Home Valuation Code of Conduct; HVCC – What it is and what it isn't
Dennis Norman
By: Dennis Norman
Practically the entire real estate industry seems to be abuzz about the Home Valuation Code of Conduct (HVCC) that went into effect May 1st. I first wrote about it back in early April in a post on this blog.
Since Fannie Mae and Freddie Mac implemented the new rule there have been many questions and much confusion about what the Home Valuation Code of Conduct (HVCC) does or does not do. I thought it would be helpful to cover some of the more common questions here, this is not meant to be a complete picture of everything entailed in the new rule but some FAQ’s.
Q- Does the new rule apply to ALL home loans?
A- No, just on homes and up to 4 unit residential buildings and then only on loans that will be sold to Fannie Mae or Freddie Mac.
Q- What about FHA and VA loans?
A- No, HVCC does not apply to FHA or VA loans nor Federal Home Loan Bank loans either.
Q- Do lenders have to use an Appraisal Management Company (AMC) to order appraisals?
A- No, lenders may order the appraisal directly from an independent appraiser.
Q- Are my agent and lender forbidden from talking with the appraiser?
A- No, your agent and/or lender may talk with the appraiser if it involves requesting that the appraiser consider additional data or information in determining his or her valuation or for the purpose of correcting an error.
Q- Can I (the borrower) pay the appraiser direct for his services?
A- No, the appraiser must be paid by your lender or the Appraisal Management Company (AMC).
Q- Can my lender transfer an appraisal to another lender if I change lenders or will I have to pay for another appraisal?
A- There is nothing in HVCC that prohibits the transfer of an appraisal provided the original lender (the one that ordered it) authorizes the transfer.
As I stated at the beginning this is not intended to be a complete description of everything contained in the HVCC but hopefully answers some of the more common questions. If you have additional questions I would invite you to submit them via a comment. Also, it seems many appraisers read my earlier post and will perhaps read this one. If you are an appraiser and would like to offer additional information or more answers to FAQ’s please submit them via a comment and I will post them to get the information out there.
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You give the wrong impression. My friend lost her real estate refinance because the appraiser used the wrong number of bedrooms. She sent two old appraisals, but the lender refused to talk to the appraiser because of HVCC. If correcting mistakes is okay, my friends lender did not think so and would not make any contact whatsoever with the appraiser. They offered to do the deal over again from the beginning and hope for a better appraiser.
Also, local lenders in Santa Fe are under the impression they can’t use independent appraisers and a broker yesterday told me he will not use independent appraisers because of HVCC. So there’s what you say, and what is really going on.
Thank you for your comment. The information in my post on HVCC I believe is accurate in terms of what is permitted under HVCC. It is consistent with information published by Fannie Mae as well as the National Association of REALTORS(R).
It sounds like your friend had a bad experience and her situation may have not been handled properly. Unofortunately when new regulations come out there is a time of period where the industry finds itself in a learning curve. Some are not aware of what is permitted or prohibited and others, usually those lacking a complete understanding of the regulation, sometimes overreact, which is unfortunate.