Looks Like HVCC is Slowing Home Sales

By Robert Freedman, Senior Editor, REALTOR® Magazine

For weeks, NAR has been getting e-mails and phone calls on problems caused by the implementation of the Home Valuation Code of Conduct. If you’re not familiar with HVCC, it’s an agreement entered into between the two secondary mortgage market companies Fannie Mae and Feddie Mac and the State of New York. The intent of the agreement is laudable: to curb the kind of inaccurate appraisals that helped fuel the housing meltdown.

But HVCC has turned out to be a problem in its own right, judging from everything we’re hearing, and not just for real estate deals in New York. The two mortgage companies are applying HVCC rules to all mortgages they handle, regardless of state, so any problems with HVCC are nationwide in scope.

Here’s a sample of what our researchers found:

  • 76 percent of practioners say the time to obtain a completed appraisal increased after May 1 (the date of HVCC implementation), with 69 percent of those saying the increase has been more than eight days.
  • 37 percent says sales have been lost because of the appraisal rules, with 20 percent saying they’ve lost multiple sales. This is especially unfortunate, since market data suggests we have pent-up demand for housing.
  • 70 percent say out-of-area appraisers have been used. This is important because our members say out-of-area appraisers can’t be counted on to have intimate knowledge of a market and can therefore miss details on comparables and other facts that can affect price.

These and other findings from the survey are preliminary, so there might be more information coming out of the survey in the next few weeks. What’s important is that NAR leaders and staff have some hard data to share when they talk with lawmakers and policymakers, as they’ve been doing for the past two weeks. NAR President Charles McMillan last week had meetings with the attorney general’s office in New York and with the Federal Housing Finance Agency (Fannie and Freddie’s conservator). The two mortgage companies were in that meeting with FHFA as well, as were apprasiers.

Congress is aware of the issue. There’s even a bill (H.R. 3044) to impose an 18-month moratorium on HVCC, but it’s unclear what will happen with that, since Congress is focused on health care reform this summer. (If you want to look at the bill, go to Congress.gov and search “H.R. 3044.”)

Given the amount of concern the issue has generated (a blog entry by one of NAR’s officers, Steve Brown, generated more than 150 comments), a good look at what’s happening is clearly needed. At a minimum, NAR’s findings give everyone some hard data to look at and consider.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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  1. Please contact your representatives in congress and urge them to co-sponsor HR 3044. An 18 month moratorium of the HVCC. The HVCC needs to be rewritten to fix its inherent flaws that are affecting consumers and the economy.

    HVCC has caused havoc for homebuyers and homeowners. It is anticompetitive legislation that sets precedent for more anticompetitive legislation in the future.
    Please contact your Representitives

  2. Lorraine

    Dealing with VA Appraiser.
    After looking at several homes my clients put an offer on a property. They were going to finance through VA and they were quailified with the lender. Well the apprailsal came in at nearly $100,000 lower then the offer. My lenders went through the system to try and first get the appraiser to reconsider, he said he was sticking to his price. Then they went to VA to reconsider, at this time they sent the comps to compare his appraisal compared to what they had. No go through VA. Now to get to the appraisal report. The appraiser went nearly 4 miles away from the property, the comps were 4 months old, they did not compare to the subject property, smaller lots, no pool, no appliances, not the same location ect. He did however use one home in the same location that sold for $249,000 there was one more home he could have used on the same street that sold for $305,000 and also needed some work. He choose not to use that comp or anything remotly close. He could have gone one mile out and found Million dollar homes ??
    I do not understand how people like him are getting away with double standards to make these crazy appraisals. I also understand market conditions, but that much differance is rediculous. My fear, are we going to get him again on another property. Is there no recourse for the buyer. Who is running who?? This whole market has gone out of control and the sad part no one is doing anything about it. But thats another issue. Listing Agents, Banks, Reos, Short Sales, I know let the Brokers take control rather then the agents. Agents are ruling Brokers at this day and time. Money Money has taken over and Ethics have taken flight. Sad !

  3. Please advise what is the guideline or bill that would apply to inome tax payments on properties being sold on short sale.

    A client has informed me that he was advised by his accountant that he will be paying an equivalent tax for an amount of $80,000. We managed to sell the house of my client for $180,000. His original mortgage was approximately $510,000. Taking the difference of the selling price and mortgage would be $330,000. According to the accountant ,a cap of $250,000 for amount exempted from tax is provided by law. However the remaining balance of $80,000 will be taxable.

    Please advise the bill or guideline documenting the above procedures so we can inform our short sale clients upfront before we continue to offer our services to short sale their properties.

    I am afraid if the above guideline is true, people would prefer to just foreclose their property rather than having it for short sale as they are already in financial difficulty. Adding on this additional burder would make them be in a more difficult situation.