The Federal Reserve proposed far reaching new rules October 18, 2010 that could affect residential real estate appraisals. The interim rules which are to take effect December 2010, and be finalized in the Spring of 2011, prohibit outside influence in appraisers' valuations and require lenders to report evidence of appraiser misconduct to regulatory authorities. Isn't that what HVCC was designed to do in the first place?! So why are they "re-inventing the wheel" here on this issue?
The new rules will supersede or replace HVCC. All of this is as a result of Congress passing the "Dodd-Frank Wall Street Reform and Consumer Protection Act" in July 2010 and being signed into law by President Obama. The original sponsors of the bill were Barney Frank (D-MA) and Chris Dodd (D-CT) in the Senate Banking Committee as a result of lobbyists pressure to change or reform the appraisal rules or guidelines under HVCC which resulted in a whole host of problems and complaints with inaccurate appraisals produced by appraisers who were were working for low fees through appraisal management companies (AMC's), short turn around time, and unfamiliarity with the local market.
Appraisers were one of the principle parties that got us into this whole real estate market meltdown in the first place, then after rules and regulations were imposed on them to prevent collusion in appraisals, they have to go and screw things up even further for the consumer!
As a result of this whole real estate market meltdown or bubble-burst, it is quite interesting and makes a very poignant statement to note that there were no "punitive" rules imposed on Realtors. As buyer agents we assisted people who were able to obtain financing, which was contingent upon a satisfactory appraisal. We had no part or undue influence in either the buyer obtaining financing or in the appraisal. As long as they had a lender's approval letter, we assisted them in buying a home and assumed that lenders (and appraisers) were practicing prudent and rational guidelines in their lending practices. As listing agents we had to work within the constraints of "fair market value", unrealistic seller expectations and perceptions of value; and work within the constraints or confines of the real estate appraisal - in other words, if the property didn't appraise for what a buyer was willing to offer for it, they weren't going to get the financing, and the deal was not going to go through.
Realtors cannot be blamed in this whole debacle; the finger points DIRECTLY back to lenders and appraisers who were in "cahoots" or collusion with each other in driving the price of housing literally through the roof. Wall Street of course is also to blame since they provided the funding and means for this all to take place in the first place and knew damn well that this was going to happen.
"House of Cards" from CNBC is a great video piece of investigative journalism which documents how this all happened.
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