Former Board Chair of Tennessee Real Estate Appraiser Commission Speaks Out About the New HVCC

JOHNSON CITY, TN, Jun 24 (MARKET WIRE) --
In his Johnson City, Tenn. office surrounded by golf photos and
memorabilia, veteran real estate appraiser John Bullington isn't talking
tee-times. Instead the avid golfer is shouting "Fore!" over some new
legislation called The HVCC or Home Valuation Code of Conduct that went
into effect May 1, 2009. The appraisal reform agreement of New York
Attorney General Andrew Cuomo requires institutions that deliver loans to
Fannie Mae and Freddie Mac to adopt the HVCC. Bullington says the HVCC
may have been well intended but unfortunately while trying to "clean up"
what appeared to be a New York-based problem, it has backfired and
appraisers nationwide are taking the hit.

The HVCC mandates an arms length separation between the people ordering
the appraisals and those actually performing them. That's where
Bullington, a past chairman of the Tennessee Real Estate Appraiser
Commission, says middlemen have gotten in the mix. He says these
"opportunists" have taken the form of certain Appraisal Management
Companies (known as AMCs).

"This guy does not have to be a certified appraiser but he usually takes a
large percentage off the top," says Bullington. "Furthermore since many of
these new AMCs are from outside the market, the appraisals could come in
with misleading values," he adds.

Bullington cites the June 18 testimony of National Association of Mortgage
Brokers (NAMB) President Marc Savitt before the House Financial Services
Subcommittee on Oversight and Investigations. Savitt said that the HVCC
does not provide appraisal independence. "AMCs are entirely unregulated
under federal law, and there are currently only three states with laws
providing for any type of AMC oversight. By requiring the vast majority of
all appraisals to be run through AMCs, the HVCC renders virtually all of
the protections included in Regulation Z of the Truth-in-Lending Act
('TILA'), the Financial Institutions Reform Recovery and Enforcement Act
('FIRREA'), H.R. 1728, and various state laws inoperable. This is simply
because AMCs are not subject to the requirements set forth in these
statutes and regulations." For Savitt's full testimony click here:
http://www.house.gov/apps/list/hearing/financialsvcs_dem/savitt.pdf.

Who ultimately pays? The consumer. Cases have been documented across the
country of lag times (now averaging two weeks longer) in appraisals since
the new law went into effect and fees have increased significantly.
According to NAMB, consumers are now paying an estimated additional
$711.95 per transaction. Appraisers aren't the only ones concerned.
Bullington says lenders, mortgage brokers, real estate agents and
homebuyers should all take note.

Meanwhile AMCs are appearing everywhere and Bullington is warning lenders
that they do not have to use them. Recently, he received a copy of a
letter sent to an East Tennessee bank written by a representative of an
AMC. He waves the letter noting, "This appraisal management company is
telling lenders that they must use them and that is incorrect." He cites
an "HVCC Myths and Realities" fact sheet issued by the Appraisal
Institute that says that "mortgage sellers may achieve compliance by
establishing meaningful risk management practices, including separation
between risk management (appraisal) and loan production."

"There are approximately 1,894 appraisers in Tennessee and most of them
are honest. However, the people who operate these AMCs do not have to be
licensed, certified or regulated. Who is to say that they will have
competent appraisers or that they will know anything about the local
market?"

Bullington adds that Appraisal Management Companies can operate
legitimately but they must have competent appraisers on board. He is not
alone in his quest to have the HVCC repealed. Numerous bloggers are
writing about the issue and an online petition (www.HVCCpetition.com) to
repeal the matter already had over 38,000 signatures as of June 24.
Bullington says, "The petition comments show that AMCs are using out of
town appraisers who have no knowledge of the subject's market. They are
missing the mark by hundreds of thousands of dollars costing lending
institutions good loans or causing lenders to exceed their loan to value
ratio."

John Bullington is a certified general appraiser in Tennessee, North
Carolina and Virginia. Mr. Bullington was appointed to the Tennessee Real
Estate Appraiser Commission by Governor Sundquist for a three-year term
and re-appointed by Governor Bredesen for an additional term spanning
2002-2008. Mr. Bullington is a general associate member of the Appraisal
Institute. He was also a past member of the State Regulatory Advisory
Group of the Appraisal Foundation and a Tenn. Representative to ARROW, a
regulatory body governing the practices of appraisers for the United
States.

Bullington advises that interested parties first contact their Congressman
since this is now a matter of federal law and also contact their state
regulatory agencies for information on how their state is dealing with the
issue.

Image Available: http://www2.marketwire.com/mw/frame_mw?attachid=1010230

Mary Ellen Miller
MarketingMel
(423) 335-7267
Email Contact

Copyright 2009, Market Wire, All rights reserved.

-0-