Home Valuation Code of Conduct (HVCC) Survival Guide - Hints and Tips For Real Estate Appraisers

The much anticipated HVCC is now in effect, assuming the failure of latch-ditch efforts to delay implementation by the NAMB (National Association of Mortgage Brokers) and NAR (National Association of Realtors.) All 1-4 family loans sold to Fannie Mae and Freddie Mac are subject to the HVCC.

So what is different now? There are quite a few things that haven’t changed, for instance the HVCC still does not apply to FHAand VA loans and it also does not apply to jumbo loans, loans over Fannie Mae and Freddie Mac limits. Any such appraisal assignments that you undertake today can be performed exactly as one which you completed previously. Obviously any private assignments are completely unaffected, so those divorce appraisals, bankruptcy appraisals and tax grievance and tax appeal appraisals can be completed the same way you did them before. These types of private appraisals are also going to be increasing for several reasons:

–Existing and pending legislation promises to restrict real estate agents from performing BPO’s, and restricts broker market value estimates to listing activity only, not allowing them to provide market value estimates for mortgage, legal or tax related purposes.

–Potential congressional action could allow bankruptcy judges to modify the terms of troubled homeowners’ mortgages. Any such action would likely increase the need for appraisals for this reason.

–The decline in property values has not been properly accounted for by many assessing jurisdictions. This will surely lead to a great increase in the number of tax grievance and tax appeal appraisals as homeowners look to reduce their property taxes.

With regard to Fannie and Freddie and AMCS: As we and many others have repeated, there is no mandate within the HVCC for the usage of appraisal management companies. This is amongst the many myths that have developed surrounding the HVCC. Question 35 in Fannie Mae’s Home Valuation Code of Conduct Frequently Asked Questions (FAQs) asks: “Is a lender required to use an AMC for ordering appraisals?” The answer: “No. A lender may order appraisals directly from an individual appraiser.”

While the HVCC does not mandate the use of AMC’s, bank consolidation and other factors have undeniably increased the share of appraisal orders that flow through AMC’s. Individual appraisers need to evaluate how taking orders from management companies fits with their overall business plan. Working with management companies on a limited geographical basis or on specific types of assignments (for example, review assignments, which appear to be increasing) can be beneficial for many appraisers seeking to limit the percentage of their overall practice devoted to AMC’s. Appraisers need to be cautious with some of the newer AMC’s as to both the unrealistic time pressures they may impose and their ability (or willingness) to pay the appraiser promptly.

Bill Collins has been a residential and commercial real estate appraiser on Long Island for over 20 years with All Island Appraisal. He is also the developer of the Tax Grievance and Tax Appeal Appraiser directory as well as an FHA Appraiser directory.