Vladimir Bien-Aime is the CEO and co-founder of Global DMS. Prior to that, Bien-Aime consulted on special technology projects that involved the analysis, design and implementation of large-scale technology systems for several of the industry’s leading corporations, including CitiGroup, Juniper Bank, First USA, WingSpanBank/Bank One and Standard & Poor’s. But these days there’s a line in the sand called the Home Valuation Code of Conduct, and players in the industry are taking sides. For this installment of In This Corner he explains why HVCC needs to stay. There’s talk about Congress doing away with HVCC. What is your verdict on that regulation? Should it stay or should it go? I feel that HVCC should stay. Before HVCC, let’s face it, the door was wide open to loans containing inflated appraised values. In order to avoid the problems of the past decade, we need to do everything we can to protect the integrity of collateral valuations. HVCC isn’t without its difficulties, but doing away with the guidelines altogether would be throwing the baby out with the bath water. Is HVCC perfect? No. Is it necessary? Absolutely. The primary complaint about HVCC seems to be low appraised values, which are actually not a result of HVCC, but rather a function of market conditions. HUD postponed new rules over appraisals for February 15, 2010. Are these new guidelines going to clean up the appraisal process or simply slow it down? I think they’re going to clean it up. HUD did a really good job of taking the best of HVCC and incorporating that into its existing appraisal protocol. There is one minor issue, however, that’s causing a bit of confusion. The new guidelines addresses the issue of appraiser compensation, but state only that they need to be paid what’s customary and reasonable. Without a clear definition of what “reasonable and customary” means, a lot of lenders will be left wondering if their appraisal process complies in this area. What sort of adjustments are appraisal management companies (AMCs) going to make? AMCs or appraisal management companies will need to ensure that their appraisers are on the FHA roster. A lot of people think that simply being licensed is enough, but it’s not. All appraisers must be certified for FHA. Also, there’s some language that implies that lenders will need to disclose the fees they’re charging for the appraisal and the fee that the actual appraiser is being paid. While the language is a bit vague, lenders and brokers should be prepared to report their margins, in the event that the investor requires disclosure. At a time when housing prices are on the decline, how can an appraiser feel good about a value he or she puts on a property? A legitimate appraiser will not care what the value of a property is, and will feel neither good nor bad when it comes to the current value of a property. What he or she will be concerned with is determining a true and accurate assessment of the value of the subject property according to current conditions. The role of an appraiser is to be completely objective, without a vested interest in the outcome of the appraisal. That’s the only way we can ensure an unbiased evaluation. This is why appraisal objectivity is so important to the process. Editor’s Note: HousingWire is currently putting together its first supplement for subscribers that explores ultimately whether HVCC is a good for the mortgage finance business.
