On this page we will write about the different factors that influence the Hawaii real estate market. Here is the first article on this subject:
JUST SAY NO TO FANNIE AND FREDDIE
No housing market recovery in sight with booby traps abound.
The HVCC Looks like a conspiracy against home owners, structured to keep home values low, lower and lowest over time in a legal, convenient way by controlling the appraisal process, interfering with professional appraisers, in fact terrifying them if they do not follow the new policy enacted May 1, 2009 by Fannie Mae and Freddie Mac.
The Home valuation Code of Conduct (HVCC) will hinder any positive market recovery, it is done without vision, planning, goal or concern about its impact on the housing market throughout the United States of America. These regulators enacted laws with sharp teeth; an agent who is trying to convey, point out, or provide helpful valuations to the appraiser, may be charged with class 6 Felony (refer to Board Statute, A.R.S. § 32-3633 undue influence).
Often, competent appraisers come to different conclusions of value, because appraisers do not have a uniform valuation approach. A professional appraiser may give $15,000 credit for a home with an extra car garage, and another licensed, professional appraiser will just add $10,000.
Hawaii economic experts thought that we have resilient real estate market, until the appraisal rules started being enacted, and having its impact. Hawaii has limited land, limited inventory, and with the higher cost of homes, a slower market and limited comparables.
The mortgage GIANT said new rules for appraisals don’t require that appraisers select distressed properties — including short sales, foreclosures or real estate-owned properties when identifying “comparable properties” for valuations.
Ask the GIANTS, Fannie and Freddie: Did you tell appraisers what they can use in the absence of market recent sales? In the absence of a guide line, the appraisers are using exactly that, the short sales, bank owned properties and foreclosure.
In spite of the higher appraisal fees, many appraisers are now earning less per appraisal as the management companies take a large cut for doing a job that is not very involved and provides no benefit to the consumer.
There is less incentive for an appraiser to do the added work/research/ documentation that ensures they have painted a true picture of the subject’s market to an underwriter, since their additional work/ market knowledge is not rewarded with additional business.
It’s sort of a socialist approach to things, definitely not a system in which professionals are motivated by anything other than their good character to give it their all. I find the whole thing a waste of time and money, and extremely detrimental to the industry and the economy.
Both Buyers and Sellers feel devastated, betrayed and used. Buyers pay higher rates for an appraisal, and most often, is required to pay for two, and end up in lost sale and money.
The loss to both Buyers and Sellers is magnified because with a sale timeline, they made plans , gave vacating notice to landlord, contracted with movers, purchased airline tickets, worked on school selection, sold some of their furnishings, may be sold their car, packed their house hold goods and, got the devastating news ten days or so before scheduled closing date.
Fannie and Freddie’s policy of only buying loans that were appraised under the HVCC code, will add more problems to financial institutions.
So, Fannie, Freddie, now that your Instructions to slice and dice the home valuations are a sure way to foreclosures and short sales and in no way will protect property values; is there anything in the works to move the housing market into positive territory?
Kay F Osman, R, ABR, CRB, CRS, GRI, SRES
Del Osman Realty, Inc.
E-mail: dosman888@aol.com
