Austin Real Estate

That was fast. On June 25th House Rep. Travis Childers (D-Miss.) sponsored a bill that would put an 18-month moratorium on HVCC and an end to this free for all we’ve been calling real estate for the past 60 days. The bill has the full backing of the NAR and undoubtedly a number of agents who’ve lost deals recently due to the use of out of area or inexperienced appraisers.

If you’re just tuning in to the HVCC debacle, here’s a refresher on what’s happening: HVCC is the Home Valuation Code of Conduct which basically stipulates that loan officers and others who will make a commission from the home sale cannot choose or make contact with appraisers. A bank’s in-house staff could order the appraisal or the bank could simply use an AMC (Appraisal Management Company). This created a plethora of problems for agents and loan officers because it now means that a loan officer can’t rush order an appraisal for someone who needs to close sooner than later (i.e. before school starts) and caused many sales to fall through due to artificially low appraisals. These appraisals came by way of appraisers using foreclosures or poor comparable home sales to measure the value of a home.

The real drama begins when we discovered that banks can actually own a portion of AMCs which gives them little incentive to use outside appraisers when they can now make money on the loan and the appraisal. Worse yet, AMCs take a large portion of the appraisal fee which gives appraisers very little to support themselves with.

As many working agents can attest, the use of AMCs by nearly everyone has also caused a massive backlog in appraisals and has delayed hundreds, if not thousands (or tens of thousands) of home closings by 3 – 4 weeks or more. I have personally experienced a few home transactions that haven’t closed due to HVCC caused delays including one home that still hasn’t closed. Thankfully the appraisal on that home wrapped up last week (we were originally shooting for a mid-May 2009 closing).

Fast forward to the 25th, the bill has been sponsored and referred over to the House Committee of Financial Services. There has only been one other House Rep. willing to co-sponsor the bill so far; Rep. Gary Miller (D-Calif.). If there’s any hope left that someone is watching over real estate and thinking “Gee, that wasn’t a good idea!” the bill might pick up steam as it moves through the House. I’m especially hopeful that they move on this quickly as a huge influx of previously pent up FHA buyers descend onto the condo market in October 2009 to take advantage of the $8,000 home buying credit in conjunction with newly lightened up FHA guidelines. Only time will tell…

Author Bio: Josh Ferris is an Associate Real Estate Broker in the lower Hudson Valley area, outside of New York City. Learn more about Rockland County real estate including homes for sale in Monroe NY by visiting his community guides for popular communities like The Harbors at Haverstraw.

Image Credit: timetrax