A new bill, led by House Representatives Childers (Republican - MS) and Miller (Republican - CA) has been introduced and is currently in committee (Housing Financial Services).

This new bill H.R. 3044, would place an 18 month moratorium on the Home Valuation Code of Conduct (HVCC), which has received a frigid response since being implemented on May 1 of this year.

The National Association of Mortgage Brokers, which has been one of the most outspoken opponents of HVCC, sued the newly formed FHFA (Federal Housing Finance Authority) over the proposed changes back in February, and now supports legislation to halt it.

As you may recall, the HVVC was written up by the OFHEO and NY Attorney General Andrew Cuomo to help combat mortgage fraud and attempt to strengthen the home appraisal process.

The agreement eliminates mortgage broker ordered appraisals, is meant to prohibit appraiser coercion, and to reduce the use of lender in-house appraisals and captive appraisal management companies.

I will note here that this new appraisal law was a result of a 2007 lawsuit involving First American Corp.'s eAppraiseIt unit and alleged overly inflated home values tied to Washington Mutual home loans.

According to Marc Savitt, NAMB President; "the introduction of this legislation is a victory for consumers and members of the industry alike."

As a result of the new law, according to Savitt: "In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market".

Supporting this argument is Lawrence Yun, chief economist at the NAR (National Association of Realtors), and who recently reported that sales numbers are lower than anticipated because poor appraisals are delaying transactions.  "Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan".

Mr. Yun went on to state: "In the past month [since the inception of HVCC], stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is dangerof a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."

No matter where you fall on the argument of whether or not HVCC should exist, you as a realtor, homeowner attempting to refinance, home purchaser or loan officer/mortgage broker, have probably felt (whether you realize it or not) the market disruption that HVCC has created in its short existence.