On May 1, 2009, new rules went into effect governing appraisals on loans sold to Fannie Mae and Freddie Mac which are the majority of loans now being done, either for purchase or refinance. This rule is the result of a consent decree obtained by Attorney General Cuomo of the state of New York in exchance for dropping his suit against the 2 mortgage giants. This is the most egregious boondoggle pulled off for special interest groups in the history of mortgages.
The rule is call the HVCC which stands for Home Valuation Code of Conduct which prohibits Mortgage Brokers and lenders from speaking with appraiser or holding them accountable, in any way for accuracy, competance or service. This was supposedly accomplished by creating AMCs or Appraisal Management Companies who would be the fraud firewall against bad or inflated appraisals.
Guess who owns these AVMs. THE BANKS OWN THEM!!! TALK ABOUT PUTTING THE FOX IN CHARGE OF THE HENHOUSE. If Cuomo wasnt paid to do this in cash or political capital, he is just a fool. There is a bill in congress to suspend this abomination and I suggest that you call your congressman supporting the repeal of HVCC.
Since May 1, 2009, it is estimated that 1.5 trillion in home equity has disappeared due to bad valuations of real estate, Sales are not closing because the appraiser will not call the market price on a property what a bona fide buyer is ready to pay, but something less based on his desire to please the lenders who give him business. Legitimate appraisers have to go along with this or not work. Lenders do NOT ACCEPT EACH OTHER APPRAISALS SO IF YOU HAVE A PROBLEM WITH ONE LENDER YOU HAVE TO PAY FOR ANOTHER APPRAISAL!!!!
WHEN IT COMES TO REFINANCE THE AMCs AND THEIR STOOGE APPRAISERS ARE KILLING MANY DEALS WITH UNFAIRLY LOW VALUATIONS.
FHA still makes it possible to choose an appraiser directly but why would you go FHA if you could qualify for a cheaper loan.
STAY TUNED!!
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