Feeling The Ripple Effects of New Regulations?

Have you seen what’s going on with the new HVCC code?  You might be wondering “What is the new HVCC rule and how does it relate to RESPA reform?”  Basically, it’s a cautionary tale.  It tells the story of how new industries can spring up as a result of new financial regulations, how those who don’t proactively update their business processes can suffer, how unintended consequences flow from well intended reforms and how market-place realities can change overnight.

The Home Valuation Code of Conduct came into law May 1st, and the impact has been far reaching.  Basically, the HVCC requires lenders to use appraisal management companies, who order appraisals from a pool of independent appraisers.  Now there are reports (featured here on cnbc.com) that many transactions are falling apart at the last minute because the properties aren’t appraising for a high enough value.  The reasons cited for the lower appraisal values include: non-local appraisers doing the analysis, a lack of technological access to the relevant data, the incorporation of distressed sales as comps and the distant appraisers being unaware of property renovations or market conditions. 
 
Additionally, the new HVCC – and we should take special note here – is “increasing processing times, raising costs for consumers, and in often cases bringing in valuations that don’t appear to be correct”. Could the same be said for RESPA reform if thoughtful and deliberate implementation steps are taken?  I think so. 

As we’ve said before, there is a virtual alphabet soup of new regulations coming down the pike.  Staying informed and one step ahead can save your business time and money.  The HVCC is a perfect example of a regulation that you could easily think “that doesn’t impact me, only lenders need be concerned about that” … but anything that affects our customers eventually impacts us in one form or another. 
 
Stay here at RESPA Ready to keep up to date on all of the current issues that impact your ability to stay profitable in these rapidly changing times.