What is HVCC?

December 11, 2009 | 122 Comments

HVCC refers to Home Valuation Code of Conduct, a set of rules created to prevent those who stand to profit from a real estate transaction from putting pressue on the appraiser. The rules went into effect on May 1, 2009 for all conventional, single-family loans destined for sale to Fannie Mae or Freddie Mac. The law prohibits mortgage brokers and real estate brokers from ordering appraisals and requires that lenders erect a firewall between loan production staff and appraiser. Since these rules have come about-there’s been protest around the country.

Appraisers says that HVCC threatens their livelihood, leads to low-quality appraisals, and increases costs to consumers. Real estate brokers and salespeople says the rules are delaying closings and killing deals. According to Joe Sabella of Imperial Appraisals LLC in Fairfield, Conn., “The very people who were intended to be protected by the rules are the ones getting hurt.” The trouble is that the new code is vague and confusing. Some say that the code has literally killed the independent appraiser industry.

Some appraisers feel that appraisal management companies (AMC’s) are unjustly benefitting from the rules. When a property is under contract but there;s no appraiser in the area willing to take the assignment, an MC has to cast a wider net. Although the Uniform Standards of Professional Appraisal Practice (USPAP) specifically address knowledge of a geographic area, for a variety of reasons, appraisers may feel compelled to take out-of-area assignments. The result is that appraisals fall well below the contract price and don’t accurately reflect market conditions.

Facts you need to know:

  • Real estate sales professionals and lenders can talk to appraisers, including making requests to consider additional data to correct errors.
  • The code applies only to 1-to-4 unit single family loans sold to Fannie Mae or Freddie Mac.
  • A mortgage broker may transfer an appraisal if the lender who ordered the original appraisal grants permission.
  • Lenders may directly retain the services of an independent appraiser, as long as the contract is not made by loan production staff. Use of an appraisal management company is not required.

The National Association of Realtors is now seeking a legislative solution, advocating for HR 3044, a bill that would impose an 18-month moratorium on the HVCC.

Source: www.realtor.org/realtormag


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