Land Park, East Sacramento
and Curtis Park Specialist

HVCC 101

HVCC 101

There has been a lot of confusion about HVCC and what it means to our industry. I would like to present a “basics” blog to explain the repercussions of these well intentioned guidelines. First: a glossary of termsHVCC – Housing Value Code of ConductAMC – Appraisal Management CompanyAndrew Cuomo – New York Attorney General Who:In an attempt to ensure lenders could not put undue pressure on appraisers to value a home higher than appropriate, Andrew Cuomo took it upon himself to create a new set of guidelines referred to as HVCC. He also informed Fannie Mae and Freddie Mac that if they didn’t adopt his new guidelines, he would sue them. They adopted HVCC. What:The HVCC demands that an AMC is created. The AMC would hire the appraisers necessary to perform appraisals as requested by Fannie Mae and Freddie Mac for all conventional loans. Where:These new guidelines are being implemented nationally. How:1. A buyer and seller negotiate what both feel to be a fair market value for the property.2. The buyer’s lender gets a copy of the fully executed contract.3. The lender then contacts an AMC to have the property appraised.4. The AMC then retains the services of the next appraiser on their list of appraisers for that area.5. The appraiser then goes to the property to get the information necessary to do an accurate appraisal.6. The lender then receives the appraisal from the AMC. General Guidelines:1. Realtors and lenders cannot have any direct contact with the appraiser unless contacted by the appraiser. Even then, they are not to have any conversation with the appraiser that might influence the...
HOW ARE VALUES EVER GOING TO GO UP?

HOW ARE VALUES EVER GOING TO GO UP?

We have a problem. We are creating the perfect storm. As Erin Attardi’s post “Erin Attardi’s Short Sale Experiment” reflects, there are areas where the majority of available properties are short sales (and I suspect a few foreclosures thrown in). In the new HVCC regulations, appraisers cannot be in communication with Realtors, agents or lenders. It is more important for comparables to be recent than accurate. Allow me to elaborate. At one time, appraisers would take into account that a property was a foreclosure or short sale when they were doing their appraisal and adjust accordingly. If we, as Realtors, felt that inappropriate comparables were being used, we could discuss the issue with the appraiser. Appraisers, if they felt we had a valid point, could change their appraisal. Comparable properties could have closed within the last 6 months. If the market had changed, the appraiser would adjust accordingly. Presently, appraisers are coming up with value by using the lowest common denominators…the short sales and foreclosures. No longer is there an adjustment for these types of sales. Due to HVCC, appraisers can come in and appraise in an area that they have no experience in…and we have no way to help them or provide information to encourage accuracy. With a shortage of comparable sales in now a demanded 3 month period, appraisers are being told to go outside the true area the home is in, thus throwing off the true value of the property. So, if we are valuing our listings by the lowest common denominator, and there is no adjustment for the type of sale they are (generally seriously...