National Mortgage Professional Magazine had an opportunity to follow up with National Association of Mortgage Brokers President Marc Savitt regarding the Home Valuation Code of Conduct (HVCC) and NAMB's recently launched Call to Action campaign. NAMB has encouraged all mortgage industry profesisonals to continue to flood the offices of New York State Attorney General Andrew Cuomo, and Fannie Mae and Freddie Mac over the harmful effects of the HVCC.
Click here to listen to our conversation with NAMB President Savitt on the HVCC, recorded Friday morning, three days after NAMB's June 9 initial Call to Action.
"Our Call to Action has taken on a life of its own and has really caught fire," commented Savitt. "I don't know if I can stop it even if I tried."
In our conversation, Savitt recounted a story that took place this past Wednesday while he was in Phoenix at the Arizona Association of Mortgage Brokers (AAMB) 2009 Marketplace & Expo in Phoenix. He said that at a luncheon, an AAMB Board member stood up, and to a room of approximately 300, asked everyone to take out their cell phones, and simultaneously, call the Office of New York State Attorney General Andrew Cuomo. They then followed that call with a 300-plus strong simultaneous call to the offices of Fannie Mae, again jamming the lines and voicing their concerns.
"Fannie Mae is hearing us, but is not quite sure what we want," said Savitt.
As the Call to Action picks up increased momentum, interest from national print and television media outlets has picked up as well, as NAMB is lining up several media opportunities over the next few weeks to have their voice heard on the issue. Savitt's message to the mortgage community remains the same, to continue the calls and e-mails to Cuomo's office and to Fannie Mae and Freddie Mac on a daily basis from here on in.
"The HVCC is putting people out of business ... it's a disaster," said Savitt. "Mr. Cuomo needs to get rid of this code or we are going to do it for him."
“Don’t put the fox in charge of the hen house,” is Savitt’s description of the HVCC situation, a situation that will cost the consumer an estimated $2.8 to $3 billion. “Everyone needs to understand the harm that has been caused. Unregulated AMCs [appraisal management companies] are a problem.”
After listening to our conversation, visit NAMB’s HVCC Resource Center, a mini-site dedicated to all issues related to the HVCC, by clicking here.
Savitt is also seeking input from all who have been impacted by the issue by recounting their experiences and sending them along to [email protected]
“This thing is a train wreck,” says Savitt. Click here to listen to our initial conversation with NAMB President Savitt and to find out all the details of this train wreck known as HVCC!
NAMB's HVCC Call to Action
To: All mortgage brokers, real estate agents, appraisers, lenders, home builders, title agents and consumers
From: Marc Savitt, president of the National Association of Mortgage Brokers
After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.
In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!
We have received hundreds of e-mails through the [email protected]
e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.
Who will you be contacting?
● NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
● Federal Housing Finance Agency (FHFA): (866) 796-5595, [email protected]
● Fannie Mae: (202) 752-7000, [email protected]
● Freddie Mac: (703) 903-2000, Internet Complaint
● Senators, Representatives and Governors: Click here for contact information.
● Also, please contact your local TV and Newspaper outlets.
Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.
1. NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over $2.8 billion a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
2. Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
3. AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
4. HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.
5. No Portability! Consumers are “trapped” with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
I. Lack of portability
a) Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
b) Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
c) In a poll conducted by NAMB, 75.8 percent of respondents said that zero percent of their appraisals are portable since the enactment of the HVCC.
II. Lack of quality
a) AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.
i. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
b) Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III. Increased cost of appraisals
a) The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
b) $150: Minimum increase per appraisal.
$561.95: Average loan amount of $224,778 at .25% for extended lock period
$711.95: Average total increase per transaction
x 3,870,552*: 2007 HMDA report of residential real estate loans originated
$2,755,639,496 - $2.8 billion in increased fees to consumers!
IV. Articles illustrating the effects of the HVCC
Feel free to forward these articles and/or reference them in your conversations.
a) The appraisal bubble: The Center for Public Integrity
b) The Cure is Worse than the Disease: Appraisal Press
c) Appraisals roil real estate deals: The Wall Street Journal