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Predatory lending is now even easier and banks are taking full advantage!


Banks in your back pocket

On May 1, 2009, the government put in to place the HVCC appraisal law which stands for HomeValuation Code of Conduct, which was supposed to help to keep agents and mortgage brokers from being able to talk to appraisers and keep them from swaying the value they put on a home.

But, within that law, there were some things put in by (I’m guessing) some very smart bankers. Now I believe they are being very predatory, almost even more than they were two years ago.

No ,I don’t own a tin foil hat, but they are starting to look comfortable. You see, one of the lines in the new HVCC law was that once the appraisal is ordered it can’t be transferred to a new lender and another appraisal would have to be ordered.

What good does this do forthe consumer? It keeps their mortgage broker from shopping for a better loan with a lower rate. Because even if they found a better loan, that mortgage broker and buyer would have to start the whole process over again and pay for another appraisal and ask for an extension that the seller, more than likely, won’t accept.

So, now that the buyer is stuck with a loan that isn’t the best loan for them and there is nothing they can do. They sit and wait for their close with the irinterest rate lock date slowly getting closer and closer.

I’ve looked at my company’s books over the past month and a half and what I discovered was of the loans that were required to use HVCC approved appraisers only one of them closed on time. All the others closed anywhere from 22-47 days later than their scheduled closed date.

Now, here is where the fun begins…

In talking to every one of the agents in those deals, every one of those buyers lost their interest rate locks during those 22-47 days and now were stuck paying anywhere from 3/8 to acomplete percentage higher than they would have if they had closed on time. That, to me, is the meaning of predatory lending. The worst part is they could have possibly saved even more if their mortgage broker could have found a better loan during the time of inspection and close. But because of the HVCC law, they were unable to do that without adding additional cost and time to the close.

So, is your bank taking advantage of your clients by using the HVCC law and other underwriting delays to make buyers lose their lock?


Respect Realty LLC (Expect More)


At Respect Realty, LLC our agents believe in 100% dedication to client satisfaction.  We specialize in property and land acquisition around the Portland Metro and Vancouver, WA area. We delight in working with first time home buyers and sellers to guide them from start to finish. Our doors are always open and we are always happy to assist you with your real estate questions.


Reach out today, we look forward to talking with you!


Todd Clark and Seraina Aguayo (Owners of Respect Realty)

Respect Realty LLC (Expect More)



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Comment balloon 61 commentsRespect Realty LLC • June 24 2009 11:31PM


Very interesting. I haven't done this type of research, but it's great to have a heads-up. Wonder where this will go? It's too soon to say "it's broke, let's fix it".

Posted by Vickie Nagy, Vickie Jean the Palm Springs Condo Queen (Coldwell Banker Residential Real Estate) almost 10 years ago

I think this is just one of many problems with this law.  The only ones to gain are the banks --definitely not the consumers.

Posted by Gary Coles (International Referrals), Latin America Real Estate (Venture Realty International) almost 10 years ago


This law curred a non-problem. The unintended consequences are going to cost the consumers big time!

"The only protection the consumer has is the personal integrity of his loan originator!"


Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) almost 10 years ago

Todd - This is absolutely evil.  Thanks for doing the research and tipping us off to this. When it comes to banks - our pain is their gain. 

Posted by Laraine Shape, Selling kitchen at a time (Comey & Shepherd Realtors) almost 10 years ago


You may actually be figuring out the banks and how they are tricking the government in to doing exactly the opposite of what should be done for their own gain. The government is so worried about image and how they can make everything better, they are willing to vote anything presented them without actually doing the research on said fix.

Posted by George & Arlene Paukert (Road to Wealth, Inc.) almost 10 years ago

I guess I didn't think the lenders were doing this on purpose but the delays are getting to be the standard. I sure hope customer service and the urgency of a family waiting to move to the home they have purchased become a little more important soon.

Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) almost 10 years ago

They could also be called NONLENDERS - taking into account after 6-10 weeks of waiting for that CLEAR to CLOSE - They kick you to the curb at the last minute after consuming all the time in your contract leaving the buyer angry and broken hearted, and NOT BUYING A HOUSE!

Posted by Marilyn Harrell, Wixom Lake - Beaverton MI (ReMax Riverhaven) almost 10 years ago

One more comment, the BANKING industry is obviously WAY SMARTER than our government - how else did they end up with ALL THE MONEY - and STILL WON'T APPROVE THE LOANS for the buyers ! Our government has been put to shame and someone in the banking industry (THE UNDERWRITERS?) are _______________________ . I'll let you fill in the blank!

Posted by Marilyn Harrell, Wixom Lake - Beaverton MI (ReMax Riverhaven) almost 10 years ago've seen me post on this as well.  This is such a robbery.  THere's now lender steering b/c most lenders want their clients to go FHA now b/c of all the headaches with HVCC.  Here's two more things.....1)  Appraisers are jacking appraisal costs (and you can't fire an appraiser b/c of how much they charge under HVCC), so I now order my FHA appraisals from better appraisers; 2)  Appraisers are charging for stopping by the clients hous and not finding the client there even if an appointment wasn't set.  Just B.S. if you ask me.  It all rolls downhill and the consumer is footing the bill. 

One more real true story....appraiser from illinois goes up to appraise property in Milwaukee and blows the deal.  Only puts down 2 room house when photos clearly show 4 bedroom house.  This happened more than once.

Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) almost 10 years ago

Todd - They've added another layer of profit, the cost of the services.  They've doubled the cost of the appraisal in our area, and have made the appraisers bid to get the job.  They say it is on a rotation basis, but they are really going for the cheapest bid.  Appraisers used to charge $350, or so in our area.  To get the job with the service on a normal property they bid $180.  They can't make a living at that.  If it is a complex job that they would charge more for the same ratio applies.  Who pays?  The consumer!  The same appraisers that couldn't get work before are working for cheap so what do you have?  The lousy appraisers are now getting the work and their work is inferior ... as evidenced by the appraisals we are getting.  The whole thing is costing consumers real money, causing many delays, and rocking our industry unnecessarily.  Keep your torch lit bright and held high on this!

Posted by Jim Valentine (RE/MAX Realty Affiliates) almost 10 years ago

Great info!! And now with the new TILA law taking effect 7/30/2009 and more disclosure time required, we will see more and more delays and more ratelocks blown. If the Appraisal triggers and increase in anything (fee or rate) above .125% there is a mandatory 7 thats SEVEN days to rediclose before they buy can sign.

Posted by Steven Fishman almost 10 years ago

DO something about HVCC!  Visit this site and sign the petition to STOP HVCC!

By the way it is not a LAW, but it is a policy that Fannie Mae and Freddie Mac were pressured into implementing. 

Watch the video

Forward this info to your database of clients and professionals, together we can stand up and show how HVCC is hurting more than it helps!


Posted by James Mucci (Orion Lending) almost 10 years ago

Since HVCC, I've had 2 closings delayed & one appraisal using ridiculous comps.  My 2 story newer completely redone (roof, siding, etc) listing was compared to a much older ranch that needed work in a different neighborhood.  There were better comps, but the appraiser said those "sold too high".  I kid you not!  "Sold too high!" WOW.  There was nothing we could do about it.

Is this the change we wanted?

Posted by Nan Gagliano almost 10 years ago

Hey there Todd, Congrats on the Feature...I am going to have to call my contact at ResDirect, because I THINK...I dont know, but I THINK, there is one loophole out there..regarding using an appraisal from a 3rd party vendor.  I will check and come back to this comment. 

If the FUNDER/BANK..etc...happens to ACCEPT the appraisals from the SAME 3rd party vendor then I believe it is okay>..Now, the odds are slim that they utilitze the same ones...For example, RESDIRECT, who is WELLS FARGO's main company, utilizes LSI & RELS to do their appraisals.  IF and only IF Taylor Bean & Whittaker had LSI or RELS approved with them, then I believe THEY CAN utilitze the appraisal.  The other thing that CAN be you can truly submit any appraisal TO THEM ...but either your lender overlays, or the UNDERWRITING dept, can request a REVIEW of the 3rd party an ADDITIONAL PREPAID cost to the borrower!

Yes, this sucks...yes, this is ugly, and yes this is WRONG!!!

Thanks again...  Darin

Posted by Darin Osenberg (Funky Quail Vintage) almost 10 years ago

HVCC is just plain bad. There are so many arguements against it, its become almost redundant to go over them time and again. Its clearly a knee-jerk over-reaction to a problem that is hopefully behind us. If you haven't signed the petition yet, its time to get out there and get it done!!!

Posted by Scott White, VP at Guaranteed Rate, NMLS 82835 (Guarateed Rate, NMLS 2611) almost 10 years ago

I agree with you that HVCC has created a lot of serious issues within the industry but I recommend you research how this even came about.  This was not something that Congress enacted nor did Lenders dream up.  it started with a high ranking official in New York basically forcing Fannie Mae & Freddie Mac to implement new policy that Lenders had to start following May 1, 2009.  That's why we don't have to follow these procedures on government guaranteed loans.  If you want to play a role in trying to help fix this check out the following website:


Posted by Darrel Cunningham (Express Mortgage) almost 10 years ago

I feel the pain as a loan officer trying to represent my clients in the BEST capacity.  This HVCC law has given the appraisal mgmt firms and the banks real power.  When I price out a loan now I can nolonger think best rate, but the following below.

1. Does the lender require their own AMC or can I use my AMC?

2. Who can get my loan done within 30 days?

3. What appraisal / DTI overlay do I need to be concerned with?

4. What are the costs of an extension if needed?

5. How much will my appraisal cost?

It used to be that my appraiser who is one of th best would tell me if a deal could be done or not and I do not mean jacking the appraised value or manipulating the system.  If the house has issues, doesnt meet guidelines, or was over priced I could educate my borrower.  Now everything is up to the interpretation of the lender and the AMC.   Not trying to rock the boat but this market has swung to the absolute extreme and the borrower is gaining nothing... 


Everybody have a good day and lets hope things will get better down the raod and HVCC goes away.  The lenders have many ways to determine true value and HVCC helps nobody!

Phil Olson
Sr. Mortgage Planner
Cottage Grove, Mn



Posted by Phil Olson, NMLS 238103 (AMEC Home Loans ) almost 10 years ago

Well, at least we still have Barney Frank and Chris Dodd there to protrect the consumer!  NOT.

Posted by Pat Dunphy almost 10 years ago

LUV the twist.  I have had 3/5 HVCC loan prone escrows close on or before lock expiration (and contracted date) in the last month.  Two appraisals came in low, one appraiser went on vacation right after the appraisal was completed but before the reinspect (mere days later) and the third party company refused to reassign it to a new appraiser - they lost their lock.  Only because HOA demands weren't taken care of by title/seller/list agent BUT if we didn't have to wait so dang long for the appraisal start to finish (April 27 ordered, May 28 completed) we wouldn't have had the lock issue.

Buyers are being set up for failure all the way around.

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) almost 10 years ago

I just had a buyer back out on one of my listings right after the appraisal was done and the exact same appraiser was ordered for the next buyer, not even a week later and the new buyers were charged another full fee.  How lame is that?

Posted by Anonymous almost 10 years ago

This is interesting indeed.  Shorter closings are a thing of the past and even 30 days closings may be a real challenge.  I understand the new rule/law will have all appraisals ordered through a national company and then routed through to the appraisers.

What I am really curious about is how the new H.E.R.A. , Housing and Economic Recovery Act, will impact our business.  It looks like things will only get more difficult for all of us in the biz.

Posted by Russell Benson (Berkshire-Hathaway HomeServices/Anderson Properties) almost 10 years ago

Great post Todd! While I can't stand HVCC just as much as the next Realtor or broker, the issues your agents ran into with their brokers could have been avoided all together. Knowing that appraisals are going to take anywhere from a week to a week and half with HVCC, brokers "SHOULD" be educating their borrowers and advising them to lock in for at least 45 days. While no, this will not give you the best rate at the time, it does secure that you don't end up jacked in the end.

As far as the whole issue with rates getting better and flipping loans and so on...that is a thing of the past. Brokers should be doing their job to advise the client that if they lock in their rate, they are locked in. There is no flipping to another investor for a lower rate. Investors will cut brokers off for lock fall-out and if your pull through ratios are not up to par. Losing investors today is suicide. You need all your possible resources as a broker these days or you just won't make it.

Tell your agents to work with their lenders together to both convince the buyer to either lock in for an extended period of time like 45-60 days or float the rate until you are about 30 days out from closing (generally after the appraisal comes in).

Good Luck - Death to HVCC!

Posted by Joshua Lerette, Tampa Bay's #1 Trusted Mortgage Specialist (Tampa Bay Florida FHA, VA, USDA & Jumbo Mortgages) almost 10 years ago

The solution is to do FHA loans if possible. No HVCC required.

Posted by Britt Little almost 10 years ago

Every one of us should be sending a letter to our Congressional Reps and Senators. I am prepping mine as speak.

Posted by Eric Johnson almost 10 years ago

None of mine are closing on time due to appraisal or underwrting delays. My lenders are not happy with HVCC. They used to be able to call an appraisor they knew would get the job done right away if they had short lead time, now they have no control. And if the appraisal is not being done in a timeley fashion, they are not even allowed to call the appraisal company to find out why. This is not helping the buyers or the sellers in any way.

Posted by Pat Bittner (Prudential Ambassador Real Estate) almost 10 years ago

Wow. This sounds like pure deviousness on the part of the banks. Thanks for alerting us to this. But what can we do about it?

Posted by William James Walton Sr., Greater Waterbury Real Estate (WEICHERT, REALTORS® - Briotti Group) almost 10 years ago

Yes - HVCC needs to Change!!! I personally believe the issues you bring up are issues Lenders have with the system also.  If your in the business you should realize the lenders pay up front for locks and it cost them money everytime a lock expires.  Who makes money everytime a new appraisal is ordered?  The Appraisal Management Company (AMC)!!!  Below are the issuses that I believe need to be changed and why:

The Home Valuation Code of Conduct (HVCC) appears to be counter productive to the Obama Administrations position because the Administration is spending Billions of Constituent Dollars to stabilizing home values!!!

We must try to change this appraisal nightmare created by HVCC before it destroys any chance of stabilizing home values in all neighborhoods, whether they are very stable neighborhoods with very few sales comparisons, or neighborhoods riddled with “REOs” and “Short Sales”. Thus, delineating a historical sales market composed of a few willing Sellers, but mostly liquidators (i.e. REOs & Short Sales).

Jim Amorin’s, president of the Appraisal Institute, reflected the need for change before the U.S. House of Representatives’ Financial Services Committee when he said: “The Institute believes HVCC has too many shortcomings”.

HVCC appears to have fostered appraisals which are nothing more than glorified automatic valuation model-generated (AVM) estimates of value because their being done by appraisers from outside the local neighborhoods who have at best a limited knowledge of local issues affecting value. My 38 years in the Real Estate Industry has provided some insights I’d like to share to help mediate the glaring short comings of the appraisals currently being performed under the HVCC directives:


     Assign only local Appraisers when possible.


    Appraisers adjusting for local issues effecting comparable value Appraisers adjusting for types of

    non-comparable sales, i.e.: “Market Value” is determined between willing Buyers & Sellers.

   “Market value” isn’t determined by “as is” REO & Short Sale liquidations.

   “Market Value” has to be adjusted by the systemic risk of a “hold harmless” agreement in REOs which is

    being reflected in the Market.


    Increase the 90 day comparable window back to at least 6 months.


    Assigning appraisers by rotation with no regard to proximity to property.

    Adding time to appraisal process – providing less time for the appraisal.

    Reduced fees to Appraisers resulting in inaccurate appraisals by rushed professionals or assigning

    cheap, novice Appraisers.

    Driving honest Appraisers from the profession, eliminating competition, increasing costs to consumers

    and reducing State & County revenues.

    Selection of appraisers causing value inconsistencies, time delays and increased costs because of “rate

    lock” extensions or higher rates

This continual appraisal battle is creating great stress and financial hardship to all our constituents, whether they are refinancing, selling or purchasing!!!

Posted by Jumbo Dan almost 10 years ago

I get a little sensitive when someone wantonly blames the "Big, Bad Banks", or any other major industry when new regulations appear to favor them.  In truth, HVCC is bad for everyone except a few lesser-qualified appraisers who agreed to take a lower fee for work from the AMC's.  Wells Fargo and other major banks have successfully used a from of this for years - the intent being to limit outside influence on the appraisal.  Mostly, it has worked okay, but the new HVCC rules are causing serious issues where there really weren't any. 

An earlier post identified a high-ranking official from NY State as the promoter of this rule, and that is correct.  To suggest that the "big banks" had someone in bed with this is ludicrous. 

Another earlier post mentioned HERA/HOEPA.  This will have an even bigger impact than HVCC on getting to the table faster.  To me it's just more of the same - when government gets on its high horse about "protecting the consumer", it usually backfires.  All industries have their bad players, but those of us with integrity - we who understand that without the customer we don't eat - will always do business in a way that precludes the need for ridiculous regulations and rules, which ultimately cause more harm than good.

Posted by Brian Bortz (Heritage Home Mortgage Group, LLC) almost 10 years ago

Okay guys...I'm an appraiser and we are definitely getting the shaft...from the government and from the AMC's. My normal appraisal charge is $400 and $425 for an FHA loan.  The AMC's are asking me to take anywhere from $210 to $325...$325 isn't bad...but how many of you would want to see your fees decreased by almost 40% for this next year?  Thank goodness I work for a couple of good banks that have an "appraisal desk" that they order their appraisals through.  The AMC's are the ones "jacking" the prices of the appraisals...they keep anything over the $210 they pay some are keeping $190 for just being a "middle man".  I have no clue what the AMC is charging the client.  They ask us NOT to include an invoice in our report...guess why...they don't want the client to see what the appraisal cost at $210 and then be asking why they paid $425 instead.  I have been getting lots more FHA appraisals lately, as well.  I just can't believe there are appraisers out there that are willing to take takes me twice as long to do an appraisal as it used to becuase of all of the additional research for the 1004MC now.  It takes me longer to do the appraisal and I get paid less...what's wrong with the picture?  I don't know how any appraiser can crank out an appraisal in a day...there is no physical way possible...and some of the AMC's put short turnarounds down so they can get them back in less than 3 days.  I work with one AMC and it pays $325...I have had others contact me to work for $210 to $260 and I turned them down.  My time is worth more than $10.00 an we are now required (in most cases) to have E&O insurance at a cost of $600-1200 per year depending on coverage...we pay for MLS each month, we pay for a SUPRA key each month, we pay for our software each year, we have to pay Real Estate Association Dues to have MLS and SUPRA, we pay for GAS to go do the appraisals...good I breaking even???  I agree that lots of the appraisers working for AMC's are either new or the ones that couldn't get jobs anywhere else in the past.  I know most of the appraisers at my NAIFA meetings were not going to sign up to work for AMC...

I was signed up with RELS and they told me I couldn't "raise" my fees.  I told them I could becuase I am still an independent fee appraiser and what they were doing was price fixing.  They agreed I could keep my fees at my regular price.  Of course, I haven't gotten a single appraisals from them.  Then I got an e-mail that they were taking me off of their list becuase I wasn't competitive in my pricing...I would say I wasn't competitive in THEIR pricing, personally.  Oh's a big mess. 

Good luck to all you LO's and real estate agents.  I truly believe the majority of folks are decent honest was just a few bad apples that spoiled the whole thing and now the client is having to pay the well as me, the appraiser...UGH!  I also have my real estate license...maybe I need to switch fields, huh?



Posted by sharon arnold almost 10 years ago

There are fixes for this problem.

1. Use lenders you know and trust. 2. "Fire" the ones who don't perform 3. Monitor their performance. Do you know the correlation that exists between 30-year bond yields and mortgage rates? If you do, then you can see when a lender is gouging. 4. If an appraiser makes an appraisal on a four bedroom, calling it a two bedroom, first, file a complaint with the governing body and next, suggest a law suit for malpractice and the cost over the life of loan for the loss of locked in interest rate. This will clean up the pool very quickly. Appraisers are not perfect, but the ones who gouge and are negligent need to be eliminated. This hold true, in my opinion, for agents and lenders too.

Posted by Steve Toker (Coldwell Banker Kinard Realty) almost 10 years ago

I have to agree with Joshua.

As a former lender I still keep up on the current lending guidelines and with the passage of HVCC I thoroughly advise my client the same way- Lock in for 45 days. In fact, some banks I used to deal with don't even lock for less than that any more. And yes, the lender should be shopping for the best rate BEFORE getting the appraisal. This is more important now because of HVCC and as Joshua pointed out, your relationships with your lenders. They will cut you off at the knees if you have too many fallouts- not a good situation in an enviornment where brokers are being (in my opinion) forced into extinction.

HVCC is a lose lose all the way around. And for those who aren't aware, a vast amount of the AMC's are owned by the big banks, AMC's NOT the appraiser set the fee- the appraiser gets a fraction of what they could command on their own-and the buyers get stuck with a shoddy appraisal. And heaven forbid someone tries to contact the appraser that isn't "allowed" to.

Does this protect the consumer as Cuomo supposedly created it to do? Not on your life...

Good post Todd.

Posted by Micki OToole, General Manager (PropertyADVANTAGE) almost 10 years ago

I have no doubt the banks are behind this and manipulating this.  In part I feel sorry for the banks as they were forced to take TARP money and submit to government control, they were forced to make bad loans, and a lot was beyond their control.  But then they turn around and act so stupid, using the same tactics of manipulation on the public that has been used on them.  This goes way beyond appraisals and to how the REO's are being handled.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) almost 10 years ago

Here we go again.

Posted by Patty Rufo, William Raveis Real Estate, Osterville, MA. almost 10 years ago


Just like your picture pickpocketing...!!! Thanks,   Fran

Posted by Fran Gaspari, "The Title Man" - Title Insurance - PA & NJ (Patriot Land Transfer, Inc.) almost 10 years ago

i have friends in the appraisal business and and can attest that THEY are not the problem.  i can't imagine why they remain in the business.

the issue here is simply the latest hackneyed POLICY that is nothing more than feelgood crap from the new administration.  that crew has never run a candy store and now they have their hooks into carmaking, banking, and home finance...and soon healthcare.  america is getting precisely what they voted for.  this sort of bizarre through-the-looking-glass result is quite predictable.

this is what happens when government interferes.  the law of unintended consequence rarely fails to bite us on the posterior.  Mr. Obama,  please stop trying to "help".  and call off your regulators.


Posted by Michael Ford, California+Hawaii+Oregon almost 10 years ago

I agree Todd...HVCC is bad for the consumer on every level & I'm still not sure who is benefitting from this. I've talked with the lenders & they are pulling their hair out as well - They hate the new policies.

I honestly think this is another case where the government steps in and comes up with new policies that are damaging to all parties involved & certainly does not acomplish what it originally set out to do.

Posted by Dan Magstadt (Paramount Residential Mortgage Group, Inc) almost 10 years ago

The HVCC is destroying the appraisal profession.  Those of us with the experience, knowledge and education to perform quality appraisals cannot justify working for an AMC and earning 1980's wages.  It's ok for the inexperienced, young, single appraiser without a family to support, but not for the rest of us.  After leaving a 17 year corporate career with a fortune 100 company to strike out on my own and become a professional real estate appraiser 10 years ago, I now have some regrets about that decision.  Back then, we were collecting $350 for the standard URAR appraisal.  After 10 years, our fees are still $350-375.  Appraisals now take 2-3 times longer to complete than they did back then.  Can anyone name another profession that goes 10+ years without an increase?  Now, with HVCC, take half of that fee away.  In addition, add new forms, additional liability, ever changing lender requirements and the ever present dis-respect we appraisers receive from the real estate/lending community.  I know several colleagues with similar experience levels as my own that (like me) refuse to do AMC work.  It's been a real blow financially, but my FHA and non-lender business is growing.  At some point, I hope to exit the lending business entirely and go strictly non-lender work.  It's just not worth the headaches any more. 

Posted by Ted Lingley almost 10 years ago

WOW...blame the lender for HVCC???  Call your local congressman...might be a better avenue for this chant. In the meantime, get to know the "Consumer Friendly" Lending programs, such as USDA Rural Housing, FHA & VA.  If the price of the home is outside the limits of these programs, then "Buyer Beware"

Jeff Wilmoth (HomeStar Financial Corporation)

Posted by Jeff Wilmoth almost 10 years ago

I keep hearing a lot of bad things about HVCC although not from any Realtors or lenders that I personally know. 

I don't have enough of an understanding of it to have a specific opinion on whether or not it enables a new way to engage in predatory practices. 

My general observation is this.  I have yet to see - in any industry - a law, regulation, procedure, bureaucratic initiative, policy, etc that was not exploitable by those who want to "use their power for evil instead of good".   Never has been, never will be.  Someone will always find a way.


Posted by Rick Schwartz (William Raveis Real Estate) almost 10 years ago

I agree that HVCC leads to delays in the loan process and possibly higher costs to the consumer.
But, I don't think the mortgage broker could have found a better loan or HVCC leads to predatory lending as you purported...

"The worst part is they could have possibly saved even more if their mortgage broker could have found a better loan during the time of inspection and close...because of the HVCC law." 

My guess is the market rates increased and the mortgage broker did not have a sufficient lock or was not able to extend the lock to meet the extended timeline caused by the appraisal delay.  Many originators (banker and broker) have been blind-sided by the delays and the resulting losses HVCC has caused to extend a rate lock to honor a commitment to the borrower.

While I don't like the delays or the resulting quality of work that HVCC has created I don't think that "shopping" the appraisal with a different investor is the right answer.  In fact, breaking a forward commitment (rate lock) with an investor does more harm to consumers in the long run.  Just like bogus insurance claims and shoplifting result in increased premiums and consumer product costs. 

What happens to the original investor's time/effort/expense if the mortgage broker in your scenario had "shopped" the loan with another investor after committing to a lock with the original investor?

The answer is higher rates and loan fees passed on to consumers for not honoring the commitment.  It was more likely poor planning by the mortgage broker or unrealistic expectations of other parties given the current lending environment.  Originators need to do a better job of qualifying a prospect (including the value of the collateral) before submitting an file to an investor to underwrite.  

Setting an expectation for a longer lock and closing time frame to accomodate delays with all parties involved in the transaction would help.  In other words, proctecting the integrity of the process will go a long way to improving the challenges that arise is todays market instead of adding to them.     

Posted by Brian Brass almost 10 years ago

Another sorry attempt by regulators trying to protect the consumers! But the real protestors, the "in-the-trenches" guys, are never invited to the design session. So the deep pockets hijack the process for their own gain.

Only solution for now:


Posted by Anonymous almost 10 years ago

I couldn't agree more with what is being said here. Isn't consumer protection amazing when it costs consumers more?


Posted by Dan Hartman (Province Mortgage Associates - NMLS #2861) almost 10 years ago

Just like I posted yesterday, if it smells like Limburger it's probably your bank!  Very good investigative work there Todd and thanks for that info.  I am also having problems with appraisals and the turn around time is just not correct.  Not to mention the last 2 appraisals cost $400 a pop.  Cha-ching.  That's full boat for an appraiser.  Make the buyer pay another $400 as an example and it might make them think about not walking.  It's larceny.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) almost 10 years ago

Not only are the buyers being predisposed to failure, the fallout too often makes the Realtor look like the culprit.  It has caused a lot of pain and mistrust in our profession at a time that people are already looking at us carefully.

Posted by Edward Bachman, Your Kingwood TX Realtor (EXIT REALTY SOLUTIONS) almost 10 years ago


If you want to cure this problem as our writer has identified a major issue here in our industry, please read the following email that I got from the San Diego Chapter of the National Mortgage Brokers Association AND follow thier suggestions.  If everyone spreads the word and does as it says, it will get some notice.  Hats off to the writer!

New contact information for Fannie Mae

To:      All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers
From:  Marc Savitt, CRMS, President- National Association of Mortgage Brokers
After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.
In order for this "Call to Action" to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!
We have received hundreds of e-mails through the e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.
Who will you be contacting?
NY Attorney General Andrew Cuomo's Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595,
Fannie Mae: (800) 732-6643  Internet Complaint (new HVCC-specific form)
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.
Also, please contact your local TV and Newspaper outlets.
Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.


Talking Points:
1)         NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
2)         Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
3)         AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
4)         HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo's investigation.
5)         No Portability! Consumers are "trapped" with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
I.     Lack of Portability
A.  Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
B.   Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
C.   In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
II.    Lack of Quality
A.  AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.
i.    Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
B.   Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III.   Increased Cost of Appraisals
A.  The minimum increase we have seen in direct consumer cost is $150 per appraisal.  That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
B.   $150.00 - minimum increase per appraisal
$561.95 - average loan amount of $224,778 at .25% for extended lock period
             $711.95 - average total increase per transaction
                  x 3,870,552* - 2007 HMDA report of residential real estate loans originated
              $2,755,639,496 - $2.8BILLION in increased fees to consumers!
IV.   Articles Illustrating the Effects of the HVCC
A.  The Appraisal Bubble - The Center for Public Integrity
B.   The Cure is Worse than the Disease - Appraisal Press
C.   Appraisals Roil Real Estate Deals - The Wall Street Journal
i.    Feel free to forward these articles and/or reference them in your conversations.


Contact SDNC

phone.  858-523-9990 X 203

Posted by Wayne L. Brown (Franklin Advantage Inc.) almost 10 years ago


I've been wearing my tinfoil hat for a while now.  Welcome to the club my friend.

This is just one stepping stone to doing away with mortgage brokers altogether.  Independent brokers have seen their sources dry up as lenders have run from offering broker channels like their heads were on fire.  They offered the products, we sold the products, but WE were the problem.   That's like blaming car dealers for selling new cars that were later found to have design and production defects...

Without commission paid brokers your loans and closings will be in the hands of hourly paid LO's and processors that get paid no matter if you close or if you don't.  Who has more incentive to get the clients to the closing table and on time?  Who will care if your lock expires?  

The mtg broker should be atop the endangered species list.




Posted by Michael Loeb (TGC Financial) almost 10 years ago

Was Cuomo in the back pocket of banks when he forced this upon us?  This is just a backdoor way of getting banks further entrenched into our industry...Not good, and yes this law is evil and hurts consumers all around.

Posted by Kerry Jenkins (Prime Properties) almost 10 years ago

I don't think the appraisers should get a copy of the contract then either :-)

Posted by Loree Nichols (Charles Rutenberg Realty, Inc) almost 10 years ago

Great post, Todd, and one sure to generate a lot of response.  As someone in the lending industry for over 30 years, what I see is the federal government getting in the way of the free market economy-an economy which in the past has made the appropriate adjustments to balance inequities in the market.

Instead of becoming a help in curbing fraud and abusive appraisal practices, it becomes a hindrance to consumers by increasing the costs of doing business.  And it's a cost that, unfortunately, will likely be passed through to that consumer.

It is not increased regulation that will solve this problem, but greater transparency throughout the mortgage loan process.   Allowing consumers to see all of the costs associated with their loan-including the YSP-will ultimately result in them making better choices up front for themselves and their family.   Mortgage lenders who embrace absolute transparency will be those to whom consumers will turn, and those lending professionals who elect not to do so will be unable to make a profit and will eventually withdraw from the marketplace.  

Posted by Mark Warner (RealEspace) almost 10 years ago

Interesting information Todd. I am sure NAR will have a thing or two to say about this.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 10 years ago

Todd, THANK YOU for this post!  It is most riveting!

I got as far as Comment #12, clicked on the link for the video, watched it, and went immediately to send an email to everyone in my address book and everyone in my business database.

I then posted my own blog with a copy of the email letter I sent out.

Click here to read my letter on my blog:   HVCC (CALL TO ACTION LETTER TO SOI & DATABASE).   Feel free to use it, everyone!!!

I have also sent letters to all the legislators I could think of and had time to do. 


Now, I need to go back up to Comment #13 and continue reading.

Posted by Paula Burt, REALTOR , SFR, RECS almost 10 years ago

These new HVCC rules are ridiculous!  The government sticks their noses in to try to clean up the problem and as usual creates an even bigger bureaucratic mess!  HVCC has gotta go!

Posted by Michael Barrow, Realtor, San Diego CA Real Estate (Keller Williams Realty - San Diego Metro) almost 10 years ago

Why are we so surprised at this when the current congress doesn't even read the bills they pass, and makes a joke of the requirement to?

Posted by Joetta Fort, Independent Broker, Homes Denver to Boulder (The DiGiorgio Group) almost 10 years ago

Todd, it sounds like the fox is watching the chicken coup.

Posted by John Palmisano (Keller Williams Properties Weston, FL) almost 10 years ago


A lender/bank does not benefit if a buyer/borrower loses their lock.  In fact it is the opposite.  A locked loan is in most cases committed for delivery into the secondary market at a set price.  This locked loan commitment carries interest rate risk until it is delivered.  A lender in this case "hedges" against interest rate risk by using a variety of securities.  Think of it as insurance against rising rates that the LENDER pays for regardless of whether or not the loan is closed. 

This comment does not address loan "brokers" who lock with lenders/banks.  If you work with brokers that intentionally blow locks with one lender (with the intention of locking in with another) to increase their income, you should send them to a doctor to have his/her head examined.  State and Federal regulators may also want to pay this person a visit. 

Posted by Thom Kraley (NewCastle Home Loans, LLC) almost 10 years ago

Many of you get e-mails from NAR but maybe some of you do is one from earlier today. We should wish them good luck.  Mike

To:      All REALTORS®

From: Charles McMillan, 2009 NAR President

Re:     Appraisals

Dear Fellow REALTOR®,

During the past two months, we have heard from many of you regarding problems with appraisals that are causing deals to be delayed or canceled altogether. I assure you that we on the NAR Leadership Team are experiencing the same problems in our businesses. In fact, VP & Liaison to Committees Steve Brown recently shared his experiences in Ohio on the Voices of Real Estate blog.

Let me update you on what NAR is doing to resolve these problems quickly.

On Monday, June 29th, I will be in New York to meet with the Deputy Attorney General and his staff who worked directly on the Home Valuation Code of Conduct. I plan to share our concerns, as well as your stories, and ask for their assistance in resolving any problems related to the HVCC.

On Tuesday, June 30th, I will travel to Washington, D.C., to meet with the Director of the Federal Housing Finance Agency to discuss ways we can work with Fannie Mae, Freddie Mac and lenders to ensure that appraisals are accurate.

We will keep you posted on the outcome of these meetings. In the meantime, I encourage you to check out the following resources on for more information on the HVCC and how appraisal problems are impacting the real estate market:

Economists Podcast


Appraisal Blog

On behalf of the entire Leadership Team and staff, I thank all of you who have shared your experiences and concerns with us. With your continued participation, I believe we will overcome this challenge in much the same way as we have conquered others - "United Toward Tomorrow."


Charles McMillan Signature

Charles McMillan
2009 NAR President

Above e-mail as received by Mike McCann on 6-25-09

Posted by Mike McCann - Nebraska Farm Land Broker, Farm Land For Sale 308-627-3700 or 800-241-3940 (Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska) almost 10 years ago

All I can think after reading the posts for the last couple of days is that I'm glad I'm no longer in the business of selling real estate. The banks are evil, and our lawmakers are so dumb that they play right into their hands.

Wouldn't it be fun if the million plus real estate agents in the U.S. could join with all the mortgage brokers and refuse to do any loans except for private money for about 30 to 60 days? That would put the banks' tails in a kink!

How about if you refused to show or sell any of their REO properties?

I know, your buyers want them, but still... Watching them scream would be satisfying.

Since that can't happen, perhaps everyone should begin writing, emailing, faxing, and calling their Congressmen. Voting out everyone who voted for any of the nonsense that's going on right now would also be a good idea.

Wishing good luck to all of you who are dealing with the banks right now...

Marte Cliff, Copywriter

Posted by Marte Cliff almost 10 years ago

Don't put all the blame on the banks throughout the country.  It started with those in Government that created this situation in their push for "all to own homes" (a la the Franks, the Dodds, etc.). Then they try to rectify it by making the appraisers "independent" of the transaction, pulling down market values and they have bogged down the entire process.  Many banks also outsource their loans and they are caught in the middle of locking rates and then getting dragged out because an out of control appraiser is "trying to cover their butt" and not really performing their job responsibly.

Posted by Rita Zarcone, SRES, Realtor, CSP (Howard Hanna Real Estate Services) almost 10 years ago

Thank you everyone for the comments, but make sure to do something more important... CONTACT YOUR STATE REPS! This needs to be taken care of and the only way to do that is put it back to the way it was. I'm not blaming banks, I'm more blaming the government for taking what they banks were probably trying to say and taking it way to far! (Then the banks for taking advantage of the situation.)

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) almost 10 years ago

The banks never cease to amaze me with the way they treat customers.  Unfortunately we (the government) bailed out the banks but left the same mangement teams in place that got them there in the first place.  Now the same bankers are just playing with new money...

Posted by Stuart Dobson ( almost 10 years ago


 Lets all hope this get passed FAST

McLean, VA - June 26, 2009 - Last night, Representatives Childers (D-MS) and Miller (R-CA) introduced legislation calling for an 18 month moratorium on the Home Valuation Code of Conduct (HVCC). The National Association of Mortgage Brokers (NAMB) applauds the introduction of H.R. 3044. NAMB would like to thank Representative Childers (D-MS) and Representative Miller (R-CA) for their continued efforts and leadership on this issue.

"The introduction of this legislation is a victory for consumers and members of the industry alike," said NAMB President Marc Savitt, CRMS. "We thank Congress for recognizing the need to address the issue of appraiser coercion without causing undue harm to borrowers or diminishing competition in the marketplace."

NAMB has taken an active stance against the HVCC since its introduction in March of 2008. "We urge Congress to pass H.R. 3044 as soon as possible to ensure that more borrowers will not be negatively impacted by this de facto rule," stated Savitt. "In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo's rule."

NAMB looks forward to working with Members of Congress as this legislation progresses.


The National Association of Mortgage Brokers is the voice of the mortgage broker industry, representing the interests of mortgage brokers and homebuyers since 1973. The Association is committed to promoting the highest degree of professionalism and ethical standards for its members. In addition to mandating members adhere to a professional code of ethics, NAMB provides mortgage brokers with professional education opportunities, and offers rigorous certification programs to recognize members with the highest levels of professional knowledge and education.


Posted by Anonymous almost 10 years ago

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