Proposed Home Valuation Code of Conduct Will Harm Consumers and Significantly Limit...

Proposed Home Valuation Code of Conduct Will Harm Consumers and Significantly
Limit Role of Independent Appraisers

Congress Urged to Safeguard Key Role of Independent Appraisers

WASHINGTON, June 27 /PRNewswire-USNewswire/ -- A plan under consideration in
Washington will drastically curtail the valuable role of independent
appraisals in home sales and harm consumers. The plan, known as the Home
Valuation Code of Conduct (HVCC), was designed to prevent lenders and mortgage
brokers from coercing appraisers into providing inflated property valuations.
Unfortunately, as written, it will actually harm independent appraisers, who
have no financial incentive and act as the "auditors" of housing transactions.
If approved by federal regulators, the HVCC is scheduled for national
implementation in January 2009.

Tens of thousands of independent appraisers throughout the country are
expressing their concern to lawmakers and regulators in Washington. They have
formed a loose coalition to urge Congress to protect consumers by safeguarding
the critical role of appraisers in providing fair property valuations.

"While I support the concept of the HVCC, the current version will decimate
our profession and actually is a big step backwards for consumers. It creates
a dangerous, unbalanced playing field certain to result in lower quality, less
accurate valuation of the nation's housing, right at the time that we need
accuracy and stability the most" said David Biggers, chairman, a la mode,
inc., one of the real estate industry's most mission critical and innovative
technology companies. "Accurate, independent valuations protect the interests
of consumers, lenders, taxpayers, and investors."

The HVCC forces lenders to engage regulated appraisers through unregulated
appraisal management companies (AMCs), which retain almost 50 percent of the
fees paid by lenders. This means that independent appraisers - who represent
tens of thousands of small businesses across the country - could lose half of
their revenue if the current version of the HVCC is implemented. These small
business people are responsible for more than $6.4 billion in revenues to the
U.S. economy, according to Federal Financial Institutions Examination
Council's Appraisal Subcommittee. Beyond the immediate loss to the
appraisers, there is a negative impact to the economy, estimated to exceed
$5.8 billion, adding a significant impact to the overall financial downturn.
(1)

Physical inspections of properties may be curtailed
Unless amended, the proposed Code will result in lower quality and less
accurate appraisals by creating a system that does not require a physical
inspection of properties. Instead, it creates a preference for the use of less
reliable automated valuation models, known as AVMs.

"We are concerned that major portions of the Code will undermine, rather than
enhance, the quality and reliability of appraisals," Comptroller of the
Currency John C. Dugan recently wrote to the Office of Federal Housing
Enterprise Oversight, the agency that oversees Fannie Mae and Freddie Mac.
"We have significant concerns that compliance with the Code will disrupt
mortgage appraisal processes that generally are functioning well for
depository institutions and consumers."

"AVMs have been criticized by government agencies, including the National
Credit Union Administration and others, because they are simply not accurate,"
said Biggers. "They do not take into account special details that can have a
substantial impact to the value of a home, and could result in consumers
getting inflated or deflated appraisals."
About a la mode
Founded in 1985, a la mode develops desktop, mobile, and Web tools for the
real estate and mortgage industries. a la mode's mission-critical products are
used by hundreds of thousands of appraisers, agents, inspectors, and lending
professionals to complete the nation's real estate transactions. a la mode's
state-of-the-art offices are located in Salt Lake City, Oklahoma City, and
Washington, DC. For more information, visit www.alamode.com.

(1) Data derived from the Federal Financial Institutions Examination Council's
Appraisal Subcommittee's (ASC) database of appraisers, the number of estimated
active appraisers, number of appraisals performed annually, fee per appraisal
and an economic impact multiplier of 1.8.

SOURCE a la mode, inc.

Lisa Wolfe, +1-917-588-4733 or Heather McNamara, +1-202-321-3017, both for a
la mode, inc.