HVCC Home Valuation Code of Conduct: Effective May 1, 2009
The HVCC is an attempt to remove the ability of Bankers, Mortgage Brokers, Loan Officers, Realtors and Borrowers to influence the appraisal process. The opening paragraph reads as follows:
No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, , inducement, intimidation, bribery, or in any other manner…
The act requires absolute independence within a lender’s organization between the appraisal function and loan production. The act also stipulates that the borrower must receive a copy of the appraisal at least 3 days before closing.
In looking through the HVCC summary on the Freddie Mac website this seems like a solid attempt to address the problems that have plagued the lending industry with appraisals. However if you listen to the comments of appraisal industry there are a number of possible issues with the act. In a very good article published by Dave Biggers in the Appraisal Press a number of interesting points are discussed that could be a problem for borrowers down the road.
Mr. Biggers points out that the Lender now has effective control of the process and that while the act restricts the activities of licensed appraisers and prohibits the banks from owning or controlling more than 20% of an appraisal management company, the banks can own up to 100% of an automated valuation company. He further points out that the banks have a vested regulatory and financial interest in using Automated Valuations as apposed to using licensed appraisers.
If Mr. Biggers is right then what HVCC has done is created a situation where the lenders now control the appraisal process. So what our government has done is created another profit center for the banks and allowed them to take control of the appraisal process. Let’s not forget that these are the same banks that were the creator of the crisis to begin with.
Read the HVCC code of conduct here: http://www.freddiemac.com/singlefamily/docs/030308_valuationcodeofconduct.pdfRead Dave Biggers article here: http://www.appraisalpress.com/news/articles/hvcc_the_cure_is_worse_than_the_disease/
Tags: Freddie Mac, Home Valuation Code of Conduct, HVCC, Mortgage, Mortgage information
July 29, 2009 at 4:10 pm |
We have a discussion on this subject of HVCC on our blog at http://blog.privocorp.com/. With the advent of HVCC, the general opinion is that the quality of appraisals is lower and most of the borrowers are finding it more difficult to get a loan. Is there hope in the future? Share your thoughts on the PrivoCorp blog.