So often we read about the HVCC and unfortunately much of it is misinformation. Just this morning our local Folsom Telegraph had a letter written by a "Folsom Mortgage Broker" that in part stated that due the the HVCC all appraisals must be ordered by an AMC. Sadly this myth is widely circulated and the facts are not checked.
Here is part of the Rest of the Story:
I read the article on home appraisals in this mornings addition and was dismayed to see that the facts were not checked by the "Folsom Real Estate Broker" that wrote the letter. The letter to Miki states that the HVCC "now require all appraisals for conventional loans to be ordered through Appraisal Management Companies, or AMC's" this is not accurate. The HVCC applies only to loans that are sold to Fannie Mae or Freddie Mac and AMC's while they have gained a large market share since the HVCC came into effect on May 1st 2009 they are not mandated.
Here is a portion of the "frequently asked questions" from Fannie Mae's site regarding the HVCC:
Appraisal Management Companies (AMCs)
Q42. Is a lender required to use an AMC for ordering appraisals?
No. A lender may order appraisals directly from an individual appraiser.
Q43. May an AMC affiliated with, or that owns or is owned in whole or in part by the lender or a lender-affiliate, order appraisals?
Yes, an AMC affiliated with, or that owns or is owned in whole or in part by the lender or a lender-affiliate, may order appraisals if the AMC meets the criteria of Section IV.B. of the Code.
Q44. May a lender direct a mortgage broker to a specifically authorized AMC that will receive information from the broker about the loan application and begin the appraisal process?
Yes, as long as the lender has previously arranged for its appraisal process to be managed by the specifically authorized AMC. This process is compliant with the Code because the broker is not responsible for selecting, retaining, or providing for payment of compensation to the appraiser.
The confusion seems to come from the fact that mortgage brokers can not order directly from an appraiser under the HVCC code however lenders and banks can. Some "mortgage brokers" are "direct lenders" or "correspondent lenders" which can all order from an appraiser directly as long as they set up an ordering system that separates the ordering of the appraisal for Fannie Mae or Freddie Mac loans from directly benefiting from the results of the appraisal. Portfolio Lenders are not included in the HVCC as they are not selling to Fannie Mae or Freddie Mac.
Some of the local lenders have set up "round tables" of local appraisers to order their appraisals from which is allowed under the HVCC and while some call them an AMC others do not. This allows local appraisers that have been vetted by the lender and is knowledgeable in the local market to continue doing their work.
The HVCC also has a "shelf life" as currently written. This is an excerpt from the Appraisal Scoop another great resource to the facts of the HVCC:
Repeal of the HVCC: The HVCC is due to expire in 2010 (18 month life). By the time all the efforts to block the HVCC can be enacted . . . it could die all on its own. The problem? The impact of the HVCC has ALREADY become part of Fannie Mae's and Freddie Mac's Selling Guide and lenders and brokers have already changed their business models. The appraisal profession has been adversely impacted for years to come.
Miki, you are widely read in the community and can provide a great resource to dispel the misinformation regarding the HVCC which can greatly help consumers and the lending community.
If you want the whole story great sources of information include the Appraisal Scoop and Fannie Mae's web site which includes the HVCC as written and the FQA (frequently asked questions) which are updated from time to time.
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