Industry News
HVCC Update- Seeing Light
Regulators, lenders and the public are finally getting the message that all is
not well with HVCC. Consider FHA's recent mandate that appraiser fees be
customary and reasonable and that there be a clear separation of
appraiser and AMC fees (Page **). These requirements speak directly to
appraisers' complaints. Legislation to regulate AMCs, with provisions to
fix many problems articulated by appraisers, has passed or is being considered
in many states (see below). On the federal level, H.R. 1728 (Mortgage
Reform and Anti-Predatory Lending Act), which passed the House of
Representatives in May 2009, requires the registration of AMCs as well as a
clear separation of appraiser and AMC fees. H.R. 3044, still in
Committee, proposes an 18-month moratorium on HVCC. In October 2009, an
amendment was added to House Bill 3126, the
Consumer Financial Protection Act of 2009, which would
give the HVCC no effect or force, would allow mortgage brokers to order
appraisals again and would make a new Negotiated Rulemaking Committee
responsible for creating one set of appraisal independence requirements. All
this is progress. Just last May, the Federal Housing Financing Agency (FHFA),
the agency that oversees HVCC, issued the following statement in response to
appraiser complaints: “The Code (HVCC) does not alter the fundamental business
models that exist in the appraisal industry, nor does it alter the fees or
charges of any participants in the valuation system.” (WorkingRE.com, Sidebar:
FHFA Letter Regarding HVCC.) Apparently, FHA, numerous states and the
U.S. Congress disagree and seem to understand that HVCC has changed the playing
field, and that while well intentioned, it could have been better conceived. You
can find and contact your Representatives in Congress here:
Writerep.house.gov. Senators here: Senate.gov.
Petition to Reconsider HVCC: (WorkingRE.com, Sidebar:
HVCC Petitions).
Home Valuation Code of Conduct Interim Complaint Form is finally
released. You can find it at WorkingRE.com, Sidebar:
HVCC Interim Complaint Form.
WRE/OREP HVCC Appraiser Talkback Blog and Survey:
Grassroots appraiser feedback, including results from the HVCC Appraiser
Talkback Survey, is making a difference. The Survey was quoted in a highly
influential New York Times story on HVCC over the summer, saying:
“Moreover, if the goal of the code is to lessen pressure on appraisers, it is
not clear that is happening…half the respondents (to the Talkback Survey) said
they sometimes felt that management companies were ordering them to come up with
a value that would make the deal work.” Read the Times story at
WorkingRE.com, Premium Content, In Appraisal Shift, Lenders Gain Power and
Critics. Get connected with other appraisers nationwide and make your voice
heard at the OREP/Working RE HVCC Appraiser Talkack Survey and Blog!
WorkingRE.com.
Appraiser (AMC) Rater: Get the low-down on AMCs from the appraisers who
work with them at the Appraiser Rater section of the OREP/Working RE
Appraiser Talkback Blog. Visit WorkingRE.com and click Appraiser
Talkback Blog.
AMC Regulation has been enacted in six states as of this writing:
Arkansas, California, Louisiana, Nevada, New Mexico and Utah and is being
considered in 15 to 20 additional states, according to the Appraisal Institute.
Geographical Competency- Useful
Boilerplate
Geographical Competency is in the spotlight with appraiser management companies
(AMCs) blamed for using
out of area appraisers (i.e. the lowest bidder). Others say geographical
competency was an issue long before HVCC. Either way, appraisal reviewers
are paying closer attention. According to appraiser John Huston, REA,
geographical competency is not about distance but about understanding the
market. “Your office can be 50 miles from your subject and you
can still be geographically competent,” he says. Huston says underwriters these
days are more likely to question a report if they feel it
is not located on the appraiser’s “home turf.” He uses the following explanation
to address the issue in advance: “The subject
Property is located 24.17 miles from the offices of Las Palmas Appraisal,
Inc. Each assignment executed by this appraiser
requires an intimate knowledge of the area in which the Subject Property is
located, known in our profession as ‘geographical competency.’ This appraiser
has spent sufficient time in this market and understands its nuances, including
the supply and demand factors relevant to the Subject Property. Such
understanding is not solely based upon database information such as
demographics, costs, sales, and rentals. Geographical competency requires
this appraiser’s understanding of local market
conditions based upon years of on site knowledge, providing the link between a
sale and legitimate comparable sales or a rental and comparable rentals.”
Huston says, “I've found that since I've been incorporating this note in each
report, my conversations with reviewers have become nonexistent in regard
to this issue. The mileage comes directly from the map info in my a la mode
software. I prefer to go to the tenth of a mile as it seems to enhance the
credibility of my report.” Huston, based in St. Petersburg, FL, appraises
in the Tampa Bay market. He can be reached at:
johnh@laspalmasapp.com.
2010-2011 USPAP Released
The 2010-2011 edition of the Uniform Standards of
Professional Appraisal Practice (USPAP) was released by The Appraisal
Foundation (TAF) on October 1, 2009. The 2010-2011 edition will be valid for two
years, January 1, 2010 through December 31, 2011. As with the prior edition,
the new edition will include guidance from the ASB in the form of the USPAP
Advisory Opinions and the USPAP Frequently Asked Questions (FAQs). According
to a TAF press release most of the revisions involve improving the clarity,
understandability and enforceability of the ETHICS RULE, the COMPETENCY RULE and
STANDARD 3: Appraisal Review, Development and Reporting. Significant
changes in the document include:
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A requirement added to the Conduct section of the ETHICS RULE, stating that, prior to accepting an assignment (and if discovered at any time during the assignment), an appraiser must disclose to the client and in the report certification any services regarding the subject property performed by the appraiser within the prior three years, as an appraiser or in any other capacity.
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Clarification in the JURISDICTIONAL EXCEPTION RULE that a jurisdictional exception may only exist if it precludes an appraiser from complying with USPAP. There are also related revisions that apply to the citation and disclosure of the source of the jurisdictional exception.
“Although it may not appear obvious at first glance, the ASB made
several revisions that we believe improve the clarity, understandability and
enforceability of USPAP,” stated Sandra Guilfoil, 2009 Chair of the Appraisal
Standards Board in the release. “The change to the Conduct section of the
ETHICS RULE reflects the ASB’s mission to enhance public trust in the appraisal
profession. In this climate of greater scrutiny and the need for improved
transparency in financial transactions, this new requirement allows the
client to determine whether there may be any real or perceived conflicts of
interest prior to engaging the appraiser in the assignment.”
You can find the entire press release at WorkingRE.com, Sidebar: TAF
2010-2011 USPAP Press Release.
Marshall & Swift Repair Estimation
Program Helps Lenders Control REO Challenges
Marshall & Swift has created the Repair Cost Express (RCX), a Web-based
repair cost program specifically for use by Realtors, appraisers, lenders, and
others in the mortgage servicing industry. It responds to the need to estimate
repairs on the growing number of residential properties now in, or entering, the
real estate foreclosure market. RCX gives the lending industry reliable and
trusted industry-standard tools for understanding and validating repair costs at
a time when troubled assets in disrepair are driving billions of dollars of
expenses. The program is also useful for establishing repair costs to increase
the speed of marketing
time for all real estate transactions. To learn more about RCX, please visit
WorkingRE.com, Sidebar: Marshall & Swift RCX Press Release.
FHA Automatic Roster Renewal Instructions
FHA appraisals are not effected by HVCC and business is good. The FHA and the
Appraisal Subcommittee are working together to create a seamless renewal process
for appraisers on the FHA Roster, according to Donna Tomposki, Director of the
Home Valuation Policy Division within FHA’s Office of Single Family Program
Development. If an appraiser’s license/cert. number is an exact match to the
National Registry at the ASC.gov (Appraisal Subcommittee), the renewal will be
reflected automatically on the FHA Appraiser Roster within 24 to 48 hours of
when it is updated on the National Registry. Many appraisers have expressed
confusion on how to ensure their information conforms. For step-by-step guidance
directly from FHA on how to ensure that your Roster information matches the ASC,
visit FHA Seamless Renewal Process, WorkingRE.com, Premium Content
(unlocked).
Upgrade to Certified
Licensing Level/FHA Coursework
If you want to upgrade your license to the required Certified level, now's the
time. OREP is offering discounted approved continuing education through the OREP
Education Network/McKissock. You do not have to be an OREP member to enjoy this
current opportunity. Bundled coursework of up to 49 hours is available for
licensing upgrades and continuing education through a link at OREP.org, click
OREP Benefits then
OREP Education Network.
Directory of Appraisal Management
Companies
This directory will save you time searching for Appraisal Management Company (AMC)
work. This PDF report is an updated listing of 140 AMCs. The directory is
compiled and updated by a fellow appraiser and marketed through OREP/Working RE.
It is designed to save you the search time of finding the companies that use
appraisers nationwide. There is no guarantee of work and you will have to apply
to each AMC, just like with any lender. The price is $49 and can be purchased at
WorkingRE.com or OREP.org via a secure website (click
Purchase AMC Directory).
OREP insureds will find a link to purchase at a group discounted rate ($40). A
PDF list will be emailed to you by the author shortly after purchase. Please
remember to include a current email address.
Bank Appraisers Needed
Valuation Opportunities for Bank REO Properties
Amid the current housing
market crisis, the nation’s banks and financial institutions need qualified real
estate valuation experts for third-party services on their foreclosed and
troubled real estate properties, both residential and commercial. This is one
intermediary source that matches work with appraisers and other vendors. There
is a one-time registration fee. Orders are awarded on a bidding system, so there
is no guarantee of work. Appraisers/vendors keep 100% of their negotiated
fees. Through an affinity relationship,
OREP insureds qualify for a $115 discount at sign up. Working RE readers
also qualify for a $75 discount under the same agreement. To learn more and to
obtain the group discount code(s), please visit OREP.org or WorkingRE.com and
click Bank Appraisers Needed. You will find links for more product
information as well.
Working RE Email Edition: You Don’t Know what you Don’t Know
One thing you may not know is that the online version of Working RE
publishes many stories you can’t find in print. If you don’t receive
WRE’s Online Edition, you’re missing lots of valuable information. Designed to
keep you informed in between print issues, WRE Online reaches
40,000-45,000 appraisers twice a month and 16,000-18,000 home inspectors once a
month via email. Stay competitive and informed with this free offering. You can
opt in to either edition at WorkingRE.com or email
subscription@workingre.com with “appraiser” or “inspector” email in the
subject. It’s free and your information is never sold or traded. It’s what the
other half knows.