Q: WHAT DOES THE ROOT OF ALL EVIL,ANDREW CUOMO AND CIRCUS GUYS WITH FEZ HATS HAVE IN COMMON?(Part 1)

A: They are all involved in screwing up your appraisal.

Let me take a moment to introduce myself. I'm the root of all evil. This is according to my good friend, The Governor of the Great State of New York, Andrew Cuomo. You see, Andy..'cause that's what his good friends call him, Andy decided the best way to gain timely headlines just before getting himself elected to the governorship...I mean just in time to save every American from we evil mortgage companies, was to point a finger at how we went about our dastardly deeds.

Andy figured out that because I am so evil, I could unduly influence the appraiser I sent to your home during your loan process. The theory goes that I could cross the River Hades, and force my appraiser to come up with totally inflated values on your home, thereby causing the collapse of the real estate market. By the way, I was also responsible for that whole burning of Rome thing. Niro was actually just a crazy fiddler.

Anyway, Andy decided to save you from me by doing what any attorney worried about the good of mankind would do...He sued. Through this suit was born something called HVCC, or Home Valuation Code of Conduct. Part of this lil' ditty is how your appraisal is now conducted.

In those evil old days, I would call an appraiser that I've worked with for years (let's call him Mike), ask him to check the value of your home before going out, and then charging you around $300 for the appraisal. But NOW, I have to go on line(because my evilness forbids me from talking) and order your appraisal with an appraisal management company. These are companies that act as a liaison between the devilish mortgage broker and appraiser. Here's the best part. That appraisal that used to cost $300 now costs $450.Why? Well to protect you, of course. That protection involves the management company randomly picking an appraiser they probably have never met from a list they rarely review.And what of that $450? Well it's immediately charged to YOUR credit card. Here's the next best part. Instead of Mike The Appraiser getting $300 for his expertise, the management company gets between $200-$300 of that $450. The anonymous appraiser now gets around $150 for the same work. Imagine how shoddy THAT work can be! More on that in Part 2 of this post.

Ohhhhhh, and I almost forgot something!! My buddy, Andy Cuomo...Guess who now owns several of the largest appraisal management companies? The banks, of course..DUHHHH! Because who is more benevolent, sacred and caring than BofA, Chase and the rest of the banks.

What has become of Andy's concern for you has become a circus. Unfortunately, the guys in the fez hats have run us all over in their little cars.

A WASTE OF MONEY & ANDREW CUOMO

Sometimes,throwing your money out the window may be a good idea. As a parent, that almost kills me to say. As a real estate and mortgage broker, it almost kills me to tell you why. If, for any reason, you've had an appraisal done on your home in the last 11 months, you may have noticed a few things:

The appraisal costs a lot moreThe guy/woman doing the appraisal has no idea that Foothill, Grand, Garey, Magnolia or Sierra are the major streets in your town

The same guy/woman makes reference to the fact they have been licensed since Thursday

When you finally get your appraisal, the value is low. Upon further inspection, you realize the appraiser has compared your home to a) The year old repo up the street., b) The crack house 5 miles away., c) a home that looks nothing like yours.

What could have caused all of this mess? In the name of "financial reform" it's part of what the government has done to protect you, the consumer. Feeling better yet? Below is an excerpt from an article in today's Los Angeles Times that will go into greater detail:

By Kenneth R. Harney
October 31, 2010
Reporting from Washington —

...In all likelihood, the money you pay (for an appraisal) isn't just going to the person who does the appraisal. It gets split up, and sometimes your lender is getting a sizable chunk of the action. An estimated two-thirds of home appraisals are produced by appraisal management companies, some of them owned in whole or part by big banks.
Many of those companies have slashed appraiser fees from traditional norms — $400 or $500 to the appraiser — and now hire only appraisers who agree to work for $175 to $200. They also require fast turnarounds — complete appraisals delivered within 24 to 36 hours of the assignment.
Since experienced appraisers generally refuse to work for such low compensation and rushed delivery demands, many appraisals are assigned to newcomers to the field. In some cases, critics charge, the jobs go to inexperienced appraisers who are willing to travel far beyond their home markets to get the assignment.
Gregoire and Turner say they routinely hear complaints from realty agents about low-ball valuations turned in by out-of-area appraisers who have minimal knowledge about local market trends and don't distinguish distressed sales from ordinary sales. Sometimes the bad appraisals undervalue houses by tens of thousands of dollars and kill sales or refinancing, leaving buyers, sellers and their realty agents sputtering.
Brian Coester, chief executive of Coester Appraisal Group, an independent management company with a network of 3,000 appraisers in 50 states, agrees that low fees to appraisers "produce low-quality appraisals."
"At $180 to $200," he said, "you're not going to get good work." Pay the appraiser more — say $250 to $350 — "and now you're going to get a quality product." His firm averages $275 to $300, Coester said in an interview, but is constrained by the demands of mortgage lenders, some of whom will pay only $300 for the appraisal but later charge consumers $450 at closing.
kenharney@earthlink.net.

So as election nears, keep in mind those that may have allowed this entire mess to propagate, and those that have "helped" you out since. If you happen to live in New York, think Andrew Cuomo.

HVCC, " Andy's Law" ON THE WAY OUT

HVCC, or " Andy's Law", appears to be on it's last breath. The end can't get here fast enough. This is one of the most ill conceived, heavily trumpeted laws to come out in the entire housing crisis. In the name of publicity, its author, New York Attorney General Andrew Cuomo, has done a great disservice to both the business community and anyone struggling to get a home loan. Please see the latest link from the Los Angeles Times below:
Home valuation code could soon undergo major revamp -- latimes.com