The Wall Street Journal is reporting that mortgage broker and the real estate industry is pushing to kill the Home Valuation Code of Conduct (HVCC) through pending legislation to overhaul financial-sector regulation.
Adopted in May 2009, HVCC was meant to ensure appraiser independence by banning mortgage brokers and bank loan officers from selecting appraisers. Mortgage brokers and realtors complain that the rules have produced low-ball appraisals that have blown up deals, while appraisers argue the change has harmed appraisal quality.
Mortgage lenders, on the other hand, are trying to fend off the measure. Several big lenders own or have a stake in companies that have seen a surge in business as a result of the new rules. “We’re going to try all we can to keep it out,” said John A. Courson, the Mortgage Bankers Association’s president and chief executive officer.
Reverse mortgage brokers would also enjoy seeing an end to HVCC. Since enacted, brokers have been required to use appraisal management companies and the results haven’t been good. “They have driven costs up, the work is marginal, and the response times are terrible,” said Jack Belles, CEO of Reverse Mortgage of New England.
Prior to the new regulations, Belles said the company typically paid $350 for a Federal Housing Administration appraisal. Now, they’re paying anywhere from $450.00 to $550.00 and sometimes as high as $650.00 he said.
Things could change if the final version of Wall Street reform includes language passed in the House, which included a measure to direct federal regulators to come up with an improved set of rules. The language, however, didn’t make it into the most recent draft being used as a basis for House and Senate negotiations said the WSJ.
Lawmakers are expected to turn their attention to the appraisal rules and other mortgage provisions this week.