Mortgage brokers sue over valuation code, appraisers pitch in

As Valuation Review reported this week, the National Association of Mortgage Brokers (NAMB) has filed a lawsuit with the U.S. District Court for the District of Columbia against Federal Housing Finance Agency (FHFA) Director James B. Lockhart over the Home Valuation Code of Conduct (HVCC).

NAMB President Marc Savitt said in the announcement that the HVCC will drive up costs for consumers and push small businesses out of the market, and that it’s critical for mortgage and real estate professionals to maintain an appropriate level of contact with appraisers to ensure appraisal quality and independence.

Savitt spoke in more detail with Valuation Review recently regarding the suit. Here’s an excerpt from the interview:

Valuation Review: Would you prefer that the code be dropped completely? If the parties were to alter it, what changes would you like to see?

Savitt: We want it thrown out. Our suit will be in court probably within 10 days or so. We’re going to ask for an injunction to have this thing put on hold until it can be heard by the court. Especially with everything going on – we’re trying to restart the housing industry – this is going to delay the process and add cost to consumers.

Let me give you one example. Appraisers can’t work for half price. They’re hurting now. So if you’re making $400 on an appraisal now, and the appraisal management company is going to pay you $200, you’re going to raise your prices. So who ends up paying for that? The consumer.

You’re going to have a lot of lost time because you’ll have to have longer lock-in periods. Lock-ins are going to cost more money because they’ll be for longer periods of time.

Financially, it’s going to hurt the consumer first and foremost. Secondly, it’s going to hurt the mortgage brokers and the appraisers. The appraisers have actually called NAMB to team up and fight this thing because they’re own trade associations won’t stand up for them. They won’t fight for them.

To read the whole interview, see “NAMB president: Appraisers backing HVCC lawsuit” (requires subscription).

CLEVELAND ROCKS … the HVCC

Valuation Review recently hosted a live national audio seminar on the new Home Valuation Code of Conduct from its Cleveland, Ohio, studio. Hundreds of appraisers, lenders and others called in to participate and get answers to their questions about the code.

A few highlights:

• US Bank Chief Retail Appraiser Tony Pistilli on how appraiser exclusionary lists might change — “We’re discussing re-evaluating our exclusionary appraisal lists by virtue of how many different business lines we have. We, at times, have disparate lists in the bank itself, so we want to consolidate that and only include those that have extensive documentation going forward. There’s going to be, I think, a new list for our bank that would include those appraisers on the Fannie Mae or Freddie Mac exclusionary list, and then anyone we have substantial documentation for within the last year.” 
• FNC Chief Appraiser Kathy Coon on fee changes — “I suspect appraisal fees will increase (under the HVCC). There are only so many appraisers to go around, and of those, there are only so many that can produce quality reports.” 
• Allstate Appraisal’s Steve Albert on the projected rise in AMC business – “I don’t necessarily feel there’s going to be a rush to AMCs from lenders. … We’re not being overwhelmed by calls from lenders who invariably are choosing AMCs. Everyone’s making that decision over the next couple of months.” 
• Appraisal Institute VP Joe Magdziarz on appraiser education — “There are about 13,000 licensed appraisers, at last count, on the market today. FHA has precluded licensed appraisers from performing appraisers for them. I would anticipate that will happen eventually in the HVCC.” 

Listener comments about the show echoed the quality of the experts:

• “Good choice of panelists; well moderated; excellent inclusion of questions”
• “I would recommend the radio vehicle; October Research has the model down cold. Highly worthwhile.”

For those who missed it, CD copies of the show are available. Also, look for more analysis from the show in an upcoming edition of Valuation Review.