The Home Valuation Code of Conduct (HVCC) is a document jointly created by the members of Freddie Mac, the Federal Housing Finance Agency (FHFA), and the New York Attorney General. The Code provides a “firewall” between the lender and the appraiser, and it applies only to loans that will be delivered to Fannie Mae and Freddie Mac. It states that as of May 1, 2009, mortgages delivered from Sellers who do not adopt the Code with respect to single-family mortgages will no longer be purchased by Freddie Mac and Fannie Mae. As of the present, only these two corporations have agreed to adopt the Code.

The Code was set up to ensure the independence of appraisers from lender, broker and agent influence when appraising a property. It requires that the appraiser be licensed or certified in the state where the property he or she will be appraising is located. It also requires lenders to utilize third party appraisals whether through individuals or an Appraisal Management Company (AMC). The current trend is for lenders to hire AMCs for appraisal assignments.

There are a number of complaints stating that the policy has made it difficult for agents, brokers, appraisers and even consumers to close a mortgage deal, with a percentage of negotiations falling through instead of reaching completion. AppraisalPro Appraisal Management and Risk Assessment Services can help fill the gap in this regard. Fast turnaround times and experienced appraisers who produce clean, clear reports are our specialty. Let us know how we can help.

As you may know, the Home Valuation Code of Conduct went into effect on May 1, 2009. Now the Federal Housing Administration (FHA) has decided to adopt the HVCC regulations with a cutover date of February 15, 2010.

To maintain compliance with the code, FHA-approved lenders must ensure that:

• FHA Appraisers are not prohibited by the lender, AMC or other third party, from recording the fee the appraiser was paid for the performance of the appraisal in the appraisal report.
• FHA Roster appraisers are compensated at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.
• The fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal.
• Any management fees charged by an AMC or other third party must be for actual services related to ordering, processing or reviewing of appraisals performed for FHA financing.
• AMC and other third party fees must not exceed what is customary and reasonable for such services provided in the market area of the property being appraised.

AppraisalPro has policies and procedures to keep all of our clients in compliance with FHA and HVCC. AppraisalPro ensures that all appraisers are licensed or certified in the applicable state through daily cross checks with the Appraisal Subcommittee and HUD databases for active licensing and disciplinary actions.

We will further ensure that mortgage brokers and commission-based lender staff are forbidden from selecting, retaining, recommending or influencing the selection of any appraiser for a particular assignment.

AppraisalPro will assist the lender in clearly demonstrating that absolute lines of independence have been achieved and the lender has prudent safeguards to isolate its collateral valuation process from influence.

If you have any questions or would like to learn more about the Code of Conduct, you may visit the HUD website (www.hud.gov), or simply give us a call to speak with one of our knowledgeable sales staff. Our goal is to provide you with all the information you and your staff will ever need to know about HVCC.