Mention the Home Valuation Code of Conduct to almost anyone in the real estate business, and you run the risk of unleashing a tirade.
HVCC, which took effect May 1, is a set of guidelines implemented by Fannie Mae and Freddie Mac as part of a nationwide settlement to prevent litigation concerning over inflated appraisals. HVCC aims to stop fraud by forbidding mortgage brokers, loan originators or Realtors to contract work to appraisers directly on conventional home loans. In order to meet the criteria, lenders and mortgage companies contract with appraisal management companies that keep a pool of appraisers who rotate out as work comes in.
So what’s the problem? Those pools consist of appraisers that might or might not be from the buyer or seller’s service area. “It’s been a disaster,” says Mike Anderson, president of Essential Mortgage and past president of the Louisiana Mortgage Bankers Association. “We’ve had appraisers come to Baton Rouge from Bogalusa, Mandeville and even Gulfport. They don’t know the area.” Read the Business Report story about the new rules here.
