Antonio & Alexia's Blog


The new "Home Valuation Code of Condut" Relieves Appraisers of Pressure... And Put It On Everybody Else.

The Home Valuation Code of Conduct (HVCC) Becomes effective on May 1st. 2009 and it will hurt home buyers, home sellers, real estate brokers, appraisers and lenders amongst others. Be aware, be prepared, be patient, and... don't talk to the appraiser!

The New York attorney general after concluding an investigation into Freddie Mac and Fannie Mae's appraisal practices along with several government agencies, decided to adopt new changes for appraisals in the mortgage industry. Loan brokers and lenders are no longer allowed to chose their appraiser, all relationships with them are almost illegal! 

This is what the first paragraph of the newly enacted resolution says:  Home Valuation Code of Conduct: No employee, director, officer, or agent of the lender, or any other third party acting as joint venture, partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner including but not limited to:... Followed by 10 points and 11 subcategories of limitations as to what the lender can and cannot do when dealing with the appraisers. After all, appraisers were blamed for the current market conditions.

These new rules force lenders to go to a third party for their appraisals. They must now use and AMC (appraisal management company) forcing appraisers to join an unregulated AMC that will charge 50% or more of the appraisal fee for their services. It disallows the appraisers from engaging in any type of communication with mortgage brokers, Realtors, loan officers or anybody that may receive a commission upon funding of that loan. Seasoned, experience appraisers are forced to share their fees wiThu AMC's

Lenders Magic Wan

The home buyer will probably have higher costs incurred as a result of this new rules, the delays in closing escrows now will go further because of funding delays from 30 to 45 to maybe 90 days. Lenders are not prepared or familiar enough to deal with these changes. Buyers will have to pay higher fees for the lock-in rates and the extensions and if they change lenders, they will have to get another appraisal! Home sellers will not be happy either, because for them, closing early might mean the difference between a normal sale, to a short sale to even foreclosure.  

For us Realtors, we need to start counseling every client about these delays right from the moment we take the listing or write the contract for the buyer. Listing agents should be well prepared to meet the appraiser, have enough comparable sales if available. When additions have been done to the property, copies of finalized permits should be handled over at the same time, and follow up with the lender to make sure the package is complete when submitted for final approval.

As we approach the November 30th 2009 deadline cut for the $8,000 tax credit to first time homebuyers , these delays will cost a lot of people a lot of money. This is one regulation we did not need at this time, but we have to deal with it. Hopefully we get better oversight and more conservative lending in the future, but until that happen, sit down and buckle up because this is going to be a white knuckle ride if you are dealing with real estate appraisals.

Antonio & Alexia Cardenas, "The Realtors In Motion" Serving the wonderful cities of San Leandro, San Lorenzo, Castro Valley, Oakland, Hayward, Pleasanton and Dublin in the Alameda County, on the East Side of the San Francisco bay. Visit us at (510) 326-4263


The Realtors In Motion       Antonio & Alexia Cardenas   

                  "The Realtors In Motion" 

         CRS, GRI, E-Pro Certified. SFR (Short Sales, Forclosure Resource) Serving the east shores of the San Francisco Bay, Alameda county: specially the following cities: Castro Valley, San Leandro, San Lorenzo, Hayward, Oakland, Pleasanton & Dublin.

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Comment balloon 10 commentsAntonio & Alexia Cardenas • April 28 2009 11:44PM


I am very interested to see how this new regulation is going to effect everything.  I understand they are trying to cure a problem, but I don't see that this is going to accomplish what they hope it will.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) about 11 years ago

I heard about it quite some time ago, so now iti is coming? More cost, more time, and what it gurantees? Nothing

Posted by Jon Zolsky, Daytona Beach, FL, Buy Daytona condos for heavenly good prices (Daytona Condo Realty, 386-405-4408) about 11 years ago

If I can't provide appraisers with comparable listings and discuss the interiors of those listings this will be a real problem.  Most appraisers aren't familiar with my small market area and haven't been in the homes that they will be using as comparables.  They rely upon me for factual info on the comparable listings otherwise they have to go off of what they read on the MLS sheets, which can often be inaccurate - new kitchen, might mean we painted the cabinets and put in new appliances or it could mean we gutted the room down to the studs. 

Posted by Gail Robinson, CRS, GRI, e-PRO Fairfield County, CT (William Raveis Real Estate) about 11 years ago

This is the  ONE issue that appraisers, Realtors, bankers, mortgage brokers, and consumers should be joining forces to fight - yet zero has been done to stop this from happening.

This disastrous change was first announced over 12 months ago. With no real action from any one.

Where were the trade associations for Realtors, appraisers, bankers, and brokers on this?

Let's see how everyone feels after 4-6 moths of living with the new rules.

Posted by Lee Walsh, Executive Talent Scout for Mortgage Professionals (SecurityNational Mortgage) about 11 years ago

Christine, we are going to have to deal with appraisers that might not be familiar with our market, I don't believe NAR did anything to fight this new regulation.

Jon, ditto, there are no guarantees that it will help anyone, appraisers will make less money and the homebuyer will have to be stuck with the lender they chose even if it is not the best for them simply because those appraisals will not be good for other lenders.

Gail, that is the core issue here, we need to talk to the appraiser and show them how we arrived at the price, we are the point of contact and we might know more about the area than the appraiser.

TFSLO You are right, this issue flew under the radar and nobody seem to have notice that unless we cry foul, we will or we are now dealing with the consequences. Where was NAR?

Thank you all for your visit.


Posted by Antonio & Alexia Cardenas, "The Realtors In Motion" (Alameda County - San Leandro, CA.) about 11 years ago

This sounds like a typical over-correction.

I always marveled at why in the past, whatever our accepted offer was turns out to be EXACTLY what the property appraised for.

Now, to correct the misguided exuberance in the market, they're going to stifle that exuberance by putting a muzzle on the voices of experts who can provide some insight that may be helpful to the appraiser to make a valuation. We have enough problems with out-of-town appraisers not knowing the local market and pulling comps from different parts of the city.

Who's going to make sure these folks are performing well? That they're doing their job right?

I just listed a property. To confirm the square footage of the house, I asked the seller if she has copies of her appraisals (when she bought it, when she refinanced, and when she had an independent appraisal done. All three appraisals reported different square footage --- by as much as 200 sq ft!

So we may resort to whatever is shown on public records.


Posted by Pacita Dimacali, Alameda/Contra Costa Counties CA (Alain Pinel) about 11 years ago

During an unfortunate experience with an appraiser in a recent transaction, I found that appraisers are protected from the big bad lenders BUT no one else in the transaction is protected from incompetent and unethical (yes, UNETHICAL) appraisers by these new regulations. 

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) about 11 years ago

Pacita, This is a very touchy issue because it affects everybody, the mere fact that the appraisers now will act like nobody can question them or ask them about their findings because of fears of having the loan denied for "interference" is going to create havoc with consumers, and it will cost people money.

Margaret, some of those "unethical" individuals help create the situation we are in now.

Thank you for your visit

Posted by Antonio & Alexia Cardenas, "The Realtors In Motion" (Alameda County - San Leandro, CA.) about 11 years ago
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