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HVCC Clarification

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by fla2765, Feb 18, 2009.

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  1. fla2765

    fla2765 Sophomore Member

    0
    Feb 14, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    i have been reading alot lately about an interpretation by some of the HVCC rule regarding mortgage brokers being or not being able to place appraisal orders.

    i read what was written by someone at appraisal port who said that the HVCC clearly states that mortgage brokers cannot order appraisals, even through an AMC.

    i am reading it right now and it says,

    (III A) " the lender or any third party specifically authorized by the lender, (including but not limited to, appraisal companies, appraisal management companies, and correspondent lenders), shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents).

    now i realize that the words mortage broker, and will not accept, appear real close together a couple of times up there, but where does it say that mtg brokers cant order from AMCs?

    it says the mb cant select - if he orders through an AMC, did obviously didnt select

    it says mbs cant retain - again, with an AMC doing the retaining, thats no problem

    it says they cant compensate - this can be done either by the lender or third party, (AMCs, i guess, although i've never heard of an AMC collecting from the borrower)

    anyway, it just sounds to me like its all in the interpretation.

    the only ones ive heard doing the interpreting have been AMCs and lenders

    why shouldnt mbs be able to order through AMCs if they have no contact with the appraiser - if theres no contact, how can that be a violation of the code?

    the HVCC has some great potential for good things, but also some bad. if the lender requires the entire file to be assembled and sent in without the appraisal, theres gonna be alot of wasted man hours and efforts by the borrowers for nothing, and alot of lenders losing money on files that they would have never even considered after seeing the appraisal.

    i think the appraisal should be moved to the front of the line when it comes to the mtg application process - let the mtg brokers order through AMCs if they want to - as long as they adhere to the code, whats the damage?

    i know, i know, pencil searches, pushing for values, alot of that came from the MBs, but some also came from loan officers, (THE LENDER), and AMCs, who were being pushed by the LOs

    LOs can order from AMCs - right? AMCs can take 60% of our fees and not even have an appraiser working for them, and not even have an office anywhere near where the jobs are being done.

    but MBs cant order through AMCs? doesnt make sense to me. i dont think thats what the code was designed to do, and i dont think that thats what is CLEARLY says

    thanks for your input

    fla2765
     
  2. Riick

    Riick Elite Member

    32
    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Delaware
    Short and Simple:
    Because the BANKS will not accept an appraisal ordered by a MB.

    .
     
  3. fla2765

    fla2765 Sophomore Member

    0
    Feb 14, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    thanks Rick, but i dont think its that simple.

    the HVCC is supposed to be designed to support appraiser independence.

    if banks refuse to accept mtg apps that are certified as HVCC compliant, in order to increase the volume of appraisal orders through an AMC that they own, it's gonna get sticky.

    fla2765
     
  4. George Hatch

    George Hatch Elite Member

    94
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    Actually it's very simple. Fannie and Freddie are being very direct and there is no question about their intention. They will not accept an appraisal if a loan originator had anything whatsoever to do with the selection, engagement or compensation of the appraiser.

    Here's the link to Fannie's FAQ on the HVCC. I suggest you read all of it, especially the section (on pg 5) wherein the question about mortgage broker involvement in the engagement is asked/answered three different ways with the same "no".

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

    Riick Elite Member

    32
    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Delaware

    It's already gotten "sticky" for some folks.
    But I admire your spirit, I too love to ask questions where I already know the answer.

    .
     
  6. flashwatch

    flashwatch New Member

    0
    Feb 6, 2009
    Professional Status:
    Banking/Mortgage Industry
    State:
    Maryland
    As a mortgage broker who has been in the trenches for 25 years, I can tell you this is a big joke. These banks can not even handle what they have now, throw the appraisal process in their laps and nobody will get a loan. Us quality and competent MB are seeing an even higher credit quality customer that use to go directly to the bank but is being offered a crappy deal and can't get a phone call returned. They need to get the MB's that are left, more actively involved an all mortgage transactions, not less involved. . . but they will see...Down the road, the lenders will be begging for our business and help again, and start treating the appraisers with the respect they deserve, instead of asking for 2 more comps on a 50% ltv deal...Most of us have tee shirts older than the underwriters.
     
  7. timd354

    timd354 Elite Member

    97
    Jan 11, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    Here are the applicable Q&A's, straight from Fannie's FAQ's, pg 5:



    When a lender uses an appraisal management company, the appraisal management company is responsible for retaining and paying the appraiser. Is it likewise permissible for a mortgage broker to use an appraisal management company, since the mortgage broker does not technically retain or pay the appraiser?
    [FONT=Arial,Arial][FONT=Arial,Arial]
    No. The Code prohibits lenders from relying on an appraisal where the broker had a role in selecting, retaining, or compensating the appraiser. ​

    [/FONT]
    [/FONT]May a mortgage broker provide the lender with an approved appraiser list for the lender to use when ordering appraisals for that particular broker?
    [FONT=Arial,Arial][FONT=Arial,Arial]
    No ​
    [/FONT]
    [/FONT]
     
  8. timd354

    timd354 Elite Member

    97
    Jan 11, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    As someone who has been involved in the business for a very long time, both as loan originator for mortgage brokers and banks, and as an appraiser for a very long time, I am going to give you some constructive advice: Between the HVCC and the disappearance of many wholesale lenders willing to buy loans from Mortgage Brokers, most mortgage brokers will be eliminated soon. If you cannot convert your company into a correspondent lender, you will mostly likely be finished, or you will barely survive and your income will be severely reduced. If your company cannot convert into a correspondent lender, you would be better off cutting the best deal you can to become part of a correspondent lender. If the mortgage broker business ever gets revived from the dead in the future, you can easily go back to it. In any case, good luck surviving in this environment....many people on the both the lending side and the appraising side are going to have a tough time in this environment.
     
  9. Kathleen Hayes

    Kathleen Hayes Sophomore Member

    0
    Jul 5, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Massachusetts
    NOTE: Correspondents do have a risk that brokers don’t, which is that the investor can force a correspondent to buy back a loan if it doesn’t meet the investor’s guidelines. In my opinion that risk is not great enough to warrant their being classified as lenders.

    Meaning: goodbye mortgage borkerage business as we know it...at least right now.
     
  10. ghrousseau

    ghrousseau Member

    0
    May 5, 2006
    Professional Status:
    Licensed Appraiser
    State:
    Virginia
    Which is one reason that the quality of lending coming out of the correspondent channel of business at this time is very good, at least for mid-size correspondents. As a lender, DU and LP still will give you a representation and warranty for the credit decision, as long as all the documentation in the file is consistent with the agency or investor published guidelines. The way the AMCs are being marketed to correspondents by Chase, Wells, CW, ect. is that if you use the captive affiliated AMC you will also get a representation and warranty on the collateral valuations. This is another reason that many lenders went to AMCs, even though they know the reports are crap. Correspondents who have kept the appraisal management in house are extremely careful with collateral at this point, because it is one of the few areas investors will go specifically after if a loan goes delinquent and their is no fraud with regards to asset or income documentation. Anyway, the point of my post is that very few residential appraisers actually understand the manner in which their clients conduct business and the type of lending they participate in. Next time you are visiting your clients take the time to talk to them about their lending and areas of concern they have. They may also explain to you why they are getting specific underwriting stips on certain property types in certain market areas.
     
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