Well, its finally here. the HVCC! (it stands for Home Valuation Code of Conduct) What does this mean? Well it means that all mortgage companies can NO LONGER order their own appraisals for Conforming mortgages. This is NOT a law, but is basically new stricter guidelines regarding appraisals. Fannie Mae is attempting to create a “wall” between lenders and appraisers for the purpose of “REMOVING INFLUENCE” of lenders on the value of properties. So for my company Mortgage Trust, we now have a blind and random pool of appraisers from which to access. When we need an appraisal ordered, we have staff members that will initiate that for us. These staff members are restricted to those who have NOTHING to gain by the closing of the mortgage. They are not commission based etc. So therefore they will have no influence on the value. Our appraisal requests will NO LONGER have any indication of what we think the value will be.
My feeling is that the downside will for us will be that appraisals will take longer because there will be no “customer service” dynamic at play. I also think that appraisals will become more expensive, as these appraisers have more hoops to jump through etc.
One thing to note is that this policy will NOT apply to FHA mortgages. Those will be business as usual. Even though I think the HVCC will add time and cost to the loan/appraisal process. I do not think that values will be greatly impacted. The vast majority of appraisers take great care with determining the accurate value of real estate, I don’t see this changing.
For more information on this exciting topic, CLICK HERE