HVCC AND AVERAGE PERSON!!

 

As a mortgage professional I deal with HVCC and how it pertains my industry every day. We adapt to the ever changing world of real estate all the time….However what about the first time home buyer, what about the family who desperpartly needs to consolidate debt, what about the family who was suckered into to a variable rate by some fast talking former used car salesman..What about the family that needs to sell their home and buy a bigger or smaller home….What about those people…Well those people are hearing ”NO WE CANT HELP YOU” every day from professionals they have given the trust of the biggest investment of their life!! 

Well in today’s  blog I would like to educate you help you to understand a little bit about HVCC what it is and how it affects you! 

After an investigation by New York Attorney General, Andrew Cuomo into Fannie Mae and Freddie Mac Appraisal practices, the agencies (with the Office of Federal Housing Enterprise Oversight (OFHEO)) agreed adopt new changes to how appraisals are processed in the mortgage industry in exchange for an end to the investigation. The centerpiece of the agreement is the HVCC, which contains many positive and common sense initiatives to help clean up the industry, but also contains significant negative changes to the how brokers and agents are able to work with appraisers and how appraisers are able to operate, hurting consumers, mortgage brokers, agents, and appraisers. 

Here is the break down…. 

Brokers (or anybody compensated on a commission basis upon the successful completion of a loan) may not choose appraisers to be used for loans they originate and may not engage in any communication with appraisers. Choosing appraisers and all communication with appraisers is delegated to lenders. This means that brokers are not only not allowed to choose appraisers based on quality of work and professionalism, but ultimately lose control of an integral part of the loan origination process, possibly increasing loan funding times and increasing costs to the consumers in the form of longer rate locks and the need to order new appraisals if there is a change of lender. 

2. Since appraisals are made in the lender’s name and not the broker’s, if the broker chooses a new lender for the deal, a completely new appraisal will need to be ordered. This increased consumer costs and the time involved in the transaction. 

3. All relationships with appraisers are rendered meaningless overnight. 

4. Brokers lose control over transactions and are put at disadvantage as power is shifted toward and biased towards large institutions. 

What it means to Appraisers: 

1. Must use AMC’s (appraisal management companies), meaning independent appraisers are forced to join and AMC and give 40% or more of their income to the AMC. You read that correctly, this will deprive independent appraisers of nearly 50% of their income in most cases (this could likely mean many experienced appraisers will leave the industry altogether). AMC’s are not regulated, by the way. 

2. Unfairly targets appraisers, does not affect AVM’s (Automated Valuation Models) and BPO’s (Broker Price Opinions). This not only hurts appraisers as Lenders may prefer unregulated and unrestricted alternatives that are not included in the HVCC and in a manner which is in contrast with the stated purpose of HVCC. 

3. Disallows appraisers from engaging in ANY communication with mortgage brokers, loan officers, agents, or others that may receive a commission upon funding of a deal. This means appraisers are not allowed to talk to their clients, a restriction no placed on any other industry to date. This means all the client relationships they have built are rendered meaningless overnight, an unprecedented act against any industry segment to date. 

What it means to Consumers: 

1. Higher Costs: If there is a need to change lenders or brokers as a new appraisal will be necessary. 

2. Increased time to fund loans as brokers lose control of choosing and managing appraisals and may necessitate longer rate locks or extensions of existing locks. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing time to funding. 

3. Decrease incentive to change lenders or brokers if they are not getting the service they deserve due to increased costs and time involved……. 

YOU CAN STOP THIS…LET YOUR ELECTED OFFICALS KNOW THAT  THIS AFFECTS YOUR LIFE IN NEGITIVE WAY…. 

Don’t get me wrong I believe improvement was needed however done this way hurts everybody!!! 

Please Check out my Charity and visit the links listed on this this blog. 

Thanks for stopping by

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