HVCC = The Home Valuation Code of Conduct
The focus of today's news centers around HVCC. I think it's important that you know about HVCC and how it can and WILL affect you and anyone you know buying, selling or refinancing a house. HVCC went into effect on May 1st this year, and is raising havoc with the already fragile housing industry.
The focus of today's news centers around HVCC. I think it's important that you know about HVCC and how it can and WILL affect you and anyone you know buying, selling or refinancing a house. HVCC went into effect on May 1st this year, and is raising havoc with the already fragile housing industry.
HVCC has removed our ability to communicate with appraisers about your loan transaction. We are forced to use a "lender assigned" AMC (Appraisal Management Company) to order your appraisal. These management companies are located all over the country. They charge appraisers a huge percentage of the cost of the appraisal, which has driven up the cost of the appraisal to you, the consumer.
AMCs are not licensed, and are therefore not regulated, and the lenders can even own up to a 20% interest in the AMC we are required to use.
The best appraisers are often unwilling to work with AMCs, so we are often left with inexperienced appraisers doing what our local appraisers used to do best - evaluate a home's value based on their experience and knowledge of real estate in your local area. Can you believe your appraisal for a home in San Francisco, for instance, might be valued by an appraiser in Kansas? Does this make sense?
The increased cost of the appraisal is not the only way you can lose money. Since we are now relying on unknown people to do the appraisal, we have no control over the time frame to get a completed appraisal back to the lender. This can cost you in time to close the loan, which can result in either losing your rate lock, or having to pay for lock extensions. (Typical lender charges for lock extensions = 1/4% of the loan amount for a 15 day lock extension). Are we now talking potentially thousands of dollars?
And, what if the seller needs the loan to close faster? Can this result in a lost sale?
If you are unhappy with the valuation these appraisers arrive at, for your home, or the home you want to purchase, there are additional charges for an appraisal review. And, of course, you guessed it - the person doing the appraisal review is unlikely to know anything about your neighborhood or even home value trends in your state!
AND - if rates drop during your transaction, loan officers cannot transfer your appraisal to another lender to take advantage of better rates for you. You are forced to pay for another appraisal to move your loan!
Best regards,
Shelby Bateson
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