PARAMOUNT MORTGAGE - LENDER'S BLOG

Dodd-Frank Bill Sunsets HVCC; New Rules Being Decided Now

Once the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010, the HVCC's (Home Valuation Code of Conduct) days were numbered.

Provisions in the law prescribed that within 90 days of passage, the HVCC will sunset. All responsibility to ensure appraiser independence and accuracy in the appraisal process transfers to the new Consumer Financial Protection Bureau (CFPB) a unit under the Federal Reserve Board (FRB).

The law also assigns CFPB the authority to write and administer major consumer protection laws including RESPA, TILA, HOEPA and HMDA.

While the rules have been written, David Brauner, WorkingRE editor reports, "implementation guidelines remain unresolved." With so much at stake, Brauner reveals, "the fight for fair appraisal fees is still raging" and they are "being hotly contested on all sides."

The main point of contention for appraisers is the vague language in Title XIV. Appraisers are to be "compensated at a rate that is reasonable and customary" for their services in the market area of the property being appraised.

The majority of appraisers say this approach, when dealing with Appraisal Management Companies (AMC), has resulted in "work flowing to the lowest bidders, not the most qualified professionals," Brauner continued.

The Title/Appraisal Vendor Management Association lobbying group challenged the FRB in a letter last month to adopt HUD's approach to its Customary and Reasonable Fee requirement.

In a recent WorkingRE magazine survey of 9,300 appraisers Brauner reports, "results suggest appraisal quality is worse since HVCC," and respondents "attribute it to the relentless pressure for low fees and quick turn times from many AMCs."

Paramount Mortgage adheres to HVCC rules with strict internal quality control procedures, but does not use AMCs in favor of knowledgeable, local professional appraisers instead.

The current battlefield for fair fees is in the Division of Consumer and Community Affairs at the Federal Reserve Board, according to Kathleen C. Ryan, Senior Counsel, Division of Consumer and Community Affairs Federal Reserve Board.

"Board staff is currently drafting regulations for the Board's consideration," offered Ryan. The Feds are taking comments and everyone is welcome to submit input to: Ms. Sandra Braunstein, Director, Division of Consumer and Community Affairs Federal Reserve Board, 1709 New York Avenue, NW, Washington, DC 20006.