HR 3044 18 Month Moratorium On HVCC WILL NOT Cure The “Low Appraisal” Disease Issue – HR 3044 18 Month Moratorium On HVCC WILL NOT Cure The “Low Appraisal” Disease Issue

HR 3044 18 Month Moratorium On HVCC WILL NOT Cure The "Low Appraisal" Disease Issue

I’m reading this morning from the Mortgage New Daily Email about “HR 3044: To Impose 18-month Moratorium on HVCC“.  The reasons given for the moratorium are these below as directly quoted:

“In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule.”

However, according to the media generated buzz, the outcry in the past 3 weeks hasn’t been so much been about HVCC but the media issue of “Low Appraisals”.  Just look at these recent headlines:

Bloomberg: Home-Price Recovery May Be Undermined by Appraisals

Christian Science Monitor: Are low appraisals slowing US home sales?

CNN Money: Appraisers wrecking builder sales?

The Tennessean: Low appraisals nip real estate deals

Steamboat Pilot, CO: Appraisal rules wreck real estate deals

and my favorite of all:

Joe Weisenthal: The NAR’s Appalling Fight Against Honest Appraisals

Yes, it’s true that if the Appraisal Management Companies (AMC) are sending appraisers from 2 hours away to perform an appraisal on a home just because they must use appraisers from a rotating roster, an appraiser that doesn’t know the market in the subject’s neighborhood, then that’s a problem and could result in a “low appraisal”.   However, wouldn’t the interpretation of if an appraisal is “low” or not be based on “market expectation”?  And, couldn’t the expectation by the seller, buyer, agent and lender be unrealistic in so many of the declining markets across the U.S.?  Absolutely!

I like Ben Goheen’s  response to the irresponsible comments NAR’s Chief Economist, Lawrence Yun,  made this past week blaming appraisers for the lack of a housing recovery, and I quote:

“Mr. Yun is now insisting that appraisers ignore market conditions so houses can sell – isn’t that convenient?

Since every market is local, nobody can rightfully make generalizations about how foreclosures should or shouldn’t be used as comparables in an appraisal. They may be inconvenient, but they are real and often can’t just be ignored. As a Realtor you just have to be aware how they effect your market when writing an offer.”

An 18 Month Moratorium WILL NOT make the Fannie Mae 1004MC Addendum disappear – the 1004 MC is the chief determiner of housing “sub-market” direction and quantification.  An 18 Month Moratorium WILL NOT keep appraisers from interpreting housing markets properly.  An 18 Month Moratorium WILL NOT all of a sudden give appraisers a set of rose-colored glasses to view their local housing markets.  An 18 Month Moratorium WILL NOT keep appraisers from applying “declining markets adjustments” when they are obviously evident and provable by a simple MLS chart.  An 18 Month Moratorium WILL NOT keep appraisers from applying the mandated “listing-to-sales-price-ratio” to the 3 current listings they are now required to use in their reports.  No, an 18 Month Moratorium WILL NOT keep appraisers from obiding by USPAP, lender guidelines, general appraiser liability issues and/or erase common sense.  When an appraiser studies a housing “sub-market” and sees a chart like this below, the appraiser has to do what they have to do – apply declining markets adjustments if warranted.

HR 3044 18 Month Moratorium On HVCC WILL NOT Cure The "Low Appraisal" Disease Issue

Bill Cobb is a Louisiana State Certified Residential Appraiser operating as Accurate Valuations Group in the Greater Baton Rouge Market. Bill has 17 years experience as a residential appraiser and carries on the family appraisal career tradition as a third generation appraiser. To learn more about AVG, visit:


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About Bill Cobb, Appraiser

The Baton Rouge Residential Appraisal Blog is an information source provided by local Home Appraiser, Bill Cobb, and Accurate Valuations Group. Bill has 24 years experience as a Baton Rouge Residential Home Appraiser and updates his local network of sites weekly with reports, videos and audio reviews of local housing market conditions! 225-293-1500