Well, here I go again, on another political rant.  (At least I warned you.)  As a result of the Fannie Mae/Freddie Mac fiasco, there has been a lawsuit settlement reached between the NY Attorney General, the Office of Fair Housing and Equal Opportunity, Fannie Mae and Freddie Mac.  While the proposed law seems good on the surface (it’s meant to protect us, right?), there are some serious flaws that will hurt borrowers, sellers, lenders and real estate agents.  It will most likely hinder efforts to sell property in the future.

Here are some of the issues in the proposed “Home Valuation Code of Conduct” (HVCC) that should concern you:

• Lenders that use professional appraisers (those holding an appraisal license) will incur additional fees, which will inevitably be passed along to the purchaser.  Instead, those using BPOs (Broker’s Price Opinion Statements) or AVMs (Automated Valuation Model) will be exempted from these additional surcharges.
  • This just raises a ton of red flags to me.  Those who create BPOs will most likely be pressured to “hit the number” on the contract that place buyers in homes that are worth more on paper than real life.  Hey, haven’t we already experienced that?
  • Second, the AVM hasn’t proven itself to be fail proof in my professional opinion.  Has anyone had their property accurately evaluated by websites like Zillow.com?  Yes?  Okay, wait three days and try it again.  I’ve seen clients shocked over a $30,000 loss in equity on the same property in that kind of time frame.  You need a local, experienced, human being to interpret the data, folks.  Not some computer and boiler-room processor 2,000 miles away from the subject property!
  • These additional fees for using appraisers are nothing to be sneezed at.  They’ve already cost buyers $2.8 Million in extended lock-in rates and higher appraisal costs this past YEAR.

• The HVCC restricts an appraiser from speaking with anyone else in the transaction and limits who could be called to perform the appraisal by making the ordering process go through an Appraisal Management Company (AMC).
  • This is just incredible.  For those buying or selling in unique property locations such as Arcadia Lakes/Forest Acres, Historic Downtown Sites (Earlewood, Elmwood Park) or Lake Murray property, this will affect you most of all.  I have had many calls through the years from appraisers who have asked me questions about the subject property because of its uniqueness.  I was not attempting to sway their outcome with my responses, only clarify what made it so different from all the other comparables.  I guess they assume the “give ‘em an inch, they’ll take a mile…” rule needs to be applied here, because of the previous Fannie Mae/Freddie Mac fraud.
  • All appraisals go through AMCs?  Please.  You know they’re gonna take care of friends in the business, not assign appraisals to the next appraiser in a fair method.  Did I mention that these AMCs are unregulated?  Who will be watching those guys to make sure they’re legit?  As it stands right now, no one.

There are other points that make the HVCC a bad idea, but those are the main ones that will affect most buyers and sellers (and have been for quite some time).  The National Association of Mortgage Brokers have been negotiating and fighting this for over a year now, and have called upon Appraisers, Realtors, Buyers and Sellers to make their voices heard.  This is not something we want to have happen, as the real estate market is struggling already.  There’s no need to make selling or buying any more difficult than it needs to be.

Please contact your state Senators, Congressmen and those directly involved with this settlement to let them know how you feel:

NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.
Also, please contact your local TV and Newspaper outlets.

For more information, click here.

Your “No Bull” Realtor,

Kathy Smith
Russell & Jeffcoat Realtors, Inc.
(888) 808-4Moo ext. 0
(803) 781-5729
http://www.kathy.smith.net/