Yesterday, I was able to find the Federal Trade Commision (FTC) response dated April 30th regarding the Home Valuation Code of Conduct.
This was made during the comment period before the HVCC becomes finalized. The FTC stated in their document that they are in favor initiatives that improve the mortgage process for consumer and also wants to protect appraiser independence. Based on their
response it appears that the FTC has some concerns regarding the Home Valuation Code of Conduct and how it was written when submitted for comment.
The FTC stated that mortgage brokers account for 58 - 70% of all mortgage loans and that the HVCC could inpose unduly hardships to consumers to access mortgage credit and increase appraisal fees, and reduce timely and accurate appraisals.
If a consumer currently contacts a mortgage broker for purchase or refinace they begin the process which includes the appraisal work. During the process the mortgage broker contacts several banks to get the best interest rate and terms for their client.
Under the HVCC as it currently stands it states that the mortgage broker could not submit the same appraisal to the different banks. This may result in a consumer not being able to get the best term/loan agreement since banks change their offers fequently.
Also the FTC states that the HVCC may undermine appraisal independence and result in faulty appraisals. Remember this code of conduct was written as a result of a lawsuit in which their were fraudulent appraisals that were used. It was determined that
the appraiser felt undue pressure from the appraisal managment company to come in at a higher number.... yet the code says that all appraisers must get their work from an appraisal management company.
When you are working with individuals credibilty and reason to do the right thing you will also find some that will work the system. I am not sure how the code of conduct will change that dynamic. Currently all appraisers must take a Standards and Practices
course that clearly defines their roles and responsibilities in the lending process. If someone is going to cheat the system they will cheat no matter what system is in place.
My personal take on the HVCC is that it is limiting appraisers like myself who are ethical and trying to build a business by providing quality appraisal reports in a timely fashion. My business is built on the service that I provide to my customers. If
the HVCC isn't changed than customer service doesn't matter and I become an form-filler. That isn't what I want to do with my career and I truly hope the HVCC is changed so that I won't have to in the future. I am glad to see the FTC spent time reading through
the Home Valuation Code of Conduct and realized there are some big problems for both consumers and appraisers.