Many of you have asked if the National Association of Mortgage Brokers (NAMB) has changed its position regarding the Home Valuation Code of Conduct (HVCC). The answer is a resounding “No!” We still believe that the HVCC is harmful to the consumer, to the mortgage broker, to the independent appraiser and to the economy.
NAMB was the first to recognize the harm that HVCC would cause to the consumer and the industry when the agreement was initially announced. NAMB, on its own, filed a lawsuit against Director James B. Lockhart and the Federal Housing Finance Agency (FHFA) to stop the HVCC. The suit was filed Feb. 23, 2009 before HVCC was implemented. Later, the suit was withdrawn when NAMB learned that since Freddie Mac and Fannie Mae were in conservatorship, the suit could not be adjudicated in a court of law.
As NAMB members, you have supported the efforts of your association to change the HVCC. You contributed to the Legal Defense Fund to bring the lawsuit against the FHFA. You signed petitions against the HVCC and provided information on how HVCC was harming the consumer, the industry and the economy.
Through the efforts of NAMB and the National Association of Realtors (NAR), HR 3044 was introduced which called for an 18-month moratorium on HVCC. To date, more than 200 representatives have signed on as co-sponsors of the bill thanks to your efforts.
NAMB’s efforts to stop HVCC did not end there. On Oct. 15, 2009, NAMB sent a letter to Congress requesting that they support an amendment to HR 3126 that would sunset HVCC within 90 days of enactment of the bill. The amendment was accepted and attached to the bill and passed by the full House.
NAMB is currently working to have the same amendment attached to the Senate bill that will be passed in the Senate Banking Committee. However, the mechanism to implement the sunset provision is the creation of a Consumer Financial Protection Agency (CFPA) which is in question of surviving the legislative debate.
NAMB has one big concern even if our efforts to sunset the HVCC are successful or the HVCC expires Nov. 1, 2010. HVCC has become so ingrained with most wholesale lenders that it will continue to be the predominant system for ordering appraisals. It will take many months before the smaller wholesale lenders using a different system will cause a substantial change in the way appraisals are ordered.
NAMB believes the random appraisal system will ensure the following:
►The consumer is not charged additional fees since the appraisal is portable.
►Appraisers are paid a fair value for their professional services.
►Investors in mortgage broker-originated products have confidence that there was pressure applied to reach a certain valuation.
►The mortgage broker will be allowed to order the appraisal in their name.
NAMB is working with Olde City Lending Solutions to have the government-sponsored enterprises (GSEs) and the Federal Housing Administration (FHA) approve the random appraisal system. We hope this template for appraisal ordering takes root and is adopted by other parties. Additionally, the net profits from this venture will go toward funding NAMB’s legislative efforts in Washington, D.C., another portion will go towards building a better communication system with our membership and non-members, and the remaining portion will go toward reducing the amount of dues that members pay to NAMB. Many trade associations have for-profit ventures, and NAMB is on its way to creating its own.
Again, NAMB has not abandoned its original position regarding the HVCC. We are committed to having it overturned and completely removed from the appraisal ordering system. That will take time and the random appraisal ordering system is a stopgap until that happens. NAMB is creating a “mortgage broker-centric” appraisal ordering system that saves consumers time and money. HVCC is like having a drug in your system and we all know that it takes time for a drug to be completely flushed out. In the meantime, the random appraisal system will give the consumer protection against increased costs that the HVCC does not do.
Jim Pair, CMC is with Mortgage Associates Corpus Christi and is president of the National Association of Mortgage Brokers.