Regina Corcoran's - "Pursuing the American Dream"
Sunday, May 17, 2009
HVCC

By Regina Corcoran Special to The Citizen

HVCC. It sounds like something not to like right off the bat. Could it be related somehow to HVAC? HIV? H1N1?

The acronym stands for Home Valuation Code of Conduct. That just says it all, doesn't it?

As of May 1, 2009, "institutions that deliver loans to Fannie Mae or Freddie Mac must represent and warrant that the appraisals obtained adhere to the requirements found in the HVCC regarding appraisal management, ordering and review by lenders."

It's no revelation that fraud exists in every industry. In the mortgage industry, and by extension the real estate sales field, more often than not, to develop a good scheme, an appraiser component is necessary. How many "flipping" stories have we read about in the recent past? Every one of those transactions required the co-operation of an appraiser.

Too often, I have had to shake my head and roll my eyes when I heard a real estate salesperson say, "I can get you an appraisal." Payback is here. It's not pretty. We will all suffer the penalty.

As of May 1, those of us who originate loans may no longer order an appraisal. We must place an order with an "Appraisal Management Company." These Appraisal Management Companies, or AMCs for short, maintain rosters of appraisers. The AMC will select an appraiser from its database.

An AMC has assigned appraisers for our company three times so far. Trust me, there are some kinks to work out.

The first time, the selected appraiser called our borrower. He was requesting access to the property. Our customer had no way to grant access. She was the buyer. She didn't know the seller, or for that matter, even the listing agent.

Oh, and by the way, the appraiser was also seeking a "pay by phone" type check or credit card for payment. Our loan applicant couldn't understand what he was saying. She could only make out his first name and his phone number.

With that information, I searched the state of Florida database for certified appraisers. The AMC had given the assignment to an appraiser in Fort Lauderdale. Strike one.

How does an appraiser drive eight hours round trip to appraise a property in the Keys for $315? Don't forget, the AMC gets a significant chunk of that fee, too.

Bear in mind, it's more than just measuring and photographing and reporting on the subject property. That appraiser has to research and select four comparables. New requirements call for an additional pending sale and one listing.

Imagine the appraiser making this eight-hour trip, having already selected his six comps (heaven forbid they don't work out). He or she examines the subject and then drives to the comps and photographs them. The appraiser returns to the office and finally completes the written report.

I think to be a Publix bagger would be more profitable.

Did I mention the subject property is a duplex on the water? Strike two.

How many Monroe County appraisals do you suppose that appraiser has completed? How many duplexes on the water do you think there are in Monroe County? That appraiser's first question was probably "the Keys? Do I need a passport to go there?"

What folly led the AMC to hire an unqualified person to drive three counties away and evaluate a rare property?

When I checked that appraiser's license at www.myflorida.com I learned he already had three complaints filed against him. Strike three.

These are issues we loan originators will be struggling with in the near future.

Our Florida Real Estate Appraisal Board has no provisions for control over AMCs. The AMC is not located in Florida. They don't even know how stupid it was to hire an appraiser from a totally different market to appraise a unique property in the Keys.

How in the h-e-double-hockey-sticks does this protect the consumer? Fannie Mae? Freddie Mac?

HVCC tells me that I may not order an appraisal anymore. Still, it does not prohibit me from refusing to allow a particular appraiser to complete the report. However, I think we need to deep-six HVCC.

What do you think?

Regina E. Corcoran, SRA, is a Florida real estate broker, state-certified residential appraiser and residential contractor. She is president of AmeriRealty Corp. and vice president of AmeriMortgage Corp. She can be reached at ReginaECorcoran@cs.com. Corcoran writes her column exclusively for The Citizen. It appears every other Sunday.