NAR Survey Shows Negative Impact of New HVCC Appraisal Guidelines

The National Association of REALTORS® just did a survey of members and appraisers regarding the new Home Valuation Code of Conduct (HVCC) appraisal guidelines. The results confirmed what I and others have been saying since May – the HVCC has made the appraisal and entire real estate transaction process longer, less accurate and more costly to consumers, agents and lenders alike.

Here’s a copy of the survey’s results (click here if you don’t see the embedded document below)…

NAR HVCC appraisal survey results –

In a nutshell, the new HVCC appraisal guidlines have,

• increased the length of time it takes to close a transaction
• increased the cost of the appraisal to consumers
• decreased the quality of appraisals (which has also lead to deals falling through)
• decreased the amount of money appraisers are making per appraisal

Many agents and brokers including myself are sharing our clients’ as well as our own frustrations with the powers-that-be in an effort to get the guidelines revoked or changed immediately. If you’ve had a bad experience thanks to the new HVCC appraisal issues guidelines since May 1, please leave a comment or drop me a line so I can forward it up the food chain (anonymously if you’d like).

How New Appraisal Guidelines Will Affect You

The way appraisals are done and handled is changing dramatically thanks to the new Home Valuation Code of Conduct (HVCC). Rhonda Porter wrote a good post explaining the changes over at Rain City Guide. Here’s an excerpt:

In a nutshell, mortgage originators (if paid commission) will no longer have contact with appraisers for conventional mortgages.  Appraisals will be ordered via an appraisal management company–oddly similar to what Washington Mutual used before New York  Attorney General Cuomo investigated.   Although this is effective for loans delivered to Fannie/Freddie on May 1, 2009 or later, lenders will adopt the Code well in advance in order to be able to deliver compliant loans.

The good and the bad of the new appraisal guidelines…

Good

• Appraisers and lenders have distance put between them creating less opportunities for lenders to push appraisers to “hit the number” (aka inflate the appraisal price to meet overvalued sales prices).***
• This will create decreased risk for lenders which will help keep interest rates lower (in theory)

***Fannie Mae amended their guidelines in January of this year allowing appraisal management companies to be owned by lenders. (?!)

Bad

• There’s a lot of them – just read Kenneth Harvey’s article in the Washington Post, “New Appraisal Rules Comes With Costs”
• Though many of the changes will directly and immediately affect appraisers and lenders,  things will trickle down and may start negatively affecting consumers as well.