HVCC: Home Valuation Code of Conduct Update

Posted by on May 8th, 2009

A year or so ago, I wrote a petition called “Request For Careful Reconsideration of HVCC” when the implications of HVCC became clear to me. Although HVCC has been looming for quite some time, many are just now hearing about it recently since it was implemented on May 1st. In the last couple of weeks alone, the petition has gained roughly 5000 signatures. If you have not signed, PLEASE DO. Will the petition have any effect? I don’t know, but it can’t hurt. In fact, the true effects of HVCC are still playing out as we speak.

In an email to LeadPress, Douglas Bowes point out:

The HVCC causes the appraiser to have many reasons to appraise a property BELOW it’s true value – because…

  • the appraiser is fearful of being kicked off the approved list because someone thought the value was too high.
  • the appraiser is being paid less per appraisal, he has to do more appraisals… meaning not enough time will be given to justify a more accurate, higher value.
  • So, far my experience has been ….appraisals are coming in about 10% less than the true value. ( 180k instead of true value of 200k).
  • At a time when billions of dollars are being spent to allow as many refinances as possible, HVCC serves to actually DECREASE the # of refinances that are possible.

We were also contacted by Craig Butterfield, whom has been very active in raising awareness about HVCC. Craig pointed out this great CNBC video on HVCC and this article as well to us, they are worth a look.

Craig hand delivered the following letter to all 71 Congressional members on the banking/finance committee in DC last week.

I was there all week running through the Congressional halls with three other appraisers), I’ve also E mailed it to about 200 Appraisal board members in all 50 states, and spoke with perhaps 50 of them on the phone.


Dear Senators and Congress persons:

Please take a moment to review the attached information packet that relates to the new legislation that took effect May 1, 2009 regarding residential appraisals. We represent the more than 1,000,000 people whose livelihoods are being compromised by the passage of the new Home Valuation Code of Conduct (HVCC).

We believe this regulation has been part of the discussion in committee discussing HR bill 1728 (S896) pertaining to predatory lending, whose hearings were recently held in the Rayburn building.

The following is a summary of information contained in the following pages: The purported implementation of the new HVCC regulation is to eliminate a conflict of interest on the part of the appraisal process of a mortgage loan. However, as you will see, that is exactly the opposite of what the HVCC legislation will accomplish.

v Consumers will end up paying more for appraisals because they will be prevented from shopping the market if they are unsatisfied with a particular lender and wish to change to another. A consumer should be able to choose the appraiser, not said predatory lender, so, the consumer can shop for a competitive fee, w/o a lender mandating and controlling what appraiser must be used. Simply stated, let the consumers choose and decentralize control over the appraiser.

v The quality of appraisals will be reduced because appraisers that pride themselves in doing thorough and professional work will be forced to meet deadlines set by the HVCC via AMC companies that are unrealistic.

v Appraisers are being asked to do the same amount and quality of work for 1/2 to 1/3 their normal fees if put through the HVCC when in the past 2-3 years, the cost of doing business has increased. These same appraisals become the property of the appraisal management companies (AMC’S) although the appraiser is taking all liability for its content.

v The AMC companies, which will be the only ones allowed to order appraisals, are subsidiaries of the nations largest title insurance companies and banks. This is in direct violation of anti trust laws and the FIRREA 12 CFR 34 Banking laws. They will have a monopoly, not to mention a conflict of interest, as they will still be able to dictate their unreasonable demands to the appraiser. Freddie/Fannie/Gnma directors are stockholders in these companies.

v Mortgage brokers, realtors, title closing agents, as well as appraisers are being squeezed out of business. Their businesses have contracted considerably over the past 3 years but they still held on to a hope that they could weather the downturn of the real estate market. This legislation will be the final blow wherein they will be unable to recover from this economic downturn.

v Much of the success of this country has been due to the foundation of small businesses. This legislation is a direct hit to the small business person affiliated with the real estate market. What will remain are large conglomerates that will remove the safety net that is currently in place, due to obvious conflicts of interest-exactly what this legislation is supposed to be preventing.

v We are setting a precedent here for other industries. This will be just the first in a series of changes that will mark the undoing of the American free enterprise system. Thank you in advance, www.REAUnion.org C. Butterfield – 954-929-6094

Real Estate Professionals Free Trade Coalition

E mail: Info@Appraisalunion.org


Craig also provided LeadPress with the following diagram:


HVCC Diagram

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