an accurate Lake Front Property appraisal and has completed at least 10 appraisals on Lake Sidney Lanier waterfront properties within the past 3 years" Said qualifications of any and all appraisers hired shall be provided to the Listing Agents in writing upon request."

That is awesome! I would suggest SELLERS rights are also protected in the contract, by stating that if the buyer signs an appraisal contingency in the contract, they should also REQUIRE an experienced appraiser in the property be it Lake, Golf Course, even a particular neighborhood. I would also suggest that in the case of a special property like Lakefront that the experience be even greater at least 10% of their work is completion of this type of appraisal over the past 1 year, not 3 years as things have changed over the last year as you well know. Many lenders are requiring that the property appraised by the appraiser is no more than 30 miles from the appraiser's office. I would suggest that you narrow that down and state that the appraiser must live in the SAME COUNTY as the property being appraised.

I can't tell you how many times a lender sends someone from ATLANTA to Lake Lanier to appraise that property and unless they have considerable experience on this lake, which most do not as their primary work is closer to the city of Atlanta (45 miles from Lake Lanier) you have a disaster waiting to happen when it comes to the appraisal!

So you DO have control and you need to start adding this type of language to every sales contract and making sure the BANKS comply because NOW it is in the binding sales contract. Trust me when I tell you that BANKS and especially the Appraisal Management Companies (see my previous post on AMC's) DO not care about competency of the appraiser. They select the one that can do it the quickest and the cheapest and if that happens your DEALS will fall apart on a regular basis.

Please pass this along to every Realtor you know, repost it, blog about it NOW. If you do then you can take control back on this HVCC law when it comes to appraisals on your sales deals.

If you have any questions about this new law,  let me know it is just around the corner.

Mary Thompson

www.marytappraisals.com

 

 

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Comments 1 New Comment

Rainer
60,637
Alix Pinzon
(562)743-6086
Open Mortgage

The worst result of HVCC is that any real estate recovery is going to be significantly slowed by this mandate.  Besides not know what the appraiser is thinking before he or she goes out to the property, there isn't an appraiser in the country that will make the extra effort to support the sales price, when they have no interest in the outcome.  There are positive aspects of it, but the disadvantages outweigh the advantages.  Most of the extra fees are being absorbed by the AMC's, and the end result is lower quality appraisals, and many experienced appraisers leaving the business. 

May 10, 2009 10:00 PM
Rainmaker
243,658

Kent Simpson

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