HVCC Battle Heats Up

Regulatory agencies, financial institution organizations and appraisal organizations were among the attendees at the Residential Real Estate Appraisal Summit hosted on Sept. 21 by the National Association of Home Builders. Participants addressed the use of foreclosed or other distressed comparables without making proper adjustments as well as impediments resulting from the implementation of the HVCC.

“These inappropriate practices, including reports that some appraisers are working in areas where they don’t know the market, are driving down home values and impacting home sales,” NAHB — which has a vested interest in stronger home prices — said in the statement. “Following the meeting, the leadership of NAHB, the National Association of Realtors and the Mortgage Bankers Association were united in calling for immediate action to address their appraisal-related concerns.”

Appraisal Analytics Partner Clyde Prouty told MortgageDaily.com that similar concerns recently raised by the National Association of Mortgage Brokers about the HVCC are unfounded. NAMB warned that the HVCC has led to the use of out-of-area appraisers who are unfamiliar with the neighborhood — resulting in reduced valuations, slow turnaround and delayed closings.

“Removing those persons and entities with a direct vested interest in the outcome of an appraisal from the appraiser selection and management process has been a long time coming,” Prouty stated. “If anyone has been injured by a ‘faulty’ appraisal … the remedy is to file a complaint with the state appraiser licensing and certification board.”

Prouty is concerned, however, that the infrastructure needed to implement and enforce the HVCC does not appear to be in place at either Fannie Mae, Freddie Mac or their regulator, the Federal Housing Finance Agency.

In a message to its appraisers, appraisal management company StreetLinks National Appraisal Services called many of the recent HVCC complaints distorted and said the groups are just attempting to win an HVCC moratorium. While StreetLinks benefits from the HVCC, it noted that it “has no dog in the fight” and laid out a number of talking points for appraisers who are confronted with criticism.

“In their lobbying efforts, these groups have crossed the line and impugned the integrity of the thousands of highly professional and experienced appraisers,” StreetLinks stated.

A recent comparison of the HVCC and similar procedures required by the Federal Housing Administration by Canfield & Associates Inc. indicated that while the HVCC allows but does not require the transfer of an appraisal, FHA appraisals must be transferred if the prospective borrower requests it. Another disparity is the requirement that FHA appraisers are knowledgeable and experienced in the local markets they service, while HVCC only requires state certification.

SharperLending LLC recently announced a new feature in its Appraisal Firewall product that enables lenders to provide copies of completed appraisals to prospective borrowers by postal mail or e-mail — helping them comply with the HVCC requirement that borrowers be provided a copy at least three days prior to closing.

“More and more lenders are discovering that appraisal management companies are not the answer to HVCC compliance,” SharperLending CEO and President Dave Black said in the statement.

SharperLending noted in an earlier statement that its Appraisal Firewall enables lenders to easily integrate HVCC compliance features into their existing systems. It also helps lenders maintain their existing relationships with appraisers.

“Wholesale lenders also benefit from Appraisal Firewall,” Sharper Lending stated. “They can approve and setup a panel of appraisers, then allow their broker channel to initiate the appraisal process on a lender’s behalf from the lender-approved portal. The lender then manages the transaction from beginning to end.”