Reprinted with Permission: Appraisal Institute (for further information, please contact: InsideTheBeltway@AppraisalInstitute.org)
Myths and Realities
The Home Valuation Code of Conduct (HVCC) is scheduled to take effect May 1, 2009. As of that date, institutions that deliver loans to Fannie Mae or Freddie Mac must represent and warrant that the appraisals obtained adhere to the requirements found in the HVCC regarding appraisal management, ordering and review by lenders.
The release of the Home Valuation Code of Conduct has raised many questions on the part of lenders, appraisers, and others involved in mortgage lending activities. Lenders that sell loans to Fannie Mae or Freddie Mac are likely reviewing their internal appraisal operations, and some may have to retool or restructure their operations to achieve compliance.
Unfortunately, there is confusion and misinformation in the marketplace regarding HVCC compliance and appraisal policies in general, particularly in regard to use of third party vendor management firms. To help bring clarity to these issues, the information below is intended to identify some of the myths we have identified and state the reality.
Myth: The HVCC requires lenders to use Appraisal Management Companies.
Reality: Use of appraisal management companies is not required under the Home Valuation Code of Conduct (HVCC). Lenders may engage appraisers directly without the use of third parties.
Myth: Mortgage sellers cannot achieve compliance without outsourcing the appraisal function.
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