Home Valuation Code of Conduct (HVCC)

The way we conduct the mortgage business has changed. The new Home Valuation Code of Conduct (HVCC) is to be enforced as of May 1st. The HVCC says that loans sold to Freddie Mach (FHLMC) or Fannie Mae (FNMA) will require that the lender order the appraisal. Neither a Realtor® nor the Loan Officer are allowed to contact the appraiser.

I wanted to post a quick note about this change because its important to how we do business. The HVCC does not allow us to have contact with the appraiser. This change will affect refinance business more than anything else. Conventional loans - especially those that don't require Mortgage Insurance when the Loan to Value is less than 80% will be affected when its too close to call. Going one step further, there's a possibility the appraisal comes back at much less than was estimated. Then you have no deal and the appraiser will expect to be paid regardless. You also lose the opportunity for the trained eye of a professional evaluator to provide input prior to ordering your appraisal. Our appraisers gives us an estimate for an appraised value. Their analysis is important as we come up with numbers that work for you and for your situation.

As a Loan Officer, I'm all for cleaning up the industry. However, my feeling is that taking away one of the resources that helps us provide better service is counterproductive. We have to remember, as it is, appraisals are thoroughly reviewed by underwriters before loans are approved. It's not as if appraisers make up values, they include evidence in their reports to back it up. I anticipate this new policy will have negative consequences for potential borrowers.

It should be noted that FHA loans do not have this regulation in place.