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Mortgage brokers have generate a lot of smoke about the Home Valuation Code of Conduct (HVCC). They pontificate that if the changes proposed in the HVCC are enacted it will prevent brokers from engaging qualified, and experienced appraisers. The truth of the matter is that there are many experienced and professional mortgage brokers who are in the minority, because they can not compete with the majority of the “close the deal” brokers. <br> <br> What the “close the deal” brokers are really saying is that I won’t be able to shop appraisers until I can find one that will make my deal. I am an appraiser, and have gotten numerous “comp check” requests from brokers saying that they have a deal and need a value of x to close the deal, what is your fee? One e-mail was actually addressed to 30 appraisers in the address line. The “comp check” is the mortgage brokers way of getting 1) a free appraisal, and 2) a guarantee of a pre-determined value. The appraiser is required by appraisal standards to follow the same data collection and analysis for a comp check as a complete appraisal and is forbidden by those standards to take an assignment with predetermined values. Both of which are required by a “comp check”.<br> <br> Why doesn’t the appraiser, just say no. Some do and the ones that don’t play along can be black listed by the mortgage broker. The broker will remove the appraiser from their list of “approved” appraisers and may add them to the lender’s “do not use list”. These backlists are maintained in secrecy providing no notification that the appraiser is on the list and no way to appeal their inclusion to the list. If the appraiser is foolish enough not to collect their fee up front and looks to the mortgage broker for payment, they will find that if they don’t meet value, they won’t get paid. If the deal doesn’t close for whatever reason, they won’t get paid. If they complain, they won’t receive future work. I know of one appraiser whose appraisal came in at value; however, the market had an oversupply condition which the appraiser indicated in the report. This killed the deal. When the appraiser refused to lie and change the report, the broker canceled every open order the appraiser had with the broker. These situations are not the exception as the mortgage community will try to tell you, but the norm.<br> <br> Will the HVCC solve these problems? I think not. The intentions are good, the methods are extremely flawed. Separating the mortgage broker from the appraisal process is a step in the right direction, but going to Appraisal Management Companies (AMCs) is jumping out of the pan into the fire. The AMCs are not regulated or required to have appraisal licenses. The value they add (if any) is deducted from the appraiser’s fee. The HVCC need a lot of work, but not by the mortgage broker who are one of the major culprits.
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