IMPACTS OF THE GREAT RECESSION
I have been living and trying to work through this very fluid real estate situation since the Great Recession began in 2007. I continue to work hard to understand and interpret how the changes and new rules of engagement are affecting buyers, seller, agents, appraisers, mortgage companies and everyone in between.
Since 2008 I have watched major enactments of legislation from the Home Valuation Code of Conduct (HVCC) to Dodd-Frank Financial Reform Act to the proliferation of Appraisal Management Companies to name just a few. During these changes, the individual industries did what they had to do to make changes to their own organizations and alert their members the best they could. Not all members got the message or acted on it. Many are still in the dark. There has been no real communication between the industry genres. Even worse, how these new rules now affect the homebuyers and sellers. Very few are talking to each other and asking questions.
In today’s lesson, I want to tell you that the federal regulation initiated by the Home Valuation Code of Conduct (HVCC) severed immediately all ties between homeowners, homebuyers, real estate agents, mortgage officers with the lonely old appraiser. Everyone else could continue to talk to each other and compare noted. Law now prevents the appraiser from interacting with the other parties to the transaction. That is a very powerful paragraph worth re-reading.
Since the Home Valuation Code of Conduct was sunset the spirit of the rules and requirements has been transferred to the Dodd-Frank Financial Reform Act. This is the acting legislation we have today and going forward. It has been mentioned as a target of overhaul by the Trump administration – so it will remain a fluid situation for the immediate future.
WHO YOU GOING TO CALL?
Without getting overly technical about the laws, understand things have changed dramatically. Real estate agents can no longer steer/advise/push or direct any appraiser toward any value level when involved with a specific appraisal assignment.
A home seller cannot get any answers from the appraiser concerning several questions such as value, process, client conditions, repairs noted, how long until the client should get the report, is everything okay and so on. They are not the client and cannot be told anything!
A homebuyer in the process of buying the property being appraised cannot even talk to the appraiser about any aspect of the report just like the seller. They are not the client. Yes, I know that you paid for an appraisal but you are still not the client. There is more information and explanation about this in my eBook WHAT SHOULD I KNOW ABOUT MT APPRAISAL INSPECTION? And Should I Worry? Pick up a copy today!
As a matter of law the buyer will get a copy of the appraisal but even with that they cannot directly contact the appraiser should they have questions unless they get written permission from the appraiser’s client – which is not the buyer, as noted above.
Finally, the local neighborhood mortgage officer or internet mortgage advisor who deal with the buyer on a day to day basis - they cannot even contact the appraiser for any clarifications.
There is complete separation of the parties making money or that have something to gain or lose from the transaction must be separated. That was the intent of the Home Valuation Code of Conduct and now Dodd Frank regulations. That is exactly what happened.
Anyone with anything to gain from each transaction was immediately separated from the appraiser from the acceptance of the initial offer to purchase through the closing of escrow and forevermore! The parties must never speak of that specific file in any depth without the consent of the client.
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