HVCC: What's next? FHA Appraisers Newsletter, Issue 10

Post HVCC: What's Next For Appraisers?

While it is still far too early to analyze the impact of the HVCC on appraisers, reports from around the country are suggesting a variety of changes in their practices.

Many are reporting a loss of longstanding client relationships with the acceleration of the trend towards the usage of appraisal management companies. This certainly comes as no surprise with Fannie Mae and Freddie Mac loans but anecdotal evidence suggests that an increasing percentage of FHA business may also be moving through management companies. While FHA loans are not subject to the HVCC it appears as though many FHA loans are being processed through similar channels as their FHFA counterparts.

Appraisers who count on management companies for a large percentage of their work report that their appraisal volume has been good. Many appraisers who typically relied less on appraisal management companies are reporting that their business is dormant, while others report that they are still receiving a steady flow of full fee (or close to full fee) FHA appraisal assignments from both appraisal management companies and mortgage companies.

The tumultuous events of the past year have taught appraisers to hedge their bets and not rely upon the conventional wisdom. Proposed legislation at both the federal and state levels could materially change the playing field in unexpected ways during the next six months. Regulation of appraisal management companies appears likely in the future with the exact nature of such regulation uncertain at this time and the impact on appraisers unpredictable. Pending litigation and new regulatory mandates could also result in changes in the way appraisals are ordered and processed.

The mortgage loan business appears to be headed for a good year with low interest rates projected for the near term and governmental initiatives stimulating loan demand. This is likely to exert an upward force on appraisal fees as the procurers of mortgage appraisal services seek appraisers for appraisals in new geographic areas along with needing new appraisers to supplement their existing appraisers who cannot handle the increased volume.

The Return of Hope for Homeowners?

The FHA's Hope for Homeowners Program finally appears to be a viable program with the strong potential for a large increase in FHA appraisal assignments. On May 20th, President Obama signed into law the Helping Families Save Their Homes Act of 2009. In a statement later that day, HUD secretary Shaun Donovan stated "Today, President Obama signed into law the Helping Families Save Their Homes Act of 2009. This is another critical step forward in this administration's effort to strengthen our nation's housing market and help millions of American homeowners stay in their homes. Specifically, this law improves FHA's Hope for Homeowners Program, making it a more flexible and attractive option for homeowners and lenders alike. By reducing the cost of this program and easing the eligibility requirements, we believe Hope for Homeowners is better able to help struggling families. The law also permits FHA lenders to offer families more substantial loan modifications, similar to those currently provided under the Making Home Affordable program."

Mortgage lenders appear to be anticipating substantial interest in this program as evidenced by two full page ads placed in the New York Times within the past week by Lend America, announcing that they became the first lender in the country to receive Unconditional Lender Insurance Approval from HUD for the Hope for Homeowners program.

Value Slump Presents New Opportunity for Appraisers

The need for Tax Grievance and Tax Appeal appraisals is growing substantially in many areas as declining property values have lead to millions of over-assessed properties and property tax owners taking actions to reduce the unfair burden of paying too much real estate property tax. The Appraisal Institute reported yesterday in their Appraiser News Online that the difficult market conditions in South Florida have created a great opportunity for appraisers in that area performing appraisals for property owners challenging their assessments.

On a personal level, our appraisal company on Long Island has had its busiest year ever with property owners in many municipalities grieving their assessments in record numbers.

Performing appraisals for Tax Grievance and Tax Appeal purposes not only help appraisers increase their appraisal business now but they often lead to a relationship with property owners, attorneys, and others that result in future business and a growth in their non-mortgage, private appraisal practice. While this does not seem important at a time of high mortgage appraisal volume, the private business creates long term stability for an appraiser's practice as it evens out the work flow and prevents cycles of boom and bust.

HVCC FAQ's and Links

A number of appraisers have requested that we provide them with some of the links that we included in our last newsletter related to the HVCC, so here they are:

Fannie Mae FAQ

Freddie Mac FAQ

Appraisal Institute's HVCC Myths and Realities

We really hope you find our newsletter to be informative! If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue. If you want to look back at past issues you can see our archive at www.fhaappraisernewsletter.com

Regards,

Bill Collins

bill@fhaappraisers.com

FHA Appraisers.com - Find a local FHA Appraiser Today

FHA Roster.com - Find a local FHA Appraiser Today

Tax Grievance Appraisers.com - Appeal or Grieve your Property Taxes

Appraiser Help Inc. - Targeted Marketing for Appraisers

(877) 4FHA-VALU

HVCC Special: FHAAppraisers.com Newsletter, Issue 9

HVCC Takes Effect for Fannie Mae & Freddie Mac Loans

The much anticipated HVCC is now in effect, assuming the failure of latch-ditch efforts to delay implementation by the NAMB (National Association of Mortgage Brokers) and NAR (National Association of Realtors.) All 1-4 family loans sold to Fannie Mae and Freddie Mac are subject to the HVCC. The actual document can be found by clicking here.

So what is different today from yesterday? There are quite a few things that haven't changed, for instance the HVCC still does not apply to FHA and VA loans and it also does not apply to jumbo loans, loans over Fannie Mae and Freddie Mac limits. Any such appraisal assignments that you undertake today can be performed exactly as one which you completed yesterday. Obviously any private assignments are completely unaffected, so those divorce appraisals, bankruptcy appraisals and tax grievance appraisals can be completed the same way you did them yesterday. These types of private appraisals are also going to be increasing for several reasons:

--Existing and pending legislation promises to restrict real estate agents from performing BPO's, and restricts broker market value estimates to listing activity only, not allowing them to provide market value estimates for mortgage, legal or tax related purposes.

--Potential congressional action could allow bankruptcy judges to modify the terms of troubled homeowners' mortgages. Any such action would likely increase the need for appraisals for this reason.

--The decline in property values has not been properly accounted for by many assessing jurisdictions. This will surely lead to a great increase in the number of tax grievance and tax appeal appraisals as homeowners look to reduce their property taxes.

With regard to Fannie and Freddie and AMCS: As we and many others have repeated, there is no mandate within the HVCC for the usage of appraisal management companies. This is amongst the many myths that have developed surrounding the HVCC. Question 35 in Fannie Mae's Home Valuation Code of Conduct Frequently Asked Questions (FAQs) asks: "Is a lender required to use an AMC for ordering appraisals?" The answer: "No. A lender may order appraisals directly from an individual appraiser." A link to Fannie's FAQs can be found here. A link to the Freddie Mac FAQs can be found here. Lastly, a link to the Appraisal Institute's HVCC Myths and Realities document can also be found here.

While the HVCC does not mandate the use of AMC's, bank consolidation and other factors have undeniably increased the share of appraisal orders that flow through AMC's. Individual appraisers need to evaluate how taking orders from management companies fits with their overall business plan. Working with management companies on a limited geographical basis or on specific types of assignments (for example, review assignments, which appear to be increasing) can be beneficial for many appraisers seeking to limit the percentage of their overall practice devoted to AMC's. Appraisers need to be cautious with some of the newer AMC's as to both the unrealistic time pressures they may impose and their ability (or willingness) to pay the appraiser promptly.

One other source of information worth mentioning: The Appraisal institute and the American Bankers Association will be presenting a two hour telephone briefing on the HVCC on May 6th at 2:00 PM Eastern. Information regarding this can be found by clicking here.

So you have an appraisal assignment for Fannie Mae today and don't have time to read through all the documents and FAQs (but you should find the time anyway) and next week's telephone briefing is too far away. Some of the important facts that you need to remember are:

--The HVCC does prohibit an appraiser from collecting payment for the appraisal directly from the borrower.

--The HVCC allows communication between an underwriter or processor with an appraiser in order to request additional information or seek an explanation about a valuation if they do not violate the requirements outlined in Section III.B of the HVCC.

--The HVCC does not allow a lender to accept an appraisal prepared by an appraiser that was ordered by a mortgage broker, nor can a mortgage broker provide a lender with an approved appraiser list for the lender to use when ordering appraisals for that particular broker.

Other FHA News

Is it possible that the Hope for Homeowners program, one which began with the promise of huge funding allocations for FHA loans and countless FHA appraisal assignments, might actually be revived? To date, this program has produced just 51 loans! The Wall Street Journal reported on April 29 that new guidelines laid out by the Obama administration for its foreclosure-prevention program encourage use of the Hope for Homeowners program. Other news reports indicate that this will be accomplished through lower fees, streamlined procedures and various incentives to loan officers. This is important news to FHA appraisers since this heavily funded program requires an FHA appraisal for every loan.

In Summary

Happy May Day! While the HVCC has impacted the appraisal landscape since it was first announced prior to Fannie Mae and Freddie Mac coming under the conservatorship of the FHFA, a serious appraiser with a proactive business plan can not only survive but thrive in this world of the HVCC!

We really hope you find our newsletter to be informative! If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue. If you want to look back at past issues you can see our archive at www.fhaappraisernewsletter.com

Regards,

Bill Collins

bill@fhaappraisers.com

FHA Appraisers.com - Find a local FHA Approved Appraiser Today

FHA Roster.com - Find a local FHA Appraiser Today

Tax Grievance Appraisers.com - Appeal or Grieve your Property Taxes

(877) 4FHA-VALU