California Real Estate Fraud Report

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Home Valuation Code of Conduct is a Bust

New York State Attorney General Andrew Cuomo thought he was solving a problem. Failed subprime lender WaMu had been accused by Cuomo of pressuring eAppraiseIT and its appraisers to pump the valuations of homes during the subprime mania. Higher home appraisal values meant higher commissions to WaMu loan officers; also subprime loans had a higher profit margin – again, higher commissions.

Some of the appraisers, independent contractors, had resisted WaMu’s strong-arming them and interfering with not only the appraisers’ independent judgment, but also their already existing code of professional ethics. At the risk of being blacklisted and losing work, some appraisers caved in, while others resisted and fought back with lawsuits against WaMu.

Cuomo, after doing a great job of nailing WaMu, came up with the lame and bone-headed idea of the Home Valuation Code of Conduct for appraisers. It’s lame and bone-headed for three reasons:

(1) HVCC institutes guidelines that appraisers already follow when not under economic duress;

(2) HVCC avoids directing the blame where it lies – with the mortgage lenders;

(3) HVCC creates a new bureaucracy, i.e. 3rd party “appraisal firms” that subcontract with appraisers. Appraisers, lenders and real estate agents complain that this has slowed-down the ordering and completion of appraisals, thereby endangering the approval and funding of loans and closing transactions (escrows).

For a well-written article on HVCC, see Julie Messina’s discussion of the HVCC on

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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