HVCC: Home Valuation Code of Conduct

By now, your've probably heard alot about the HVCC, which sprang out of a March 3rd agreement reached between the Attorney General of New York (Andrew Cuomo), Freddie Mac, Fannie Mae, and the Office of Federal Housing Enterprise Oversight (OFHEO) and is scheduled to take effect by next January.

In the settlement agreement, those parties agreed to address issues of appraisal coercion and independence in exchange for the Attorney General's office terminating its investigation.  The agreement stated that the HVCC would be the standard of conduct following by the parties, and would be complemented and overseen by a newly formed Institute.  This Institute, called Independent Valuation Protection Institute or IVPI would be funded jointly by Fannie Mae and Freddie Mac for a period of 28 months and would maintain a complaint hotline for appraisers, consumers, and other parties. 

The main goal of the HVCC is eliminating mortgage broker-ordered appraisals, prohibiting appraiser coercion, and reducing the use of appraisals prepared in-house or through captive appraisal management companies in underwriting mortgages.

At first glance, it may seem like an appraiser's dream, as both the HVCC and the agreement lead off with languange stating the need for quality appraisals completed free of any coercion on the part of the lender or any other party, for that matter.  But of course, you need to look further.  Just take a look into many of the business periodicals and online forums which clearly reflect anxiety about the agreement.  Many fear that the HVCC will hurt small businesses without really solving the mortgage industry's problems.  Other concerns include the possible downsizing or even dismantling of lenders' in-house appraisal departments, loss of work by appraisers whose business depends heavily on brokers and/or lenders, and increasing bureaucratic costs if appraisal management companies gain importance.

Well, all of the parties have some work to do.  If , the agreement instructs, they consider comments, criticisms, recommendations, etc., obtained during the comment period in good faith, then a positive win win outcome should emerge.  Until then, I along with the industry, await......