KGE Real Estate

I received another comment with new information about the Home Valuation Code of Conduct that I posted information on previously. Again, some good content prompted me to post instead of simply leaving it as a comment.

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Below is an example of New York State Attorney General Andrew M. Cuomo HOME VALUATION CODE OF CONDUCT (HVCC) and what is may cost the US Consumer if HVCC is not stopped in the Senate.

Home Valuation Code of Conduct
The Federal Housing Finance Agency (FHFA) has announced the “final” Revised Version of the Home Valuation Code of Conduct (HVCC).

The Code is based on an agreement between the Enterprises, the New York State Attorney General Andrew Cuomo and FHFA to improve the reliability of home appraisals.

The “agreement” was originally between Fannie Mae, Freddie Mac, the Office of Federal Housing Enterprise Oversight and Cuomo. The New York Attorney General made a big splash is THIS ANNOUNCEMENT. The settlement was prompted by an investigation of mortgage and valuation fraud initiated by the New York Attorney General in response to allegations of shady dealings between an Appraisal Management Company, Washington Mutual and a group of appraisers doing contract work for the Appraisal Management Company.

“The integrity of our mortgage system depends on independent appraisers,” said Cuomo. “Washington Mutual compromised the fairness of this system by illegally pressuring appraisers to provide inflated values. Every company that buys loans from Washington Mutual must be sure that the loans they purchased are not corrupted by this systemic fraud.”

The lawsuit filed last week details a scheme in numerous e-mails showing First American and eAppraiseIT caved to pressure from Washington Mutual to use appraisers who provided inflated appraisals on homes.

E-mails also show that executives at First American and eAppraiseIT knew their behavior was illegal, but intentionally broke the law to secure future business with Washington Mutual. Between April 2006 and October 2007, eAppraiseIT provided over 250,000 appraisals for Washington Mutual.

Due to many problems with the original HVCC, the failure of WAMU, Fannie, Freddie and a myriad of other reasons, the agreement was revised after a comment period. However, it’s far from perfect and, if implemented, will have a significant effect on your brokerage business and the relationships you have built.

Per: http://www.ffiec.gov/hmcrpr/hm091108.htm 9/8/2008 Release $$$$$$$$$$$$$$$$$$$$ US CONSUMER COST INCREASE EXAMPLE with HVCC$$$$$$$$$$$$$$$$$$$$$$$$$

The Federal Financial Institutions Examination Council (FFIEC) today announced the availability of 2007 data on mortgage lending transactions throughout the nation at 8,610 financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include, but are not limited to, banks, savings associations, credit unions, and independent mortgage companies. The HMDA data made available today cover lending activity – applications for loans, loan originations and denials, and purchases of loans – from 2007. The data include 21.4 million applications and originations and 4.8 million purchases, for a total of 26.2 million actions reported by all covered institutions in 2007.

Now let’s work the math 26.2 million consumer mortgage transactions in 2007. Now the loans will need to be locked for at least 45 days (maybe 60) being conservative vs. 30 days as the time frame to get an appraisal will be that much longer than before due to the complexities and process of the AMC’S (Appraisal Management Companies).

Let’s be conservative that the average loan amount is $118,000.00 x 26.2 million = $3,091,600,000,000 Total Mortgage Monies Lent out.

So now we take $3,091,600,000,000 x .25% (this is a conservative number for the cost of the extended rate lock vs. a 30 day lock)

= $772,900,000,000 cost more to the US Consumer now wait there is MORE $$$$$$

The average price conservatively of a new appraisal under the HVCC will increase by $125.00

26.2 million mortgage transactions x $125.00 more from the US Consumer = $3,275,000,000 MORE $$$$$$

Grand Total of the example to the US Consumer

$772,900,000,000 + $3,275,000,000 = GRAND TOTAL US CONSUMER MAY PAY MORE WITH HVCC $776,175,000,000

References:

Per: http://www.ffiec.gov/hmcrpr/hm091108.htm 9/8/2008 Release

http://www.oag.state.ny.us/about.html

http://www.cnbc.com/id/30521887

http://www.petitiononline.com/hvcc/petition.html

http://kgerealestate.com/blog/2009/04/home-valuation-code-of-conduct-must-be-stopped/

http://narblog1.realtors.org/mvtype/appraisalinsight/home_valuation_code_of_conduct/

http://www.realtor.org/wps/wcm/connect/b79bfd004dd40b4f8919ade06077afc4/Williams+Fannie+Mae+HVCC+Delay+04202009.pdf?MOD=AJPERES&CACHEID=b79bfd004dd40b4f8919ade06077afc4

http://www.realtor.org/wps/wcm/connect/239710804dd4088588d5ade06077afc4/Koskinen+Freddie+Mac+HVCC+Delay+04202009.pdf?MOD=AJPERES&CACHEID=239710804dd4088588d5ade06077afc4

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf

http://ezinearticles.com/?(HVCC)-Home-Valuation-Code-Of-Conduct-And-The-End-Of-The-Independent-Real-Estate-Appraiser&id=1142474

http://appraiseractive.blogspot.com/2009/01/home-valuation-code-of-conduct.html