Another article in the ABQ Journal this past weekend was entitled “Unintended Consequences”. It was a good article about the appraisal mess that has ensued since the government created the Home Valuation Code of Conduct (HVCC). The intended purpose of this law was to create a barrier between the lender and the appraiser. The idea was needed and worthwhile because lenders could/would sway appraisal values, thus inflating values. The big problem, however, is the governments apparent continued inability to actually think through completely the ramifications of their actions. It is always interesting to us how they never seem to consult those who are involved and directly affected by their actions. For example, they just changed the law regarding the Truth In Lending (TIL) to protect the borrower from surprise fees. That is awesome, but it is causing delays in closings because the process they created sucks (to be frank).
What they have done with the HVCC is put appraisers in who do not know the market well, are not the cream of the crop, are undervaluing appraisals because they are so freaked out they will get sued or fired, and/or have run off all the good appraisers who do not want to deal with all the garbage. The number of certified residential appraisers in NM dropped from 60 to 15 in less than a year. That is a 75% drop. As the Journal article quotes Chuck Olsen, who we have worked with before many times, “I don’t disagree with the concept…But I can see absolutely no prose to this – everything’s a bunch of cons.” He also says the impact has been entirely negative in terms of its impact. We could not agree with him more. If the government were a coach they would have been fired for such poor execution. There are many ways to improve the system so that it actually achieves it intended purposes. But what do we know, we only deal with it each and every day.