My New Blog

     Thanks to everyone who tuned in to the show today at mytechnologylawyer.com/radio.  I'm told this was a very popular show in terms of the number of listeners, e-mailers, and people who called in or tried to call in with questions and comments. 

     This is a very hot topic among appraisers, so much, in fact, we've scheduled two more shows on this topic.  The next show will be August 21st at 2:00 p.m. and then another show will be on August 28th at 2:00 p.m.  If you missed today's show, you can listen to it or download it from the mytechnologylawyer.com website under "past programs."  I will also have it posted on my web site soon. 

     Thank you for your kind e-mails and support.  I hope you can catch the next show live.  Blog you again soon!

Marco

  Well, this is my first blog.  I've waited to use that word until it was safely out of quotation marks and firmly wedged into the vernacular.  I've always hated the word "blog."  It sounds like a shortened form of "blah, blah, blah, who cares?" It sounds like the perfect word for a lot of opinions and conjectures nobody really wants to hear.  So, I'm not anxious to be accused of being a "blogger."  

  But I will write this because it is important, and people should hear what I have to say.  And I want to thank every one of you who took precious seconds out of your lifespan to read this. (Thanks honey, thanks mom.)

  First things first. The HVCC.  Briefly, it stands for the Home Valuation Code of Conduct.  This is not a law, but a policy that FNMA and FHLMC have agreed to adopt in order to settle a lawsuit brought against them by New York Attorney General Andrew Cuomo.  It is purported to be a measure to create appraiser independence and thereby protect consumers from borrowing too much because the appraised value was inflated.

  In point of fact, it will do just the opposite.

  The HVCC puts a barrier between the lender and the appraiser.  That is, the lender cannot directly order an appraisal from an appraiser but must do so through a third party.  The third party will most likely be an Appraisal Management Company (AMC.) 

  The flaws in this solution are numerous but here a couple of cold, hard facts that you need to be made aware of:  The AMC works for the lender; the appraiser works for the AMC.  The lender pressures the AMC; the AMC pressures the appraiser.  The idea that appraisers working for AMCs are independent, i.e., immune from pressure to inflate values, is naive at best.

  In fact, what started AG Cuomo on the warpath was a suit against one of the nation's largest lenders and one of the nation's largest AMCs in which the evidence that turned up clearly showed the lender pressured the AMC to have their appraisers inflate values. 

  Now it seems AG Cuomo went to these same guys and asked them to draft a solution to the problem.

  Also, you need to understand that AMCs compete for the lender's business by offering appraisal reports delivered quickly and at the lowest possible price.  This means the appraiser who has lost all of his/her lender clients because of the HVCC is now having to work harder to get their reports out quicker for a lot less money.

  The net result of this "solution" is that honest, hardworking appraisers who take pride in their work and want to do thorough research and analysis are going to be driven out of the business in favor of appraisers who'll turn out low-quality reports fast, cheap, and at whatever value they're told to.

  This will be a disaster for the appraisal industry and for consumers who will no longer be able to have any confidence that the appraisal that was done when they got their loan wasn't inflated.

  There is a whole lot more to say on this issue, but I'm told to keep it brief. So, we'll talk about it in my next post.