HVCC Wins Again – But Help is on the Way

I’m not sure how to say this without making myself unpopular, so I’ll just go for it.

HVCC is here to stay.

I’ve written before, several times now, on the Home Valuation Code of Conduct (HVCC), which has been widely blamed for depressing home values and causing borrower and buyer and seller and Realtor and mortgage professional frustration since it went into force on May 1 of this year.  There has been what appears to be a huge outcry over the Code; there’s a petition to get rid of it that has over 75,000 signatures, and there’s a bill in Congress to institute an 18-month moratorium.

None of this makes any difference.  Want me to outline the reasons?

1. 75,000 people sounds like a lot, until you realize that it isn’t enough people to fill up the Big House at the University of Michigan on Saturday.  Spread that over the entire country, and it’s 1500 people per state.  That’s an irrelevancy.

2. HR 3044 was introduced by two of the most obscure memners of Congress.  This is never a positive.  It now has 91 cosponsors, which sounds like a lot, until you realize that cosponsors don’t mean very much.  Congressmen cosponsor most anything that gets introduced, if they think it will give them cover.  HR 3044 is perfect for this, because it makes it look like Congress is doing something when, in fact, it isn’t.  The bill is stalled in the House Finance Committee – hasn’t even been assigned a subcommittee yet – and isn’t going anywhere.  Paul Kanjorski (D-PA), who is on the Finance Committee, has his own bill that has passed the House twice already, and that’s the one the Committee is backing.  Read it.  It doesn’t do anything at all with HVCC.

3. When the momentum is this heavily toward increased regulation, there is no practical chance that any restrictions on the mortgage industry will be lifted.  Since we all talk to each other all the time, we get this sense that the whole country is opposed to the HVCC and that the momentum is to get rid of it.  Then FHA institutes its own HVCC-like language, and you realize that you’re getting a false picture of how things really are.  Washington is spending thousands of man-hours a week finding NEW regulations to place on us, and you think any effort will be wasted on removing some?  That’s delusional.  If there really were any pressure to pass the moratorium, or to get rid of HVCC altogether, what do you think the chances are that the bureaucrats at FHA would be patterning their own parameters after it?

4. Not even everyone in our industry is opposed to the HVCC.  I’m not, for instance.  I like most of it.  There are parts that I think need tinkering with – I’ll talk more about that later – but on the whole, I think it addresses a serious problem.  I’m far from alone.  Yesterday there was an excellent article by the inimitable Marcie Geffner about how repealing the HVCC would be a step backward, and this was echoed in the comments, especially notably by two long-time professional appraisers that like the HVCC and what it’s done for them.  I have letters from appraisers that praise the AMC I use – these are quite important to me – because their lives have been made easier since the HVCC went into force.  Saying that you like the HVCC is about on par with saying George Bush was a decent President, so most people, even if they think that, keep their mouths shut.  This doesn’t mean there aren’t any people that do.

When I started writing about this back in the early summer I predicted not only that there would be no repeal, but that the FHA would institute its own version of HVCC before long.  Last Friday, FHA released new appraisal restrictions that are almost word-for-word out of the HVCC, exactly as forecast.  I confess that I cheated when I made the prediction; I had actually spoken to people in Washington DC that knew what was going on (I know, I know, bloggers are supposed to make wild, unsubstantiated guesses about things, not do actual research).  Since then, I’ve done more discussing, and I have an idea what the next HVCC-related event is going to be.

It’s okay, you’ll like this one.

It concerns appraisal portability and the use of AMCs.  Before too long – I’m forecasting by early next year – there will be a national registry of AMCs.  At that point, Fannie/Freddie will institute a regulation that a lender must accept an appraisal performed by any registered AMC, which mirrors the way things used to be, where as long as an appraiser was licensed under the state laws where the loan was to be done, the lender could accept the appraisal.  Seems a small change.  But it isn’t.

The biggest problems mortgage and appraisal people have with the HVCC are caused by bad AMCs shorting appraisal fees and causing crappy appraisals to be generated.  Good AMCs – and there are some, I use one – don’t do this.  The good AMCs would, in a free market, kill off the bad ones.  Appraisers would insist on full fees, and only the good AMCs are paying them, so appraisers would only work for the good ones and the bad ones would die.  Most of the problems with HVCC would go away.  Once this regulation appears, we’ll have a much free-er market in appraisals than we do now, and a great deal of normalcy will return to the market.

For those of you that have spent a great deal of time and energy protesting and rallying the troops to get rid of the HVCC, I strongly recommend that you use your time to do something else.  Lobby for a free market in AMCs instead.  For you appraisers, help is on the way.  Call the Appraisal Institute and tell them to lobby for an AMC registry, so we can get back to being able to sell appraisals to anyone, instead of a restricted few.

It’s going to get better.  Eventually, it’s going to get better.  I promise.

One Response to “HVCC Wins Again – But Help is on the Way”

  • Vincenzo says:

    Hello there are using WordPress for the site system? Iam new to blog planet nevertheless. Iam trying to find started out and hang up my own, personal. Furthermore, i found out about Drupal is okay. Sees my choice…. Helpful article, cheers.

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