Appraisers
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Lenders
Important links to the HVCC:
Frequently Asked Questions
Compliance &the HVCC Appraisal Operations Performance Payment & Pricing Technology
Compliance & the HVCC
What is the HVCC?
The Home Valuation Code of Conduct (HVCC) stemmed from an investigation of lender-appraiser collusion at WaMu and First American’s eAppraiseIt Company. The original start date was January 1, 2009 however was moved to May 1, 2009 to allow for a public comment period.
Where can I learn more about the HVCC?
More can be found online at: Fannie Mae: https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf Freddie Mac: http://www.freddiemac.com/singlefamily/hvcc_faq.html Copies of the HVCC and FAQ from both Fannie Mae and Freddie Mac are found at the end of this FAQ.
How does the HVCC affect us?
While the HVCC addresses many issues, there are two aspects that will impact your business model. First, is the manner in which appraisers are selected, retained and compensated. Specifically brokers, real estate agents, borrowers and production staff at the lender cannot select, retain and compensate appraisers. This added management function is now left for the lender to address. Secondly, the HVCC prohibits the improper influence on appraisers. Specifically no person or entity can request or imply to the appraiser an estimated value, pre-determined value, desired value, target loan amount and loan-to-value at anytime prior to the completion of the appraisal. In other words there are no “comp checks”, no borrowers estimated value, no lender estimated value, no proposed loan amount, etc…
What are the penalties for violating the HVCC?
From the Fannie Mae FAQ, “A lender shall certify, warrant, and represent that the appraisal report was obtained in a manner in compliance with this Code of Conduct. If the Enterprise determines, on its own or from a referral made by the Institute, that a lender is in breach of a material aspect of this Code of Conduct or in violation of a provision of the Code by a complaint referred from the Institute, the Enterprise will enforce all applicable rights and remedies, including suspension or termination of the lender’s eligibility to sell loans to the Enterprise, if the lender fails to remediate.”
What is this I hear about "Control Testing"?
Lenders must agree to Control Test valuations (including appraisals, AVMs, BPOs and desktops) from a randomly selected significant portion of all loans sold to both Fannie Mae and Freddie Mac and report those findings. There is no specific time period, % of appraisals to be tested and no specific test methods are dictated by the HVCC.
How will InHouse make it easier and affordable to comply with the “Control Testing”?
Rather than wait until the end of the year (or some other time period) and then test, InHouse Solutions quality controls all valuations as they are ordered and performed. Meaning, that by the time audit is required, you will be fully compliant. By testing “as you go” you can be sure that each loan will meet compliance before it is sold to Fannie Mae or Freddie Mac, preventing future needs to go back in time to correct non-compliance. InHouse solves this added burden via an Appraisal Transparency Report for each appraisal.
What is an Appraisal Transparency Report?
An Appraisal Transparency Report (ATR) is the factual reporting of compliance or non-compliance to the HVCC. The ATR specifically addresses the HVCC and reports factual data for each valuation product, answering such questions as: Who ordered the appraisal? Who paid for the appraisal? Was the appraiser coerced with pressure? Did the borrower receive a copy? And other pertinent HVCC requirements.
The ATR provides clear factual proof that you are in compliance with the HVCC.
Appraisal Operations
Who can engage appraisers?
The HVCC specifically prohibits brokers, real estate agents, borrowers and production staff at the lender to select, retain and compensate appraisers. Non-production staff at the lender may select, retain and compensate appraisers, or a designated non-production entity, such as an AMC.
How do we order appraisals?
You do not have to change a thing about your process. You can fax, email or order online. We also can accept orders through your LOS through custom integration at any point in the process.
What is this "improper influence" all about?
No person or entity can request or imply to the appraiser an estimated value, pre-determined value, desired value, target loan amount and loan-to-value at anytime prior to the completion of the appraisal. In other words there are no “comp checks”, no borrowers estimated value, no lender estimated value, no proposed loan amount.
How can we order an appraisal if we do not have even an idea of what the value will be?
Most AMCs suggest using a free service such as zillow.com or cyberhomes.com for a free Automated Valuation Model (AVM). Although these are not accurate, they do provide a ballpark figure of what a home may or may not be worth.
InHouse Solutions understands your dilemma and has created a compliant Desktop Appraisal. The Desktop Appraisal is a paid for product and provides an estimated value range for properties before ordering an appraisal. Although not guaranteed, this is far more accurate than a free AVM and may provide a good starting point and decision making tool.
What if we don’t agree with an appraiser’s value?
All lenders have the right to dispute the findings of an appraiser. However it must be done in a manner that provides facts as to why the property was undervalued or overvalued, not simply a suggestion. For example, you will have to refute the appraiser’s findings with facts such as new comparables to consider, market data, flaws in the analysis, etc… A lender cannot simply say, “…reconsider the value to $X.”
Can we select the appraiser for each specific appraisal?
Yes, provided that the selector is independent of the production staff and that the production staff has no influence on the selector. In other words, a production staff member cannot select the appraiser and influence a non-production staff member in selecting the appraiser.
Can we offer a list of appraisers we currently use?
Yes, if you are a lender, however mortgage brokers cannot. InHouse simply needs a list of preferred appraisers with contact information. We will then proceed to contact the appraiser and welcome them to the new business model. We will work with them in this new process and maintain the relationships you have built.
Will there be fallout from our "main appraisers"?
Yes, some fallout will occur initially, however, we find that a sizeable portion of the appraisers will eventually re-join because of the shift in the appraisal business model to AMCs. It’s becoming a necessity to perform work for an AMC. In fact, since December 2008 there has been greater than 75% increase in AMC appraisals nationwide.
Further, an AMC such as InHouse will give back to the appraiser in the form of steady work volume, increased selection, increased clients, consistent billing and office support. And for the lender, you will gain an increased group of appraisers focused on servicing you.
What is the "spread" between the appraisal fee and the appraiser fee?
The appraisers share in the appraisal fee varies from state to state, based on supply & demand. It is important to note that appraisers are never “under-compensated”.
Aren’t appraisers willing to take lower fees "worse" than other appraisers?
Not at all. In fact we find that AMC appraisers actually perform better and at higher rates of quality and consistency because they are part of a larger system of excellence. And as the HVCC takes a hold May 1st, most all appraisers will be performing work through an AMC.
Further, InHouse Solutions does not blindly recruit appraisers on to a “list”. We conduct interviews and check references for all appraisers on our Preferred Appraiser list.
Aren’t AMC appraisers overly conservative?
Not at all. Appraisers are expected to provide a credible and supportable opinion of value, not a conservative or aggressive value. In fact, each appraisal is quality controlled for compliance, lender/investor guidelines and for their opinion of value.
Do you review each and every appraisal?
Yes, InHouse Solutions reviews each and every appraisal for compliance, lender/investor guidelines and for their opinion of value. Our goal is to ensure that each appraisal received by you is ready for closing. Beyond review for quality, InHouse specifically offers an Appraisal Transparency Report for each product and specifically addresses the concerns of the HVCC and proves compliance.
What is a Preferred Appraiser List?
We take careful steps in ensuring an exceptional group of appraisers. These appraisers are screened, interviewed, time tested and always held to the strictest standards of excellence.
How do you select appraisers?
Appraisers are selected on appraisal quality, overall turnaround times, handling of conditions, proximity to the property and cost. InHouse keeps non-bias stats on each appraiser and disseminates this information accordingly so that they can improve their level of service for you.
Do we have to provide a copy of the appraisal to the borrower?
Yes, per the HVCC the lender must provide a copy of the appraisal report to the borrower no later than 3 days prior to closing, unless the borrower specifically waives this requirement. InHouse Solutions is setup to handle this necessary step without any burden on the lender.
Performance
What is your turnaround time?
In most areas you can expect an average turnaround time of 2.5 days from the day of inspection which is competitive in the market place. At InHouse we have improved the pre-appraisal processes increasing the overall turnaround time.
What do you mean by the pre-appraisal processes?
The pre-appraisal processes include the typical appraisal functions that are outside of the actual property inspection and report completion. By transferring this workload from the appraiser to InHouse’s controlled centralized environment InHouse speeds up overall turnaround time by approximately 2.5 days and reduces the “Appraiser Black Box”.
How does controlling the pre-appraisal processes affect the turnaround time and more?
Specifically at the moment of appraisal request receipt, we will screen the file immediately, contact the borrower for an appraisal appointment within 30 minutes, schedule the appointment for the soonest available time (1.5 days) and deliver the report in 2.5 days from inspection.
This pre-appraisal process will immediately identify properties that will clearly not meet lender guidelines, screen out serious from non-serious borrowers and get your borrower to commit to you ASAP resulting in an overall faster turnaround time. In other words, we perform many of the duties that the appraiser would have to perform otherwise, allowing them focus on performing inspections and completing reports in a timely and competent manner, therefore reducing 2.5 days of appraiser “legwork”. Most of our appraisers view us as an “assistant” to make their jobs easier.
What is the Appraiser Black Box?
The Appraiser Black Box has nothing to do with the appraiser themselves, but the processes that are performed by all appraisers. In the traditional AMC model, once an appraisal is assigned to an appraiser, it enters the Appraiser Black Box, where nothing is known by the AMC or lender until the appraiser reports it. Therefore there is valuable information regarding important processes that are unknown.
What makes InHouse Solutions different than other AMCs?
InHouse Solutions reduces the Appraiser Black Box and manages appraisers, not just appraisals.
We reduce the Appraiser Black Box by moving approximately 66% of traditional appraiser workload to InHouse staff. This reduction allows the appraiser to appraiser properties, focusing on inspections and reports, thereby increasing their service to you. Further, transparency is enabled; there is more control, true real-time status, and the ability to customize solutions to fit your business model.
Next, we manage appraisers, not just appraisals. We nurture and develop the lender-appraiser relationship to reach maximum potentials and long term advantages. We view our appraisers as valuable assets, not just vendors, creating focused and loyal appraisers to service you the best.
Payment & Pricing
Who pays for the appraisal?
The first method is the most common today and in the AMC world. In this method, the lender will collect payment from the borrower and handles all duties resulting, such as collections, verifying payment, accounts receivables and accounts payables. It is the lenders responsibility to pay the appraiser or appraisal company.
In the second method, InHouse Solutions will handle all payment processes as described above. Borrowers can pay by phone or online with a credit card or check.
Who pays the appraiser?
InHouse Solutions will compensate the appraiser directly.
What if we want to pay out of escrow?
InHouse Solutions allows payment out of escrow, however if escrow never closes, the lender is responsible for payment.
What do you charge for appraisals?
InHouse Solutions provides tiered pricing based on volume. Pricing is always a flat-fee per state. This allows lenders the flexibility to customize pricing depending on specific locales and the predictability of their appraisal costs. Fees will vary from state to state, but will always be competitive to the marketplace.
Technology
Can you integrate in to our LOS?
Yes, no matter what the LOS is, we can integrate easily. This is because we have a simple, yet powerful web-service available that makes interacting with our software possible. We will provide access to our servers where you can order, track, receive, condition and get custom reports.
How long does it take to integrate?
InHouse’s web-service literally makes integration as quick as a day. However if your LOS integration is dependent on your software provider, they will control the pace of integration.
Are your servers secured?
Yes they are encrypted, secured, fully compliant and stored in an e-vault provided by an outside vendor. Certification is available upon request.