Slamming the barn door shut after all the horses have escaped, the Federal Government has put the screws to the cozy arrangement that until a week ago obtained between lenders and appraisers.  The following comes from my Realtor, Scott Young:

“The latest financial news to affect lenders, realtors, appraisers and ultimately consumers is the implementation of the Home Valuation Code of Conduct. Known as the HVCC, this rule was implemented May 1st 2009 and requires that all lenders and brokers use an appraiser from an Appraisal Management Company.

“This ruling is of the utmost concern for it changes the entire appraisal process. Lenders and brokers no longer have a choice in who they get to use as an appraiser, and there can be no contact between appraiser and broker before a physical appraisal is given. Appraisal Management Companies will now be taking a portion of the cost of the appraisal, which means appraisers are now getting paid a portion of what they were paid before, for the same work, resulting in high quality appraisers simply leaving the industry. The AMC’s choose the appraiser, and the appraiser could be from a neighboring city. That’s tough for sensitive markets like Boulder where different neighborhood pockets get very different values, and knowing your neighborhood is very important in producing the best appraisal.

“The HVCC was originally created to help stop banks from pressuring appraisers into inflating home values, but the reality is this rule is hurting all parties in the mortgage and housing industry. Ultimately, it’s the homeowner that suffers the most. It’s the homeowner that pays for the appraisal and it’s their home that’s under scrutiny. I think everyone would agree that homeowners would like their home to be valued by the most qualified appraisers, appraisers who are paid a fair wage and have the knowledge and experience to back up their values

“We have included an article below that gives a more detailed look into the HVCC ruling as well as links to organizations that are trying to put a moratorium on this ruling for 12 months while a better solution can be worked out. Please call your representatives in Congress today, as the HVCC comes to a full vote on Thursday, May 7th. We would appreciate any forwarding of this message to other realtors, mortgage brokers and consumers, as many in the industry aren’t aware of this ruling, and it will have a truly negative effect on consumers, as well as mortgage brokers, realtors and appraisers.”