Buyers Pay More $$$ for Slower and Less Accurate Appraisals With New HVCC Rules and AMCs–DRAMA!
So the new HVCC (home valuation code of conduct) came out May 1, 2009 and have had a profoundly negative impact on consumers, appraisers–at the least the best, most established ones, real estate agents and sellers. yes you heard that correctly–sellers are being hurt by this overreaching by a federal bureaucrat Andrew Cuomo who himself received big $$$ from AMC (appraisal management company) interests.
Now most large lenders are being required to use AMC–appraisal management companies–to get appraisals done. The AMCs are a 3rd party–an extra layer of bureaucracy for consumers to pay for and wait for–through which lenders now order appraisals. The lender contacts the AMC who then delegates the appraiser to whoever is next on the list. This is to prevent lenders from directly hiring and influencing appraisers. Aw, isn’t that special–Freddie/Fannie are protecting buyers from lenders unduly influencing appraisals/appraisers? Well in case you hadn’t noticed, subprime loans and bloated appraisals stopped about a year and half ago. Now lots of appraisals come in low–often to the point of absurdity–so these new rules are endeavoring to protect consumers against a non-problem. Banks are protecting themselves now with very stingy appraisals it seems–not that they control appraisals but it has definitly changed on its own. Getting personal loans is still not that easy.
Specs on How Consumers Are Being Screwed by AMCs and HVCC rules
- now buyers pay $425-450 for their appraisals–usually up front now–rather than $350
- buyers can no longer–at least almost never–take their appraisal they already paid for to a new lender. Instead they’ll have to order a new appraisal with their new lender if they change their minds….
- instead of getting that appraisal in a week or so now buyers and sellers get to wait 2-3 weeks for an appraisal to get done
- often the appraisal is sloppy and needs to be corrected from admin/form errors, etc. or the appraiser has to work on file again and turn it in
- in the process of fixing the appraisal more time is lost
- many of the appraisers are new who are working for cheap because the appraisers are now being paid much less $$$ for an appraisal so the most experienced and most productive appraisers are in many cases leaving the business or refusing to sign on with AMCs–appraisal management companies who have to find appraisers who will work for a much lower fee
- these appraisers who are working for such reduced fees are often new, inexperienced or not all the way licensed yet
- these appraisers associated with these AMCs are often from far away and know nothing about your local real estate community and the nuances thereof in terms of home values so often the appraisals are not accurate period compared to before
- again all of this is costing so much more money to buyers and now it takes much longer to get the appraisal and you just cross your fingers hoping this appraiser–working for much less $$$ to get referred the appraisal by the AMC–does it right the 1st time….
- lenders cannot communicate with the appraisers so coordinating and solving problems takes FOREVER!!!!!!!! It slows down the process so much and is mega frustrating from a selling agent’s (buyer agent) perspective as my buyers are being hit in a negative way by these new screwels–I mean rules.
- since lenders can no longer FIRE appraisers for bad or late work, there is no accountability. This is at the heart of the problem. Lenders used to have relationships with the best appraisers who were most professional. Now those are wasted and lenders cannot demand excellent work anymore. Of course quality was doomed to go down.
Examples of HVCC Chaos in my Personal Business
Appraiser shows up finally after at least 2 weeks to do appraisal. The listing agent and Seller are angry at me because appraisal has not been done yet and he needs money to buy his new co-op in NYC. Finally appraiser comes by. A week later still no appraisal turned in. In fact 10 days after the fact we have to get another appraisal done because the first appraiser is missing in action period—even the AMC that hired him has no idea what happened to him….freaky, eh?
I was under contract personally on a home a few doors down from my best friend. The appraisal is done–at least we thought. And very close to closing we find out the appraisal was not done–weeks later mind you–because water was not turned on during his first trip out there. Well he could have let us know there was a problem sooner than right before closing. Then we’re supposed to be closing on Friday and he turns in a photo with broken window in master bedroom the day before. With an FHA loan that does not fly. The window must be fixed before the loan can be funded, remember to get yourself out of a financial hole before getting into a new one. My gosh!##@!#!!! you freakin’ schumuck!!!! You’ve had this photo for a month and you dump it on us–me, my wife, my lender and the sellers–the day before we’re scheduled to close.
In the past–before these idiotic HVCC rules by bureaucrats who as a class helped us enter the subrime mess in the 1st place–the appraiser would have called the lender immediately a month before and let him know there was problem and it would have been fixed. That’s how the communication was before–efficient and problems were solved in real time so that everybody–buyers, sellers, agents, lenders–were much better served. Now lenders do not communication with appraisers and everything moves at a snail’s pace….