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News
NYT: "In Appraisal Shift, Lenders Gain Power and Critics"
An article in today's New York Times details the origin of the HVCC and some of the problems that both lenders and appraisers are complaining about. I found it interesting that a group of appraisers created a petition before the credit crisis warning that prices were getting out of control.
Instead of developing relationships with brokers and agents, the Hartliebs must wait for a lender or appraisal management company to call. A year ago, they would make $350 for an appraisal that would take about five hours. Now the management companies offer as little as half that. The couple has laid off four appraisers who used to work for them.
Over all, it seems little has changed: lenders are still pressuring appraisers to value homes to match their needs, and honest appraisers are still attempting to fill their role in keeping the real estate valuation honest. The AMCs playing as middle man are just complicating the process more than necessary.
Wall Street Journal: "Reappraising Home Appraisers"
The WSJ covers many of the same ideas that we've already mentioned here on this blog:
- Appraisers are coming under fire (again) for allegedly low-balling home values.
- Appraisers are having to work harder for lower fees.
Appraisals are supposed to shield home buyers from paying too much and lenders from overestimating the value of collateral. If appraisals come in too high, buyers may overpay, making defaults more likely. If they are too low, it becomes hard to sell or refinance homes. Many real-estate agents and builders say that the pendulum has swung too far toward caution, and that lowball appraisals threaten to snuff out any recovery in the housing market.
You can read the full article on the Wall Street Journal website.
HVCC A Burden On Buyers?
Dirk E. Schneider argues that the HVCC rules increase the cost of appraisals without gaining any benefit in exchange.
A consumer (mortgage borrower) will typically pay from $300 to $500 for an appraisal, but out of that the AMC takes their "split," leaving maybe $150 to $225 to pay the appraiser. The AMC uses the lowest-price appraiser, who likely has the least experience, schooling and knowledge. Consumers believe they are paying a professional fee but are paying administrative fees for the management of ill-qualified appraisers. The banks no longer bear the cost of managing the appraisal process and ultimately get to pocket the money.