The much anticipated HVCC (Home Valuation Code of Conduct) is now in effect, assuming the failure of last-ditch efforts to delay implementation by the NAMB (National Association of Mortgage Brokers) and NAR (National Association of Realtors.) All 1-4 family loans sold to Fannie Mae and Freddie Mac are subject to the HVCC. The actual document can be found by clicking here.
So what is different today from yesterday? There are quite a few things that haven’t changed, for instance the HVCC still does not apply to FHA and VA loans and it also does not apply to jumbo loans, loans over Fannie Mae and Freddie Mac limits. Any such appraisal assignments that you undertake today can be performed exactly as one which you completed yesterday. Obviously any private assignments are completely unaffected, so those divorce appraisals, bankruptcy appraisals and tax grievance appraisals can be completed the same way you did them yesterday. These types of private appraisals are also going to be increasing for several reasons:
–Existing and pending legislation promises to restrict real estate agents from performing BPO’s, and restricts broker market value estimates to listing activity only, not allowing them to provide market value estimates for mortgage, legal or tax related purposes.
–Potential congressional action could allow bankruptcy judges to modify the terms of troubled homeowners’ mortgages. Any such action would likely increase the need for appraisals for this reason.
–The decline in property values has not been properly accounted for by many assessing jurisdictions. This will surely lead to a great increase in the number of tax grievance and tax appeal appraisals as homeowners look to reduce their property taxes.
With regard to Fannie and Freddie and AMCS: As we and many others have repeated, there is no mandate within the HVCC for the usage of appraisal management companies. This is amongst the many myths that have developed surrounding the HVCC. Question 35 in Fannie Mae’s Home Valuation Code of Conduct Frequently Asked Questions (FAQs) asks: “Is a lender required to use an AMC for ordering appraisals?” The answer: “No. A lender may order appraisals directly from an individual appraiser.” A link to Fannie’s FAQs can be found here. A link to the Freddie Mac FAQs can be found here. Lastly, a link to the Appraisal Institute’s HVCC Myths and Realities document can also be found here. —www.fhaappraisernewsletter.com
