The Veridian Blog

The Home Valuation Code of Conduct (HVCC) is the result of a joint agreement between Freddie Mac, the Federal Housing Finance Agency (FHFA), and the New York State Attorney General to enhance the independence and accuracy of the appraisal process, and provide added protections for homebuyers, mortgage investors and the housing market.  Effective May 1, 2009, Freddie Mac will no longer purchase mortgages from Sellers that do not adopt the HVCC with respect to single-family mortgages that are delivered to Freddie Mac.  Also, effective for single-family mortgages with loan application dates on or after May 1, 2009, Freddie Mac Seller/Servicers must represent and warrant that the appraisal report is obtained in a manner consistent with the HVCC.

The HVCC provides that “the lender or any third party specifically authorized by the lender (including, but not limited to, appraisal companies, appraisal management companies, and correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser.  The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents).” 

So we all know now to stop taking our appraisers out to lunch and buy them fancy gifts, right?  Probably true and probably a good thing for the industry in the long-run.  Because of the loss of any element of control, turn times are now the big issue with many brokers.  So far, most of our wholesalers have turned appraisal reports around fairly quickly so (knock on wood), it will continue that way.  The cost of the reports have certainly increased as much as twofold, depending on which appraisal service is used which can be an initial shock for experienced borrowers/buyers.

For more information and detail regarding HVCC, please see: https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf