Sunday, May 31, 2009

HVCC Sucks

Recently New York Attorney General, in an effort to raise his image, fight corruption and save the American consumer from themselves, went to Fan/Fred and created the Home Valuation Code of Conduct that all mortgage originators (big and small) must abide by. On the surface, it sounds great. Greater appraiser independence, less commissioned individual involvement. Without going into how Mr. Cuomo decided that appraiser's were blameless in the recent fraudulent housing sales (it seems that every fraud ring includes at least one), the fact that the one party, the Loan Officer, who knows everyone in the transaction is completely (and I mean completely) removed from the coordination of the appraisal is crazy. Who do you think everyone, buyer, seller, seller's attorney, buyer's attorney, buyer's agent, seller's agent and even in house operations staff is going to call when the appraisal hasn't been scheduled in a timely manner? You got it...the Loan Officer. The one person who literally can do nothing. The one person who doesn't know who the appraiser is, what is their email address or telephone number or any other information. And the one person that the 3rd party vendor (owned by the banks) won't speak to or include in the process even as a spectator.

The break down is in the logistics. Loan Officers are the 3 monkeys in this case (see no, hear no, speak no). And we are the only party who's sole job is the coordinate all the players in the process. I guess Mr. Cuomo didn't think that through went he ran to Fan/Fred with his brave new idea.

Another aspect to the HVCC, is if there is a mistake on the appraisal, say for instance the appraiser noted that the unit appraised was 4B when it should have been 4FB or E4B. We cannot make a quick call to have it changed, nor can we contact the 3rd party vendor to have it changed, no the (currently overworked, can you say refi boom?) operations staff is the only one who can have it changed. And who fields all of the complaints when this isn't done for 3 weeks? You guessed it, the Loan Officer.

I agree with the gist of the HVCC, Loan Officers (including Mortgage Brokers) shouldn't have leverage over appraisers on the valuation of the home. Appraisers have licenses that can be held over their heads (not to mention felony charges) on these issues. But for the Loan Officer not to have access to even the 3rd party vendor to make a correction, make sure the correct phone is on the order, follow up on a order that is taking 4 weeks, is lunacy. Now the pendulum has swung too far to the other side. If we, as consumers, want to have our purchase and refinance transactions close within our lifetimes, we're going to have to have some Loan Officer input.


Anonymous said...

The owners of the AMCs are the very same banks that are making the loans. No corporate independence = monopoly = poor service

Anonymous said...

Who is this guy? : FiveMZNYC
"I'm a Mortgage Banker specializing in the New York City market focusing on Cooperatives, Townhouses and High-Rise Condos."
IF you were a Mortgage *Banker* you could have full contact with the appraiser, no need to go through an AMC, so you must be a Mortgage BROKER.

FiveMZNYC said...

I agree with the lack of corporate independence with the AMCs, though I suspect that banks are going to have to use AMCs other than the ones they own, at least in the short term.

FiveMZNYC said...

You are incorrect, I work for a very large banking institution. If you take a closer look at the HVCC, you'll see that I, myself, do not have direct access to the appraiser as I fall into this category (the following is direct quotation from the HVCC as linked in my blog post):

"All members of the lender’s loan production staff, as well as any person (i) who is compensated on a commission basis upon the successful completion of a loan or (ii) who reports, ultimately, to any officer of the lender other than either the Chief Compliance Officer, General Counsel, or any officer who is not independent of the loan production staff and process, shall be forbidden from: (1) selecting, retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or for inclusion on a list or panel of appraisers approved to perform appraisals for the lender; (2) any communications with an appraiser, including ordering or managing an appraisal assignment; and (3) working together in the same organizational unit, or being directly supervised by the same manager, as any person who is involved in the selection, retention, recommendation of, or communication with any appraiser. If absolute lines of independence cannot be achieved as a result of the originator’s small size and limited staff, the lender must be able to clearly demonstrate that it has prudent
safeguards to isolate its collateral evaluation process from influence or interference from its loan production process."

Anonymous said...

I’m a licensed appraiser AND have been involved in a personal FHA refinance that has taken almost SIX MONTHS-because of this mess-the first appraisal was fine-the second was a drive by ordered automatically by some hack who didn’t account for basement finish because it wasn’t in the tax records yet. This issuer used to be resolved with a phone call and a reinspection a day later-because of HVCC it took over a month-with me making daily phone calls. It only happened that quickly because as an appraiser I knew the issues involved and who the appraiser was and how to call her. (then to top it off the hack appraiser-who the broker wouldn’t have used for this very reason-changed her value by over 15%-adding even more of a mess) On top of all this I’ve lost some of my biggest clients to new “lists” that they didn’t get to make and aren’t happy with. And when you throw in the fact that people are now paying $400+ for an appraisal that takes two weeks-and the appraiser only get’s $200 of that-the public are the ones getting the shaft.