Video - Appraisers ~ HVCC (Home Valuation Code of Conduct)

Appraisers - HVCC (Home Valuation Code of Conduct)

For every one of the Real Estate Appraiser Home Valuation Code of Conduct (HVCC) enumerated prohibitions, you must ask yourself how or why did all these rules and regulations get codified or put into practice? Why ? Because the appraisers and lenders were in collusion in driving up the price of real estate and "rubber stamping" or inflating home values on appraisals and for making loans they had no business making in the first place. That's why !

The present recession we are in now and the housing market bubble burst which began to unfold and unravel in 2005, like a car being driven off the cliff with a brick to the accelerator pedal, can be traced back DIRECTLY to the appraisers. Remember the steadfast rule; always follow the money [to uncover corruption].

Even if a lender was coercing or influencing an appraiser by the promise of more business referrals, or conversely the threat of not giving them any more business; they had the power to say NO, to be professional and ethical in their standards of conduct and code of ethics -- but they didn't ! So even though this "RICO" operation (Racketeer Influenced Corrupt Organization) that the mortgage lenders and appraisers ran, I blame the appraisers more since they could have stopped all this. Then of course there was Freddie Mac and Fannie Mae condoning and encouraging this whole scam. Then when they ran into problems... you guessed it ! TARP (Troubled Asset Relief Program) or BAIL OUT with taxpayer dollars to the rescue.

From my professional view as a Realtor, appraisers were highly uncrupulous and highly unethical and were DIRECTLY responsible for the mess we are in now with the housing market. Of course, they'll say Realtors are unethical or unscrupulous too, but a Realtor cannot make a penny in commission (whether as listing or buyer's agent) unless the buyer can first obtain financing, can go through lender underwriting, and the lender accepts a "satisfactory appraisal" of the property as a condition of the mortgage financing. Although Realtors obviously stood to gain also in a sales transaction; you will note that the Real Estate Appraiser and Home Valuation Code of Conduct linked above makes no mention of influence, coercion or collusion involving real estate brokers or agents with appraisers. This list of "Commandments" or "Thou Shall Not's" points the finger directly at mortgage brokers/lenders and appraisers...

Fraudulent Appraisals - HVCC (Home Valuation Code of Conduct)

"For anyone who assumed that the toughened real-estate appraisal rules imposed on the mortgage market last year would mean less monkey business in home valuations, here's a shocker: Fraudulent appraisals soared in 2009, according to a lending-industry study released this week, and they now represent the fastest-growing form of home loan fraud." -- excerpt from Washington Post Article May 1, 2010

And it's as the direct and proximate result of real estate appraisers "rubber stamping" and subjectively manipulating property values in collusion with sub-prime mortgage lenders that led to one of the greatest debacles and the fall of the house of cards. This not only led America into the deepest recession since the Great Depression of the 1930's but also affected global economies as well.

The new regulations intended and designed to help eradicate this long standing, pervasive and insidious problem with real estate appraisers appears to have made matters worse or exacerbated the problem. Case in point: my father recently re-financed the mortgage on his single family detached home in Burke, Virginia and the real estate appraiser would not make any adjustment in a sales comparable that was on a 1/5 acre lot (o.20) that was located immediately adjacent to a rail road track versus the subject property that is located on an interior spacious 1/3 acre lot (o.30) on a cul-de-sac. As I told the appraiser, would the value be the same if you were to give your wife or fiancee a 1/5 carat diamond ring versus a 1/3 carat diamond ring and tell her, "honey they are from the same mine so the 1/3 carrot diamond would not be any more valuable than the 1/5 carrot one I just gave you." The appraiser capitulated after I challenged his appraisal or OPINION of value and refunded my father the full cost of the appraisal.

I am glad to see that real estate appraisers are finally coming under the microscope with these new regulations, but more needs to be done...