Paul Peters

May 1, 2009 the Home Valuation Code of Conduct goes into effect for all conventional loans that are underwritten to be sellable to Fannie Mae or Freddie Mac. The Home Valuation Code of Conduct essentially puts a wall between mortgage lenders & consumers and the appraiser so that there can be no "influencing" of an appraisers estimate of value. The code does not change the process for VA, FHA, USDA/Rural Housing, or private money transactions

What does the HVCC mean for Realtors and Consumers?

The code requires that appraisals be ordered through a 3^rd party "Appraisal Management Company" (AMC) who assigns it to a local appraiser. This means that we can no longer expect an appraisal to be done in 3 days.

There may be some challenges in transferring an appraisal report from one lender to another. Especially if the new lender isn't approved with the AMC that the original report was order from. Meaning that you can't easily order an appraisal with one lender and then take it to another lender, if you are unable to obtain an approval, or if you find more desirable financing options.

All communication with the appraiser regarding the appraisal report must go through the AMC which will result in additional turn times.

The lender no longer has "control" over selecting an appraiser and/or the quality of the appraiser assigned the order. That control will now reside with the AMC and lenders will not know which appraiser is assigned until the report is delivered. The borrower and agent will be the first to know who is assigned at the time of inspection.

The code now treats the appraisal as a disclosure and requires that a consumer receive a copy of the appraisal report three days prior to closing. Most AMC's and lenders will send the consumer's copy of the report first class mail, and will add 3 days to accommodate delivery time. So with many lenders, the loan documents will not be available until 3-6 days after the appraisal has been provided to the consumer. If there is any addendum to the appraisal, the report has to be re-disclosed and the 3-day waiting period begins again.

Desk reviews and rebuttals will now incur additional costs to the borrower since the AMC's charge for these services.

So in light of all of these changes, you may want to consider extending your closing dates for offers made after May 1^st for those transactions involving conventional financing.

If you have any questions, feel free to contact me!