The National Association of Realtors sent out an update this morning addressing the problems caused by the new Home Valuation Code of Conduct. The HVCC is an agreement between the two secondary mortgage market companies Fannie Mae and Feddie Mac and the State of New York. The intent was to stop the kind of inaccurate appraisals that helped cause the housing meltdown.
But, as the NAR tells us: “HVCC has turned out to be a problem in its own right, judging from everything we’re hearing, and not just for real estate deals in New York. The two mortgage companies are applying HVCC rules to all mortgages they handle, regardless of state, so any problems with HVCC are nationwide in scope.
Here’s a sample of what our researchers found:
- 76 percent of practitioners say the time to obtain a completed appraisal increased after May 1 (the date of HVCC implementation), with 69 percent of those saying the increase has been more than eight days.
- 37 percent says sales have been lost because of the appraisal rules, with 20 percent saying they’ve lost multiple sales. This is especially unfortunate, since market data suggests we have pent-up demand for housing.
- 70 percent say out-of-area appraisers have been used. This is important because our members say out-of-area appraisers can’t be counted on to have intimate knowledge of a market and can therefore miss details on comparables and other facts that can affect price.
NAR President Charles McMillan last week had meetings with the attorney general’s office in New York and with the Federal Housing Finance Agency (Fannie and Freddie’s conservator). The two mortgage companies were in that meeting with FHFA as well, as were appraisers.
Congress is aware of the issue. There’s even a bill (H.R. 3044) to impose an 18-month moratorium on HVCC, but it’s unclear what will happen with that, since Congress is focused on health care reform this summer. (If you want to look at the bill, go to Congress.gov and search “H.R. 3044.”)”
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