The Home Value Code of Conduct (HVCC) is scheduled to go into effect May 1st, 2009. Many lenders have already implemented new appraisal procedures and guidelines that are in compliance with the HVCC.

There has been great opposition to the HVCC from Appraisers and Mortgage Brokers. There is speculation about possible pending lawsuits and actions to try and stop the HVCC from going into effect. AMSA will keep you up to date with any breaking news.

Key Highlights of the HVCC affecting the Appraisal Process:

• The HVCC applies only to loans sold to Fannie Mae or Freddie Mac. It does not apply to FHA or VA Loans, loans purchased by other investors, or portfolio loans
• Mortgage Brokers cannot order the appraisals or have any direct communication with the appraiser.
• Lender’s loan production staff is prohibited from ordering appraisals or having direct communication with the appraiser.
• Appraisers cannot collect the appraisal fee from the borrower, only the lender or a third party authorized by the lender (AMC) may collect the fee.
• Lenders may not order appraisals with a specified value or target for the appraiser to hit.
• Lenders, Brokers & AMC’s may not ask for comp checks or a preliminary value estimate.
• The lender must provide a copy of the appraisal to the borrower 3 days prior to closing.
• The appraiser’s compensation will NOT be dependent on the outcome of a loan decision.
• Lenders can select the appraiser and order appraisals provided certain firewalls are set up to separate the lender’s operations staff with loan staff that are compensated based on if the loan closes.
• An Independent Valuation Protection Institute (IVPI) will be established, which will receive and report on any complaints of Code of Conduct non-compliance, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process
• Correspondent lenders may order appraisals providing they comply with the Code
• Lenders shall not order, obtain, use, or pay for a second or subsequent valuation unless proven and documented that the initial appraisal was flawed; or the second appraisal was done pursuant to pre-established polices.

The above are just some of the items addressed in the HVCC and we recommend all Brokers and Lenders read the code in its entirety. You can download a full copy of the final version of the HVCC here