Specifically there are two pieces of legislation that will affect your closing dates on purchase transactions.
HVCC, or Home Valuation Code of Conduct:
I like to think of this one as "HAVOC" because that's exactly what it is causing with appraisals! The intent of this legislation, effective May 1, 2009, was to protect appraisers against undue influence from lenders and loan officers. No longer were lenders allowed to select the appraiser (conventional loans) nor could they have any conversations with the appraiser! The results of HVCC lead to increased appraisal fees and eliminated the ability to transfer appraisals between lenders.
HVCC also requires the borrowers receive a copy of their appraisal THREE DAYS prior to closing (waivers may be permissible if approved). The cost of the delay in ordering the appraisal, communicating with the appraiser, and meeting the delivery requirement prior to closing has slowed down the overall process as much as two weeks! Typically the delay is less, however it's important to allow sufficient time for such when writing your contracts.
MDIA, Mortgage Disclosure Improvement Act .
MDIA impacts the required delivery time for delivery of certain documents and should any changes to the contract or loan be made affecting the APR, could delay closing.
As of July 31, 2009, the following Truth In Lending (TILA) requirements must be complied with:
- Appraisal or application fees cannot be collected for three days following delivery of upfront disclosures.
- 7 days must elapse between delivery of disclosures and closing.
- If the APR changes, either up or down, more than .125% lenders must redisclose and wait another three days before the buyer can sign closing documents. Things that might affect the APR include a change in price, loan amount, rate, program, closing date and any change in fees.
Lengthen your contract deadline dates. But most importantly, KNOW YOUR LENDER! There are no quick fixes by transfering files at the last minute to meet closing dates.
AND TAKE ACTION! MAKE CALLS! SUPPORT HR 3044!
Please call your Representatives today and urge them to cosponsor H.R. 3044. The bill was introduced by Representatives Childers (D-MS) and Miller (R-CA) and it calls for an 18 month moratorium on the Home Valuation Code of Conduct (HVCC).
Introduced Jun 25, 2009. Currently referred to Committee. View Committee Assignments .
Call your Senators, Representatives and Governors: Click here for contact information.
Also, please contact your local TV and Newspaper outlets.Below are talking points and background information to assist in your conversations. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.
Additional background for points of discussion:
1. Lack of Portability: Lenders are not allowing borrowers to transfer appraisals, regardless of the reason. Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender. NOTE: In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
2. Lack of Quality: AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence. Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
3. Increased Cost of Appraisals: The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction. Breakdown as follows:
$150.00 - minimum increase per appraisal
$561.95 - average loan amount of $224,778 at .25% for extended lock period
$711.95 - average total increase per transaction x 3,870,552* - 2007 HMDA report of residential real estate loans originated $2,755,639,496 = $2.8BILLION in increased fees to consumers!
Articles Illustrating the Effects of the HVCC
The Appraisal Bubble -The Center for Public Integrity
The Cure is Worse than the Disease - Appraisal Press
Appraisals Roil Real Estate Deals - The Wall Street Journal
We need to take action and Stop This Nonsense! Right Now! Make your calls TODAY!
Track the bill: http://www.govtrack.us/congress/bill.xpd?bill=h111-3044