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Overhauling the Current HVCC System Across the Board

NAMB Immediate Past President and full-time HVCC opponent Marc Savitt met with members of New York Attorney General Andrew Cuomo’s staff this week presenting them with thousands of petitions from real estate professionals complaining about the aforementioned whatever it is (it’s not law, btw).cuomo

The Cuomoiams did say that the AG is open to renegotiating the current system.  That’s the good news, but the more important thing is to ask how the AG of NY will be able to re-influence all those that need to implement any changes that are agreed upon.

I do believe that Fannie Mae and Freddie Mac can act independently of the NYAG’s office and change HVCC on the fly.

Also, the lenders themselves can eliminate the  layer  of appraisal management and go to a system where they approve the appraiser and a blind system assigns the appraisal based on the location and what location the appraiser is familiar with.

Sound familiar?  Yes, that’s the way VA does it now and the way that FHA used to do it.

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Yea, we have/had some issues with those systems, but it is 1000 times better than what we have now, would save money for the client and it would make the appraisal transportable to other companies.

Wow!  It’s 1988 all over again.  Sweet!

Have a good holiday all.  Try not to overload on turkey, football and wine!

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Written By

Realty Reality! That describes Fred, a sharp witted and outspoken realist for the mortgage and real estate world who has appeared on CNBC and NPR's Marketplace along with being quoted in the New York Times, The Wall Street Journal and other media outlets. Fred is the CEO of U S Spaces, Inc/Arrivva (a real estate brokerage firm in PA, NJ, DE and CA) and U S Loans Mortgage Inc (mortgage brokerage in PA, CA, FL and VA), and serves on the Board of Directors and is the Federal Legislative Director for the UpFront Mortgage Brokers. Fred is also the co-creator of real estate startup, a mathematically driven rental search engine. See everything Fred at



  1. Missy Caulk

    November 22, 2009 at 9:35 am

    Fred, in my area, it has been a problem. Appraisers assigned outside of Ann Arbor have no clue most of the time. A busy street in downtown Ann Arbor does not devalue the property, people pay high prices to live within walking distance. But, a non local appraiser doesn’t know that.
    Yes, I do believe it could be done in house.

  2. Ken Montville

    November 22, 2009 at 12:59 pm

    The HVCC and agreement with Cuomo is nothing more than a) Cuomo making a name for himself (let’s hope he doesn’t screw up and become “Client #10” after Spitzer) and b) a huge over-reaction to the mortgage fraud that took place in the early 2000s. There just has to be a way for Cuomo to save face and allow the agreement to disappear. That’s the tricky part.

  3. Matt Stigliano

    November 23, 2009 at 6:17 am

    Missy – You bring up a point that has always bothered me about appraisals in general. That busy street is horrible to some, but the greatest selling point to another. I don’t want a busy street outside my window, but I know people who live for that sound. And I don’t think we’re talking about math vs. emotion here, although the buyer’s emotions need removed from the appraisal equation to get a true value, I think there is some consideration to the buyer that should be given.

    I know there’s no way we can take into account the worth of a home from each individual buyer’s perspective, but it does matter. The appraisal process removes all human thoughts about the property from the process and goes for facts and figures, but what if those facts and figures don’t apply to that person. I can’t see how it would ever be possible to change that, but it’s an interesting thought.

  4. Matt Stigliano

    November 23, 2009 at 6:17 am

    PS Yes, I do realize this was Fred’s post, but Missy’s comment is what prompted me. (Don’t want anyone thinking I thought Missy wrote the article.)

  5. Stillwater Real Estate

    November 24, 2009 at 1:57 am

    @rerockstar: I disagree with your statement that appraisers take the emotional factor away from the equation – that’s what Zillow is for. It’s not nearly at the level a Realtor has, but it is considered.

    Fred – Good to see another AG write following appraisal news closely. I’m not for the HVCC, as it has severely damaged my bank account. But I’m not entirely sure this petition will have much effect. I’m guessing the bank-owned AMCs have a powerful voice.

    By far the best HVCC compliant appraisal ordering service I’ve seen is Appraisal Firewall.

  6. Matt Stigliano

    November 24, 2009 at 9:41 am

    Ben – I probably shouldn’t have said “all human thoughts” (ie, emotion). What I mean is, when you do an appraisal, are you taking into account that buyers emotions about the house? Are you looking at a busy street and seeing a negative impact, when actually that buyer wants this house for that particular reason?

    I just don’t think that it’s probable/possible for an appraiser to take a look at each buyer’s need for a particular home. Your job is more based in the numbers and yes, too much emotional-sided thinking probably would run up the market in a heartbeat, but I wonder how much is possible for the appraisal side without compromising your core goal of finding a fair value for the home.

  7. Stillwater Real Estate

    November 25, 2009 at 11:19 am

    Matt – I can only think of a couple busy streets here in the Twin Cities where a buyer would actually want to live, compared to a quiet one. When I appraise a home on Summit Avenue I know any buyer is more emotional about the street’s history and character rather than the traffic. Or an investment property on a busy street is often preferred because the ‘for rent’ sign will be seen by more people.

    Yes it’s true, I am a number crunching machine. But I’m also human so it’s impossible for me to take all emotional factors out of the equation.

    I’ll flip your last paragraph around at you – it’s not probable/possible for a Realtor to take a look at each buyer’s needs for a particular home. As much as we try to profile a buyer for each listing, sometimes it ends up being a person who we least expected.

  8. Matt Stigliano

    November 25, 2009 at 1:13 pm

    @bgoheen Your “booooooooyah” was well deserved after I read the last paragraph. You’re right, we can try to profile and get into a buyer’s head all we want, but sometimes it will fall short. When I moved to San Antonio I insisted on two things – two story homes had to have the master bedroom upstairs (it’s very common to have the master down here). Guess where my master bedroom is?

    I guess I can see how you do have to take more human factors into account than I may have thought about previously. What would you do in a scenario where you did your homework, came up with a price and gave xyz as a reason why it wasn’t worth what it was listed for. What if the buyer said to you – but I like xyz, in fact I love xyz and it’s the whole reason I want to buy this house.

    Would that change your report? Just curious.

    P.S. Thanks for the friendly “war” – I’m actually enjoying it as appraisals aren’t my strong suit, so I’m learning a lot more from your comments.

  9. Marion

    November 28, 2009 at 1:43 am

    The HVCC is a joke.
    It is a smoke screen.
    Lenders made ridiculous loans, to people who could not afford them, some of those loans reset the interest rate every 6 months, The banking system collasped and the consequence of it is is the HVCC? Appraiser Independance?

    Baloney! No appraiser set a list price or wrote an agreement of sale or originiated a mortgage. Home prices went up because many more people were given credit to buy houses. It was a release of pent up demand. Prices went down because the banks stopped lending unless the government is insuring the loans, and the minimum criteria to get a loan has got so strick that it is near impossible for most people who would buy one to qualify for a mortgage. So, less buyers means sellers have to lower their prices to attract the few buyers out there. Couple that with the first round of foreclosures due to stupid no doc 110% mortgages, closely followed by foreclosures casused by loss of income or pay reduction from employment and this is how we arrive at today’s market.

    So in order to fix the problem, or scape goat someone, the appraisers are now made to work for unregulated management companies for up to half their previous fees in an economy with ever rising prices and ever rising educational requirements are forcing them out of the industry. Will the HVCC correct all the wrongs that were done to the housing industry? No. Will the HVCC prevent a future occuance of the subprime lending market explosion? No. Will the HVCC create a new profit center for the lenders? Yes. Will the HVCC drastically reduce the number of appraisers? Yes. Will the HVCC impact the market value of homes? No.

    So what does the HVCC accomplish for the industry? Well, it injects money into banks that own AMCs. It gives control of the Appraiser to AMC and banks. it removes many appraisers from the industry and opens the door to greater use of automated valuation models, (another profit center for the bank). If consumers are not happy with appraisers valuation, wait until computers that have never been to the home to see the upgrades, condition of the property or visited the neighborhood starts spitting out values.

  10. Stillwater Real Estate

    November 28, 2009 at 3:54 pm

    Marion – has any lender given a loan based solely on an AVM? I doubt it, you’ll never be able to remove a human being from the appraisal process.

  11. Stillwater Real Estate

    November 28, 2009 at 4:10 pm

    Matt: I appraised a house last year where the buyer insisted that the property was a great deal and that it should appraise for at least the contract price. However, the comps supported a value about $20k less. All agents were furious (even the buyers agent) and kept trying to send me comps to use that were 5-10 miles away, where all the ones I used were much closer. The home was actually listed for $15k less than the contract price, but the higher price was meant to avoid a short sale situation. The buyer pleaded her case with me and the loan officer, and we told her that if she wanted to proceed at the contract price then she just needs to come up with the extra $20k. Needless to say that deal fell through.

    Glad I can help you (and hopefully others) understand the appraisals. I don’t have a problem explaining to people the process to people who want to learn. Too often lately I just see agents spew hateful comments and make generalizations based upon their dealings with a bad appraiser.

  12. Dana

    December 1, 2009 at 2:27 pm

    HVCC: six months later Boston Globe 11/30/09

    A recent report by a loss mitigation company known as Interthinx, revealed valuation fraud actually increased by 46% in the 3rd Q of 2009, as compared to the same period in 2008. It’s clear mortgage brokers played no role in this increase or the fraud itself, because they were and are prohibited from any participation in the ordering of appraisals. Mr. Cuomo’s HVCC has now narrowed down the list of bad actors with the elimination of brokers from that list.

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