RESPA Lawyer Blog

You identify a number of the problems with the HVCC and Appraisal Management Companies, but you missed a BIG one. Appraisal Management Companies are not regulated (with respect to providing valuation services) by the Federal Government or by most states. There is ample anecdotal evidence of pressure on appraisers by many Appraisal Management Companies as well.

Given the intent of RESPA, I'm curious about your take on the lack of transparency about fees paid to AMCs on the HUD-1

Thanks for paying attention to the HVCC

You talk about: "If AMC's "misinterpret" home values...". You should be talking about AMC's "directing" home values.

My appraisal profession has been delivered into the jaws of the AMC's which only care about 3 things: 1. Which appraiser can do an appraisal for the lowest price. + 2. Which appraiser can do an appraisal the fastest AND 3. Which appraiser can "hit" the required number.

You really think AMC's have less of an incentive to deliver appraised values that facilitate loans than Mortgage Brokers?? I have some great swampland for you if you do!

In addition, in an industry so concerned about RESPA Violations, why isn't anyone saying something about appraisers being paid as low as $125 for an appraisal and the AMC's marking up that same appraisal and charging the Borrower as much as $450??

You really think that there are going to be competant valuations completed when there is a legion of form fillers whipping out appraisals in 12 hours for $125 a report?

I really need to sell you this swampland if you do - please call me!

John C. Carlson
CA Certified General Real Estate Appraiser
www.jccrea.com

I could not agree more with John. Wells Fargo attempted to get a jump on implementing this HVCC last year and they had to stop requiring their brokers to abide by it because it was such a disaster. They of course have to start again May 1. This has the potential to bring the real estate industry to a hault. The industry has already ridden itself of the problems and this HVCC has the potential to ruin some professionals in this industry. Everyone will have to go FHA and pay increased fees and huge upfront pmi payments. What a joke.

Robert W. Tecler, Esq.
Real Estate Attorney

You guys are missing the point. The fact that they are lying to borrowers on the HUD-1 about appraisal fees is not a RESPA issue. It falls under Truth In Lending laws and is clearly illegal already. Unfortunately, nobody is doing anything to enforce it.

I have been an appraiser since 1969 and still going strong. I am in agreement with those of you who have stated appraisal fee will go up. I recently was called by an AMC to perform an appraisal. When asked my fee they were told I get "$375.00" for the service. They agreed. I received the appraisal order which stated Appriasers Fee $375.00 net to appraiser $300.00, charge to client $450.00. Clients estimate of value (Hit this number) $475,000. Hello does anyone recognize the pattern HVCC was supposed to eliminate? Bottom line, assignment was refused, they countered with $375.00 net to appraiser, and still charged the client $450.00. If the client would have ordered direct, the borrower would have saved $75.00. So much for protecting the consumer. And by the way, value of the unit $400,000.

Rich Greco
718-518-8588.

What a joke is an undertatement.

This HVCC is all a big joke and scam. This is another way for the big companies to make more money and the lenders being able to control everything. Fannie/Freddie are the main cause of the mortage crisis. They are trying to blame the appraisers and brokers. They want to talk about fraud. We are not the ones who made up the crazy loan programs nor sold C paper as A paper to Wall Street. This is really going to kill the economy and real estate market. This has only been in effect for a few days and I already feel the strain on my business. I spent 10 years building up good clientele and it is ruined over night. I've signed up with numerious AMC since January just to be proactive. I have not received 1 order yet from them. This just shows that the lenders are sending the orders to their favored appraisers that they have been using. This rotation list really doesn't exist. So once we are all out of business, do we get a bailout. Oh, thats right our government just spent billions on AIG's bailout to secure Congress and the Senates pention plan. Instead of making things better, things just got worse.

Tape is Tape. Whether it is RED or BLUE. If there was a way to value property exclusively from outside influence we wouldn't even need appraisers. Consumers could put out an opinion on what they thought their property was worth and the governement could tax their property accordingly. If the consumer needed a loan they would have to duke it out over the value of the collateral. Personally I think that evaluating a property is not necessary except for determining property taxes. For Example: If you sell your home, it is only because someone agreed to pay you what they thought it was worth. If you need a loan against your property, a person's ability to service the debt should take precedence over "Loan to Value"
Further, we need to stop trying to marginalize one another just so that Lenders can pool securities like ranchers herd cattle.

Keep an eye on the Felton Spears Jr. and Sidney Scholl, et al. vs. Washington Mutual Inc. First American eAppraiselT and Lender's Services Inc. federal class action lawsuit in the Northern District of California.

Additionally, while I won't comment on my position on this topic the timing of Cuomo's departure and the expiration of the HVCC rules is very interesting. 2010 the HVCC rules expire and guess who is out of office.

FHA will not be implementing the HVCC rules as they decided this was a disaster when FHA tried a similiar HVCC type process years ago and it was a dismal failure.

It seems that the new regulation is a necessary evil, due the fiasco that has occurred.

Need additional proof that HVCC was nothing more than a scam to enrich banks through AMC ownership?

Washington Mutual shareholders are sueing First American for providing them with 260,000+ inflated appraisals VIA THEIR AMC.

Similarly, Landsafe, Rels, & numerous others are being investigated for racketeering (skimming appraisal fees).

The fact that the government continues to support AMCs as the answer to protecting the public and providing banks with credible appraisals defies all human logic.

I suspect that when the recovery takes place and super banks are DOWNSIZED everything will come out. At that point Congress will be forced to reconcile the fact that AMCs were both the cause of the problem; yet they were chosen as the solution to the problem.

Perhaps Andrew Cuomo himself will be forced to explain this perverse logic in front of Congress.

CUOMO WAS INVESTIGATING WASHINGTON MUTUAL/E-APPRAISE IT, THEIR AMC. HE FOUND SEVERAL MAJOR ISSUES AFFECTING THE CONSUMER, APPRAISER AND THE REAL ESTATE MARKET. HE DECIDED TO SLAP THEM ON THE HAND, FINE THEM AND HAVE THEM AGREE TO THE HVCC AND SO IT WAS IMPLEMENTED. HOW IRONIC IT IS THAT HE INVESTIGATES AN BANK/AMC, SAW MULTIPLE CONFLICTS OF INTEREST AND ESTABLISHES THE HVCC PUTTING MORE CONTROL IN THE AMC'S HAND. WHAT A JOKE THIS IS. CUOMO SHOULD BE INVESTIGATE ALONG WITH ALL HIS BANKING BUDDIES THAT HE IS LINING THEIR POCKETS.

Does anyone know the answer to this? I was told that AG Cuomo has ownership in a management company. Why not sue over the fraudulent changes from "C" paper to "A" paper? When it was being sold to Wall Street. AG Cuomo made it a point to single out the brokers and appraisers. Then he settles on the lenders needing to go through a AMC. Also, doesn't Spitzer own blocks of real estate. This is all a political move. AG Cuomo is trying to keep his name out there. He won't be getting my vote.

Well it is May 9th, and I can now report the effects of HVCC. The business relationships I have spent the last decade or so nourishing, GONE. I can’t even speak to my “friends” the lenders anymore because it is against the law. I have known some of these people for 13 years or more and now I can’t talk to them? Not that I have any work to talk to them about; they have to send their appraisal orders to some AMC in Nevada to be performed by some Johnny-come –lately to the appraisal business who doesn’t even know where Daddysville is much less if it is in NC, but he’s going to the appraisal for $225. We did 80 reports as a company last month, and so far I am on track to do maybe 20. Thanks Cuomo!
I have a husband, two homes, two kids, and two cats to take care of, what am I supposed to do now????
I have been a certified real estate appraiser for 13 years and I have never seen a market like this, where a rule imposed by a non-federal agency has taken over the sanity of an entire country.
I think I will become a dental hygienist. At least then I might have a job future, I don't think they will federally mandate dental hygienists out of a job.
I refuse to work for AMCs who want to pay me peanuts, when just a few days ago I was getting $400-450 per appraisal. AMC want to do nothing, make me do all the work, make me take all the liability, and pay me a paltry $200-275 for my hard work. No thanks! I will sit at home first.
I am disgusted with the state of the appraisal today. It is appalling that decent hardworking individuals, who have done nothing but live a good and honest life, can have their entire livelihood knocked out by one misinformed individual that turned a case against FNMA into a federally mandated “bandaid”.

Once Again, we see how GREED and politics affect the livelyhood of hard working Americans!

We at AppraiserGuide.com believe in the Independance of hard working appraisal companies! We believe in what our country stands for: Democracy! and not Monopoly!!

The "unregulated" AMCs, may cause an disapearance evaporation of appraisers in the US due to the little pay split compared to the amount of work and follow up the appraisers have to do.. It may not be worth it after all!! and then who will end up doing the AMCs work??

Now is the time for Indipendent appraiser to stand for what they believe in and to get more exposure!

Some new "nich" markets to consider until the banks and politicians realize their mistake:

Even though the HVCC law only affects loans sold to FNME and FRE. Facts are that FHA loans (who do not have to abide by HVCC rules )due to their underwriting gidelines, are being highly in demand and are being chosen over the FNMAE and FRE loans by mortgage officers. We have been seing a trumendous increase on our site of FHA appraisal orders from both lenders and brokers!! Also keep in mind the JUMBO and Portfolio loans that are being made! Furthermore, we are receiving and incredibly increase in REO appraisals orders, and an overwhelming homeowners number looking for real estate tax reduction purpose appraisal (due to the market drop prices) and a lot of insurance companies who are competing for new business areordering appraisals to find out the properties cost to rebuild!!

Again, we support the indipendence of appraisal companies in the US.

Ricardo Tabet
VP
Appraiser Guide.com

This outrageous change in home sales and refinance just cost my family $155K. I am a home owner, I am looking for ANSWERS. I am not an appraiser or an agent. I only know that the county has my home valued on record at $555K as of 12-21-08. Under the HVCC, it was appraised yesterday at $400K. So much for our retirement and nest egg for our children. And yes,I OWE more than $400K on the home. Thank you fannie mae, freddie mac, Franklin Raines, Jamie Goreliche, Raum Emanuel, Barney Frank, Janet Reno, Jimmy Carter, and the politicians who passed the Community Reinvestment Act of 1977. Redline This!!

I AM CURRENTLY DEALING WITH AN AMC THAT HAS A PAYMENT NOTE OF NET 30 DAYS ON EVERY APPRAISAL REQUEST. I HAVE BEEN WAITING TO BE PAID AS FAR BACK AS OCT. 7, 2009. I THOUGHT THAT IT WAS A BREACH OF CONTRACT IF NOT PAID ON TIME.

In Oregon if the transaction does not close ontime for any reason the Seller can keep the Earnest Money and the Buyer's are out the Fee for the appraisal any fees for inspections too. If it is a short sale the third party lender can charge the Buyer per day until it does get closed.