Blue Oak Blog

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We will use this blog to keep you updated on changes to our local markets and changes in the industry. This blog will be updated weekly.

I would like to use today’s posting to talk about the HVCC. This stands for Home Valuation Code of Conduct.

Background: Andrew Como, NY State Attorney General, filed suit against Fannie Mae and Freddie Mac over the bundling and reselling of mortgages without ensuring the value of the collateral. They have settled by agreeing to establish the Home Valuation Code of Conduct (HVCC), also referred to as the “Code”.

The code does a number of things, including:

· Forbids any form of valuation pressure, including providing an estimated value.

· Forbids lenders from accepting an appraisal ordered by a mortgage broker or a realtor.

· Forbids lenders from using appraisals prepared by employees of the lender, except for reviews,

· Establishes quality control requirements, and

· Establishes an Independent Valuation Protection Institute (the Institute) to handle complaints.

The process called for input from industry and the public until the end of last April.

There was quite a bit of comment. Concerns about the relationship between brokers and appraisers, the apparent encouragement of Appraisal Management Companies (AMCs), the ability to skirt the requirements by using AVMs or BPOs, and the direction it seems to push the industry toward an emphasis on turn time and cost as opposed to accuracy and quality.

There will be some adjustments made based on the input, a new version of the HVCC, and another comment period. The HVCC takes affect 01/01/2009.

None of this is cast in stone yet, but there are guys with chisels waiting. For more information, the appraisal institute has copies of the agreements, the HVCC, and many of the organizations letters of comment on their web site. I have included the web address.

Appraisal Institute, New & Advocacy