The HVCC – The Number One Thing Costing Real Estate Investors Money Today
What is destroying American mortgages? It’s not the ever rising foreclosures in America (which are at all time highs), not unemployment, not the Banks that are going under, not AIG or the CIT rescue.
The number one thing that is destroying mortgages in America today is the Home Valuation Code of Conduct (HVCC)! Why should you care? Because bottom line it will cost you tens of thousands of dollars! You need the “know the enemy” so to speak – and here’s a bit of background on the HVCC.
The HVCC was the brainchild of an Attorney General in New York, who discovered that there was fraud in the mortgage business. The investigation showed that there were a small number of people in the industry who were forming rings that went out and stole money from banks and mortgage lenders.
This group of people would get an appraiser, a title company, a mortgage broker, and “straw buyer” together. Then, using an appraisal that was grossly inflated, they’d get cash out of properties that were worth far less that that. In some rare instances – the properties didn’t even exist! This ended up costing the lenders millions of dollars!
The HVCC decided that there shouldn’t be any contact between the loan officer and the appraiser so that the appraisal couldn’t be inflated. On the surface, it seemed like a great idea. But in reality, it was one of the dumbest moves anyone has ever made in the history of mortgage lending!
How so? Well…for starters it ignored all of the other factors that went into the fraudulent activity. There weren’t just two people involved in these schemes – there were several! They all had to work together in order to commit fraud. Also…the actual fraud being committed was much under the inflated numbers that were portrayed in the media. It was overhyped – which led to drastic action that is currently hurting mortgages!
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