How do appraisals originate and how does that affect your loan.
 
Beginning on May 1, 2009 all lenders selling off loans to either Freddie Mac or Fannie Mae are required to order appraisals from a third party ordering system.  The reason for this change is to separate the appraiser from any undue influence from any other party involved in the transaction.  This new system is named HVCC or Home Valuation Code of Conduct. Its main purpose is to promote the accuracy of appraisals.  Its secondary goal is to also ensure that the borrowers have sufficient notice of appraisal and lenders are now required to receive a copy of the appraisal no less than 3 days prior to closing.
 
Appraisers are also required to complete a market conditions addendum or form 1004MC as of April 1, 2009. This report is to provide a clear & accurate understanding of the market trends and conditions in the subject's community due to the complexity of the current real estate market. Incorporated in this form  is information about absorption rates, total # of listings, months of housing supply, median prices in the area, total sales in the area, seller concessions , short sales and foreclosures in the area. Wow that sure in a lot of information.
 
Appraisers must be given all pages of the contract and any subsequent changes even if the appraisal assignment is already completed. This is a requirement for Fannie Mae to help ensure that the appraiser is aware of all relevant aspects of the transaction. The contract will provide important sales and financing data, including whether there are any concessions as part of the transaction, so the appraiser can consider the effect on the property value.  The appraiser must consider the impact a sales concession had or has
on a transaction. The appraiser is also required to complete an interior and exterior inspection and note any adverse conditions that were apparent during the inspection.
 
Values are certainty an issue at this time. Taking into consideration the idea that house prices have fallen, the question remains as to how much, will it continue and how will this affect the present day value of the selling property.  Appraisers have different opinion on this issue just like Realtors and lenders do.  The most common factor that we are seeing used today is a negative time adjustment which allows the appraiser a % per month adjustment to lower the value of the older closed sales.
 
HVCC transitioned quietly into national policy altering the way all real estate transactions will come together in the future.