Adios to the HVCC?

Did all the complaining work? It appears that the controversial Home Valuation Code of Conduct (HVCC)–an appraisal system that was the brainchild of Fannie Mae and Freddie Mac and caused much aggravation amongst Realtors, home buyers and sellers, mortgage brokers and appraisers–may be thrown out the window.

The House Financial Services Committee approved a bipartisan amendment last week that would terminate the Code and replace it with a new set of rules and creation of a new Consumer Financial Protection Agency. The new rules would apparently not be as confining upon appraisers, a problem that caused many property appraisals to come in exceedingly low, which in turn caused many home purchase deals to fall out of escrow.

The purpose of HVCC was to give independence to home appraisers. It created a slew of appraisal management companies, used by many lenders, who would in turn pay the appraisers a fee to work an appraisal. Oftentimes these fees were low and less than appraisers normally made.

Many appraisers were obtained from out of the area, which unfortunately meant that they were often unfamiliar with the neighborhoods in which they were working, AND they sometimes lacked experience (as established, experienced appraisers would not work for such reduced wages).

Furthermore, these management companies would then charge all or a portion of the appraisal fee to the home purchaser, making a nice profit in the end. These factors caused many escrows to be delayed, and others even fell through because the value did not match comparably sold properties.

Over the last several months the National Association of Realtors, the National Association of Home Builders and the the National Association of Mortgage Brokers have been standing behind member complaints to push for changes to the HVCC. It seems to be finally working. If the new rules come into play the housing market should be able to continue on the road to recovery.

Just goes to show you how DOING SOMETHING makes a difference!