Find a new plan for appraisal reform

Re: 'Bill would suspend new appraisal rules' (June 29)

Dear Editor:

Some are saying the Home Valuation Code of Conduct (HVCC) is a good policy and that it is improving our industry. Some go farther and claim that the National Association of Realtors and NAMB are fighting HVCC because they can no longer "influence" unethical appraisers. I, however, am not one of these people.

HVCC is wrong. It ... was not subject to normal transparent conventions associated with regulation or legislation. The code is the result of an investigation that has yet to have its findings released and has all the trappings of a backdoor deal to prevent a massive lawsuit and promote a personal agenda.

The implementation of HVCC has brought lower values, but that is not the issue. The implementation has produced bad methodology. There are numerous reports of appraisers using unrealistic comps -- using single-family-residential, planned-unit-development homes for a custom-construction, gated-community sale, etc. Recently, I received a complaint of a property coming in 20 percent below contract price ($300,000), and comps for outside of the historical district were the bulk of the report. Four weeks later and with another buyer, the value came in 5 percent above the same contract price and comps were reflective of the neighborhood.

Consumers are now financially tied to lenders and it is difficult to transfer loans and therefore harder to hold lenders accountable for their pricing and service. The code does specify that transferring appraisals is acceptable, but in reality it is not happening. One large national lender will only use appraisals if they are ordered from their wholly owned subsidiary appraisal management company.

That same lender will only transfer appraisals out if they have declined or counteroffered the loan. So if they want the borrower's loan they will not transfer the report and the customer will have to absorb the cost of new appraisal.

I am not against mortgage reform and am willing to work on a system that reduces fraud and coercion, but HVCC is fraught with mistakes from its inception to its implementation. Congress needs to enact the moratorium and allow a sensible plan to be implemented as part of the overall reform of the financial industry.

Tom Heath
Mortgage professional
Tucson, Ariz.

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