HVCC Has Negative Impact on Appraiser Income. Appraisal Fees Could Rise.

Unless you've been on another planet, you're aware that a settlement reached between Anthony Cuomo, Attorney General of New York, and Fannie Mae / Freddie Mac, created the Home Valuation Code of Conduct HVCC separating the loan originator from the appraisal ordering process by directing appraisal requests through 3rd party Appraisal Management Companies. 

Now appraisers are speaking up on how this has affected their income.

The following are excerpts taken from "Working RE magazine online addition".

"Frustrated with low-ball Appraisal Management Company (AMC) fees, appraisers are digging in, many refusing to work for less, some calling for a national strike to prove their point - but there may be a better way, such as knowing what appraisal services are worth in your market and demanding it. New regulations requiring fair pay for appraisers coupled with verifiable data on median appraisal fees nationwide may make this dream a reality.

"According to the Working RE/OREP HVCC Talkback Survey, which now has nearly 5,000 respondents, 98 percent of appraisers say that in their experience working with AMCs, appraiser selection is based solely on obtaining the lowest fee at least some of the time (less than two percent answer that appraiser selection is "never" based solely on obtaining the lowest fee). To the question, "Are the fees offered by the AMCs you work with unrealistic given the nature and scope of the assignment?" 46.5 percent say "always," 37 percent "often," 14 percent "sometimes" and only 2.5 percent say that AMC fees are "never" unrealistically low given the nature and scope of the assignment."

"The following comments were posted to our survey last week by a frustrated appraiser (posts are anonymous): "Parts of HVCC are important but the AMCs should not be allowed to take, in some cases, over 60 percent of my fee. I make less money now than I made 28 years ago when I started appraising residential real estate. Is that right? Why doesn't my experience (over 10,000 residential appraisals in a single county in New Jersey) mean anything? He/she who charges the least, gets the work. I am just sick of this."

With these comments how confident can the participants of a residential sale be that the appraisal needed for their transaction was handled fairly and with a reliable estimate of value?  You have to wonder!

So what's the possible appraiser solution to this attack on their income.  In all probability, appraisers located in different geogarphic regions will band together and try to present a united front to the Appraisal Managament Companies to increase their fee payout.  Appraisal Management  Companies protecting their income stream will probably raise the charge for appraisals.  Guess who'll pay, the parties to the real estate transaction.  Keep in mind you'll still have no assurance that the best appraiser was assigned to complete the appraisal. 

Unfortunately the mood in Washington seems to be that no changes are needed to HVCC.