ASK AN APPRAISER
Do you wonder if the value of your house would increase if you added on? Or, would you like to learn more about the terminology used in appraisals? This is your opportunity to get your questions answered!
‘Ask an Appraiser’ is designed to help you better understand the appraisal process. Simply email your question to email@example.com and we’ll email you back in a timely fashion!
(Chances are someone else has the same question- and we can all benefit!)
Question: What is the Purpose of the HVCC?
Answer: Enacted May 1, 2009, the Home Valuation Code of Conduct (HVCC) is a set of rules for the mortgage lending and real estate appraisal industries. The intended purpose of the HVCC is to protect appraiser independence and prevent pressure from being applied to appraisers to produce a desired property value. Ultimately, these safeguards are intended to protect consumers. Even though there has been considerable debate about the unintended consequences of the HVCC, compliance is required for all loans backed by Fannie Mae or Freddie Mac.
The HVCC was born from an agreement between the New York State Attorney General, OFHEO, Fannie Mae and Freddie Mac. In 2007 New York Attorney General Andrew Cuomo filed suit against First American Corporation and its appraisal management subsidiary, eAppraiseIT, accusing them of enabling Washington Mutual to pressure appraisers to change values, as well as hand-pick which appraisers should be used for WaMu's appraisal reports.
Attorney General Cuomo then subpoenaed Fannie and Freddie in order to learn more about loans purchased from banks like WaMu and the valuation processes they used. One of the results of the investigation was the HVCC, which was agreed upon and approved by Fannie and Freddie. From May 1, 2009 forward, every loan eventually funded by Fannie and Freddie must be in compliance with the HVCC.
All loans backed by Fannie Mae or Freddie Mac must abide by the HVCC. The code doesn't apply to FHA and VA insured loans, or to appraisals ordered for non-lending purposes.
Lenders are required to ensure that the borrower receives a copy of the appraisal report at least three days before the loan closing. The LENDER, not the appraiser, must provide the copy to the borrower, at no extra charge. This allows the buyer to read the report and decide whether to go forward with the purchase.
Answer: Absolutely - in this time, when appraisal management companies (AMCs) often pick the appraiser, it is more important than ever to meet the appraisers. In fact, we advise agents that they should interview the appraiser over the phone prior to agreeing to an appointment.
Some AMCs may be picking appraisers randomly, or by who will do it for lowest fee - not necessarily who is most competent.
Ask the appraiser questions specific to the area to insure that the appraiser has the requisite geographical competency. We also recommend asking in advance if the appraiser is willing to review comparables that you would like to provide.
If the appraiser doesn't exude a knowledge of your home's neighborhood, and/or is unwilling to review your sales, we suggest you tell the lender to find you a new appraiser.