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Tom Mullins' $1.5 million real estate appraisal business was already being bludgeoned to death by the recession.
But the last thing Mullins expected was the federal government to come in and play Grim Reaper.
That, however, is what Mullins says is going on with the Home Valuation Code of Conduct, a federal regulation that has been in effect since May 1.
“I've never seen anything like this before,” says Mullins, who worked in commercial real estate in the Northeast before relocating to Florida in the 1990s. “This has taken the legs out from right underneath us.”
The code bans bankers and mortgage brokers who sell loans to Fannie Mae and Freddie Mac from using handpicked home appraisers.
Instead, in an effort to prevent collusion between lenders and appraisers, the mortgage brokers must use an independent appraisal management company.
Mullins, president of Sarasota-based Affordable Appraisal Services, says the code has wrecked whatever was left of his business. Mortgage brokers and bankers, clients he has done business with for 10 years, won't even call him, for fear of violating the code.
The result is that Mullins' business is down 60% since the rules went into effect May 1.
He estimates that drop has cost his company at least $15,000 — not a small figure considering the recession had already turned what was once a 20-employee firm into a mostly one-man operation.
Mullins says that as recently as 2006 his company was doing more than 5,000 real estate appraisals a year in 37 Florida counties, reaching annual revenues of about $1.5 million.
Mullins is hopeful the federal government will rectify the problems caused by the ne code. A bill that would place an 18-month moratorium on the code is currently working its way through the system. U.S. Rep. Vern Buchanan, R-Longboat Key, supports the moratorium.
“I support efforts to prevent fraudulent appraisals,” Buchanan says. “But there is evidence that the Home Valuation Code of Conduct has resulted in higher costs, unreliable home appraisals and long delays.”
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