The  HVCC home-owners appraisal process initiated by the real estate melt down and the Dodd Frank Act is keeping the value of property down. The normal appraisal process wasn’t broken but overzealous regulations have stymied your ability to get a fair appraised value. The cost to you has been inflated and the service you receive lowered.  In an attempt to punish unethical appraisers and thwart conspiracies, the government has actually punished the homeowner and paralyzed the economy.

You have probably heard that “The Dodd-Frank Act” was designed to protect the general public in their quest to purchase or refinance their primary residence.  But, what does this overzealous eight-hundred plus page document actually do for the consumer?  Dodd Frank raises the cost to the average consumer in additional fees and costs in every aspect of their financial transaction.  The beneficiaries of your additional cost are a few large lenders that have received and are still receiving tax dollars to “Bail them Out” of the real estate melt down.

When I began my career as a dual agent, Realtor-Loan Officer seven years ago the average cost of an appraisal was $350.00. By law, I wasn’t allowed to add $1.00 to any third party service. The entire fee you paid went to the appraiser. I was allowed to use the appraiser of my choice as long as they were not on a list of unacceptable appraisers with the lender. The appraisal belonged to the borrower and could be used with any lender they chose to close their loan with.  The consumer took their appraisal to the lender that gave them the best rate and/ or loan program. Now your appraisal is tied to one lender.

Previously I told the appraiser what you thought your property was worth based upon homes sold in your neighborhood, additional improvements you had made, what you paid for the property, etc. I can state emphatically that the appraisers I did business with were never pressured or influenced into making any unethical decision.  We could discuss opinions within a few thousand dollars because much of an appraisal is based upon opinion. Sometimes a $5,000.  difference in appraised value can cost the homeowner to go over the 80% ratio that requires additional Mortgage Insurance. But lenders aren’t concerned with a 1% or $5,000 opinion difference. They were concerned with appraisal conspiracies.

Now, I must order your appraisal blindly through an online Appraisal Management System  (AMC), this AMC is owned by the lender. Therefore you must choose your lender before you get an appraisal because it isn’t transferrable.   That has implications in itself that could thwart your ability to work with the best lender for your loan to value ratio (LTV). The AMC makes a large commission (previously illegal) on your appraisal. The cost of your appraisal is now about $400.00 to $440.00. The AMC keeps about half of the appraisal fee and pays the appraiser the other half.  The larger the lender (i.e. Bank of America) the less the appraiser makes. Appraised value dramatically varies between lenders AMC’s.   

Since I am ordering your appraisal blindly, you may not be fortunate enough to get an appraiser that understands your neighborhood.  When your appraised value comes back undervalued the process to get it reevaluated is difficult and often impossible.  On the occasions that I have been able to request another appraisal based upon my own research of homes sold in the area.  The appraised value has increased 20%.  On another occasion the AMC refused to reevaluate the property.  The borrowers choose to wait until the appraisal expired (4 months). The new appraisal typically increased the value over 20%. Too often this value is exactly what the homeowner knew his home was worth. Recently one homeowners next door neighbors home sale wasn't considered in the appraisal but homes outside of the condo complex were; a grave injustice  to the homwowner. Luck of the Draw; unfortunately yes, due to the Dodd Frank Act that has tied the hands of ethical licensed Loan Officer’s trying to protect their borrowers.

The appraisal process was changed due to a few unscrupulous Real Estate Agents, Loan Officers and Appraisers who conspired to create a few appraisals that typically doubled or tripled the appraised value of the property. They conspirators used third party buyers with stated income loans to commit fraud. The buyers defaulted within months and the lender lost hundreds of thousands of dollars.  Had the lender done their due diligence and asked for a second appraisal when they looked at their online valuations, we as tax payers and borrowers wouldn’t have the burden of rebuilding their wealth.

Since we no longer have stated income loans for borrowers that were fronts for these conspiracies. Since we have online appraised value and the Underwriter can ask for e second opinion if they are concerend about value.  The HVCC process is an additional burden on the typical borrower that increases their fees and keeps property values down by using appraisers not familiar with the demographics of the properties they are appraising.