HVCC - Copy of Appraisal

[Mike Phillips]

What is the general feeling regarding this provision of the HVCC:

"The lender shall ensure that the borrower is provided, free of charge, a copy of any appraisal report concerning the borrower’s subject property immediately upon completion, and in any event no less than three days prior to the closing of the loan. The borrower may waive this three-day requirement. The lender may require the borrower to reimburse the lender for the cost of the appraisal."

MY BOLD

I happen to think this provision is excellent, but I don't see it being discussed.

Comments: Three days is almost enough time for a borrower to have the appraisal field reviewed. "Upon completion" could afford the borrower plenty of time to have the appraisal reviewed. Could this open up a sub-market for the quality oriented among us? And of course we would be able to advertise directly to consumers without the "lender must order" headache.

How many of you have given much thought to a review appraisal being completed on your work just prior to closing? Does anyone think Skip & Flock might experience some uneasiness?

Is there a strategy here or did someone screw up and make a positive suggestion? Have lenders and appraisers missed this or do they figure it will die with HVCC?

Cheers -
MP

 

[Terrel L. Shields]

How many of you have given much thought to a review appraisal being completed on your work just prior to closing?

If I cannot understand the appraisal, why would I think I could understand the review?

Could this open up a sub-market for the quality oriented among us?

to do what? Review or deliberately diss your competition and throw a big fat clinker in the process? Why not just hire my own appraiser and compare results?

I mean really. A review takes more work than an appraisal if done properly. And obviously, if you disagree with the value, the borrower will want your opinion. The review, in reality, should cost just as much and if it doesn't then is it a 'review' or a rubber stamp? [or as one appraiser told me, "I can't spend time redoing this for $135!]

The 3 days before rule will mean that there will be even more pressure for you to turn the report around in 24 hours. Get assignment Monday, turn it TUESDAY, and we close on FRIDAY...

 

[c w d]

"The borrower may waive this three-day requirement."

And the borrower will waive the requirement. Why? Because it will be part of the agreement in order to do business with the lender.

 

[Mike Phillips]

If I cannot understand the appraisal, why would I think I could understand the review?

to do what? Review or deliberately diss your competition and throw a big fat clinker in the process? Why not just hire my own appraiser and compare results?

I mean really. A review takes more work than an appraisal if done properly. And obviously, if you disagree with the value, the borrower will want your opinion. The review, in reality, should cost just as much and if it doesn't then is it a 'review' or a rubber stamp? [or as one appraiser told me, "I can't spend time redoing this for $135!]

The 3 days before rule will mean that there will be even more pressure for you to turn the report around in 24 hours. Get assignment Monday, turn it TUESDAY, and we close on FRIDAY...

What makes you think consumers can't understand an appraisal? The real difficulty they usually have is verifying whether the data contained in the appraisal is accurate and secondly whether certain choices that were made, such as the selection of comparable sales, were appropriate.

But I agree, the borrower could elect to order a second appraisal and skip ordering a review on the original appraisal. But, per the HVCC rule he might elect not to do that - it does appear it would be his choice, which opens a can of worms. In all probability, many borrowers will not exercise their option anyway - but some will, especially in light of the current market.

Regarding a review ordered by the borrower, the cost in terms of time and money would depend on the scope of work agreed to in the review - right? The review could just require verification of factual data, a drive-by, whatever the parties agree to, right?

But the HVCC proposal goes further, and speaking of throwing a "big fat clinker in the process" it exposes the original appraiser's work to the light of day...AND...prior to closing.

Aside from the obvious problems this presents which I will not outline for you since I already know your personal opinions on the matter, how will this new requirement be handled by the AMCs? You say get it there faster. I don't think so.

I appreciate your comments but I still don't have an answer to my question - why do appraisers appear to have missed this provision of HVCC? Any thoughts on that?

MP

 

[Mike Phillips]

"The borrower may waive this three-day requirement."

And the borrower will waive the requirement. Why? Because it will be part of the agreement in order to do business with the lender.

Seems like such an agreement would be illegal. How do you think such an agreement would be presented to the borrower?

 

[Mztk1]

Comments: Three days is almost enough time for a borrower to have the appraisal field reviewed. "Upon completion" could afford the borrower plenty of time to have the appraisal reviewed. Could this open up a sub-market for the quality oriented among us?

The only appraisals the borrower will want reviewed are those that kill the deal.

So we will be stuck with disgruntled owners thinking their house is worth more than the original appraisal.

Most often, the appraiser will be right and then the owner will think we are simply in cohots and swindled them out of another $X for what is to them a worthless review.

This inevitably will lead to the owner asking for free consultation before ordering an actual review. And the last thing I want on a review is a client call me and asking for a comp check first.

 

[PropertyEconomics]

The only appraisals the borrower will want reviewed are those that kill the deal.

So we will be stuck with disgruntled owners thinking their house is worth more than the original appraisal.

Most often, the appraiser will be right and then the owner will think we are simply in cohots and swindled them out of another $X for what is to them a worthless review.

This inevitably will lead to the owner asking for free consultation before ordering an actual review. And the last thing I want on a review is a client call me and asking for a comp check first.

I personally think many borrowers will appreciate an appraiser telling them they are getting in over their heads. THe public is MUCH more aware now than at any time in the past ... its a very good provision of the HVCC and I support it strongly.

Early in a thread of the HVCC this was mentioned and discussed. Others brought out additional liability .. I personally think the liablity has been there all along.

 

[Peteopia]

When I read that for the first time it became apparent to me that our liability will increase as soon as the HVCC is implemented. Currently the intended user is the client, typically the lender. But with the borrower basing their decision on your appraisal three days prior to closing it will by default make them a user as well. This may already be the case depending on how you interpret Cert. 21 of Fannie's 1004.

 

[tjcou812]

PropertyEconomics is 100% correct with his statement and I couldn't agree more with him. The homeowner can read the report to varify that the data in the report about his/her home is accurate. Who best knows about the home but the homeowners themselves. I agree that the homeowners will not understand the whole report but this will also be a educational tool for them also.

 

[Lloyd Bonafide]

If this is enacted, we're going to get a lot of dumb questions from borrowers, who may have never seen an appraisal report before. We may not have to answer them, or even talk to them, since they are not the client, but try to tell them that. m2: Our phone number and email address are in the report, so the questions will come.

I seem to get way more questions from private parties I complete appraisals for, as compared to reports completed for attorneys or lenders.