As we recently discussed, the new HVCC appraisal rules are hurting real estate markets that are already struggling to recover, and legislation was just introduced to suspend HVCC until the rules can be improved to address those issues.
In a pair of posts from earlier this week, BankRate’s Holden Lewis gives a good overview of many of the specific problems being caused by this well-intentioned but poorly-designed system and discusses why supporting HVCC just because mortgage brokers oppose it isn’t necessarily a good idea.
(With regards to that last article, one important point that he only touches on is that there are multiple groups affected by HVCC–specifically: government regulators (i.e. Andrew Cuomo, the Attorney General for New York); the quasi-governmental agencies Fannie Mae and Freddie Mac; lenders; appraisal management companies; mortgage brokers/loan originators; appraisers; and consumers. While it’s often a pretty good heuristic to assume that most financial changes will screw over the people with the least power/money/resources to the benefit of the people with the most power/money/resources, in this case the people who are assuming that the mortgage brokers must be on the wrong side of things aren’t realizing that that list I gave was basically in decreasing order of power; in this case, then, the mortgage brokers are getting screwed over as much as most of the other people at the tail end of the list. Lenders are getting somewhat hurt, since HVCC is reducing the volume of loans that they can originate, but they were able to exert enough leverage on the process to allow themselves to buy stakes in the appraisal management companies (despite the fact that excessively close ties between lenders and appraisal management companies was originally what Cuomo was investigating when he forced Fannie & Freddie to agree to HVCC!), so that HVCC now serves as a bit of a cash cow for them. And as a result, the appraisal management companies themselves are also loving HVCC.)
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David
on Jan 14th, 2010
@ 5:33 pm:
HVCC = Housing Crisis II
Why? Appraisal orders are being bid out to the cheapest appraisers (regardless of where they live, regardless of their experience, regardless of whether they have a clue what they are doing).
Show me a law that requires use of the lowest bidding physician. Run some statistics the following year to see if the number of deaths in the U.S. increased.
Get my drift? It doesn’t take a genius to figure out that Cuomo, FNMA, & Freddie Mac have screwed up the housing market…thus costing homeowners even larger losses in property values. Homeowners should seriously consider a class action lawsuit against these 3 entities (or 2 semi-entities and 1 idiot).