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Overview - the new HVCC

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by VolcanoLvr, Dec 24, 2008.

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  1. VolcanoLvr

    VolcanoLvr Senior Member

    4
    Oct 30, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Washington
    I've read it. Here's my take on the upcoming regulation:

    The ‘new’ Home Valuation Code of Conduct (HVCC) is guaranteed to pi$$$ off many appraisers, industry participants, and will make others ecstatic. On balance, in my opinion, it is acceptable to returning our profession to what it should be….mandating independent unbiased opinions of real estate values provided by competent appraisers who fully respect the responsibility for doing so, and adhere to USPAP and other requirements.

    The actual HVCC document does not contain the implementation date, which has been identified by other sources as May 1, 2009.

    The HVCC applies to any loan purchased by the GSE’s….Fannie, Freddie, and presumably, Ginnie Mae. In practice, I suspect ‘in house’ loans from local and regional banks will be managed using the HVCC, separating ‘loan production’ staff from the appraisal ordering function.

    Here’s my quick overview:

    1-‘Comp Checks’ are forbidden
    Pre-stating ‘value needed’ is forbidden (However, sales contracts must be provided for properties being purchased; this does not mean the appraiser must concur with the purchase price!)
    2-Appraisers cannot be put on an ‘exclusionary’ list unless illegal or out of USPAP compliance work is submitted; then they must be notified in writing
    3-AMC’s are NOT a mandatory entity for ordering of appraisals as long as separation of loan production is isolated from appraisal ordering
    4-GSE’s will not purchase loans that are from AMC’s in which any lender has an ownership interest unless the entity has written policies and procedures that implement the HVCC provisions of appraiser independence
    5-Mortgage Brokers and RE Agents cannot order an appraisal from any appraiser; lenders cannot accept any appraisal directly ordered from them
    6-Loan production staff cannot have ‘substantive’ communications with the appraiser
    7-Lender is ultimately responsible for paying the appraiser’s fee; no fee for service can be withheld regardless of the value reported or outcome of the loan
    8-An Independent Valuation Protection Institute (IVPI) will be established [funding for same not mentioned] which will become a reporting agency for HVCC violations
    9-Lenders may use in-house appraisers as long as their assignments comply with the HVCC in terms of assigning work
    10-A minimum of 10% of appraisals (and ‘valuations’) will be randomly selected and “tested”
    11-The HVCC does not mandate any particular valuation method, i.e., appraisal, AVM, evaluation, etc. in connection with any mortgage loan or mortgage financing transaction

    There are more details within the HVCC document, but these are the highlights that affect appraisers. There will be much written by appraisal publications and the various web forums and appraiser associations over the next number of weeks before the May 1, 2009 implementation date.
     
  2. Greenback

    Greenback Senior Member

    0
    Apr 20, 2007
    Professional Status:
    Appraiser Trainee
    State:
    Louisiana
    Whoooop there it is!

    Sincerely,
     
  3. Chris Colston

    Chris Colston Elite Member

    0
    Jul 24, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Thank you David for the concise overview without the "emotion" and "sky is falling" whining. No one really knows yet what is going to come of this. As questioned before, I'm not sure how it is that one AG in NY can have influence over the rest of the country without some sort of Federal mandate.
     
  4. ResResearch

    ResResearch New Member

    0
    Mar 18, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maine
    Per Fanne Mae web site they will have an Annoucement out on January 7, 2009 with details on implementation date, FAQs etc..
     
  5. Kevin Mc

    Kevin Mc Elite Member

    0
    Jun 7, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    there you have it. Lender can own AMC. Appraiser independence my arse.
    A license to steal with the government's blessing.
     
  6. Dan/Fla

    Dan/Fla Member

    0
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    The Date of May1, 2009 came from the cover letter when we got the info

    ""FHFA ANNOUNCES HOME VALUATION CODE OF CONDUCT
    Washington, DC – Federal Housing Finance Agency (FHFA) Director James B. Lockhart announced that Fannie Mae and Freddie Mac will implement a revised Home Valuation Code of Conduct (Code) effective May 1, 2009. The Code is based on an agreement between the Enterprises, the New York State Attorney General Andrew Cuomo and FHFA to improve the reliability of home appraisals. Following a comment period on the original Code, modifications were made by the Enterprises to reflect comments received. The revisions will facilitate implementation in the marketplace.""
     
  7. TJSum

    TJSum Elite Member

    3
    Nov 12, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    I've read on the forum from others that the reason many AMCs have gone to Appraisal Port is so they can claim this "independence". Politics is all about taking care of the politically connected, the beat goes on...

    The bailouts were all about making sure nothing has to change for the politically connected and the taxpayers be damned...
     
  8. FBN2007

    FBN2007 Sophomore Member

    0
    Mar 26, 2007
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    This basically means the end of the mortgage brokerage industry. They will no longer be able to survive since they can't get a comp check and order an appraisal. This void will now be filled by the big banks who will in effect have a monopoly on residential lending. And they also get to own the AMCs. All you have to do is follow the money to see who benefits. Certainly not appraisers as tens of thousands will have to find a new line of work.
     
  9. jgordond

    jgordond Sophomore Member

    0
    Sep 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Rhode Island
    Not necessarily....I know for a fact that there are investors salivating at the availability to capture the niche market left behind by the big banks! There is room for smart $$ money in this economy. Remember the days when a loan was approved in a boardroom. Don't think those days won't come back. Quality appraisers will be needed. No more trying to fit a round peg in a square hole. It will be bad for a year or three, but if you can hang in there and maintain a quality reputation, you will be sought after!
     
  10. FBN2007

    FBN2007 Sophomore Member

    0
    Mar 26, 2007
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    So please give us the business model for the appraiser of the future.
     
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