An Appraisers View of HVCC, sub-prime, the market and more – Part 2 in a series

Dennis Norman

By: Dennis Norman

Monday I did the first post of a series of my E-View with Frank Gregoire, a Florida appraiser and author of  Appraiser Active.

Florida Governor Jeb Bush appointed Frank to the Florida Real Estate Appraisal Board where he served for eight years as a member, four of which as Chairman.

Francois (Frank) K. Gregoire, IFA RAA

Frank Gregoire provides valuation, expert witness and consulting services for a wide variety of local and national clients.  Clients include banks, mortgage companies, relocation companies, insurers, REALTORS(R), attorneys, private individuals and government agencies.

Now for part 2 of the E-View :

Dennis- In the first part we discussed the implosion of the sub-prime market, the prevalence of mortgage-fraud and declining values.  Do you feel those are some of the things that led to the Home Valuation Code of Conduct (HVCC) that seems to have the whole industry in an uproar at this point?

Frank-Let’s be honest, the HVCC came about because of an investigation of questionable actions by an Appraisal Management Company and a Federally Regulated financial institution.  The Appraisal Management Company caved to pressure from the financial institution to use “preferred appraiser”, appraisers known to be compliant and with a record of “hitting the number”.  The targets of the investigation and the industries they represent, federally regulated financial institutions and appraisal management companies, are not paying any price for their questionable actions under the settlement that goes by the name of the Home Valuation Code of Conduct.  Of course, the target financial institution failed and has been acquired by another, but the industry is not paying a price.

The attempt to alleviat pressure on appraisers through the HVCC is a good thing.  However, the most common method used by lenders to comply with the “firewall” provisions is to utilize Appraisal Management Companies (AMC’s).  The actions of the AMC that prompted Attorney General Cuomo’s investigation demonstrates that AMC’s can and will succumb to pressure.  How can they be reasonably entrusted with ensuring appraiser independence?

Add to that question the fact that with few exceptions, Appraisal Management Companies are not regulated.  Although the evidence is anecdotal, there’s plenty that the pressure role has shifted from loan production to the AMC.  There are plenty of good AMC’s, but one potential windfall resulting from the HVCC has resulted in dozens, if not hundreds, of new players, including at least one owned and operated by a former appraiser.  His certified residential credentials were revoked by the Florida Real Estate Appraisal Board.

One of the key components of the HVCC, the Independent Valuation Protection Institute, has yet to be funded, created and implemented.  Absent the IVPI, the foxes are in charge of the hen house.  There will be change, but it will not benefit the consumer.

Dennis-Thank you for the detailed explanation of your thoughts on HVCC.  Clearly this is something you are passionate about, as it appears are many appraisers, REALTORS(R) and lenders out there. 

On another note, the real estate market is starting to show signs that perhaps we are at or near bottom….while I think most people don’t think we will see any sort of trend upward in terms of value anytime soon maybe values will just level off and stay flat for a while.  What’s your take on the present market?

Frank-I can speak for my market only.  Since I take the concept of geographic competence seriously, I limit my practice to one county on the west coast of Florida.  Over the past couple of months it appears that some areas of my county are trending towards stabilized prices.  However, there are other areas of the county and some sub-markets with serious imbalance between supply and demand.  The sizable inventory in some areas often includes short sales and and pre-foreclosures that represent 30% – 50% of the total.  The real “bleeding” seems to have taken a break, but until the excess inventory is consumed, stabilization will be a wish.  Uncertainty about the US economy doesn’t help either.

I’m going to stop here today but will pick up from here in a day or two. If you wish to reach Frank, his contact information is below:

Francois (Frank) K. Gregoire, IFA RAA
Gregoire & Gregoire, Inc.
727-344-3393
email: fgregoire1@yahoo.com
blog: http://appraiseractive.blogspot.com/

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