Home Valuation Code of Conduct

                                      Home Valuation
                                     Code of Conduct
I.     No employee, director, officer, or agent of the lender, or any other third party
       acting as joint venture partner, independent contractor, appraisal management
       company, or partner on behalf of the lender, shall influence or attempt to
       influence the development, reporting, result, or review of an appraisal through
       coercion, extortion, collusion, compensation, instruction, inducement,
       intimidation, bribery, or in any other manner including but not limited to:
       1)      withholding or threatening to withhold timely payment for an appraisal
               report;
       2)      withholding or threatening to withhold future business for an appraiser, or
               demoting or terminating or threatening to demote or terminate an
               appraiser 1 ;
       3)      expressly or impliedly promising future business, promotions, or increased
               compensation for an appraiser;
       4)      conditioning the ordering of an appraisal report or the payment of an
               appraisal fee or salary or bonus on the opinion, conclusion, or valuation to
               be reached, or on a preliminary estimate requested from an appraiser;
       5)      requesting that an appraiser provide an estimated, predetermined, or
               desired valuation in an appraisal report, or provide estimated values or
               comparable sales at any time prior to the appraiser’s completion of an
               appraisal report;
       6)      providing to an appraiser an anticipated, estimated, encouraged, or desired
               value for a subject property or a proposed or target amount to be loaned to
               the borrower, except that a copy of the sales contract for purchase
               transactions may be provided;
       7)      providing to an appraiser, appraisal management company, or any entity
               or person related to the appraiser or appraisal management company, stock
               or other financial or non-financial benefits;
       8)      allowing the removal of an appraiser from a list of qualified appraisers
               used by any entity, without prior written notice to such appraiser, which
               notice shall include written evidence of the appraiser’s illegal conduct, a
               violation of the Uniform Standards of Professional Appraisal Practice
1
       An “Appraiser” must be licensed or certified by the state in which the property to
be appraised is located.
             (USPAP) or state licensing standards, substandard performance, or
             otherwise improper or unprofessional behavior;
     9)      ordering, obtaining, using, or paying for a second or subsequent appraisal
             or automated valuation model in connection with a mortgage financing
             transaction unless there is a reasonable basis to believe that the initial
             appraisal was flawed or tainted and such basis is clearly and appropriately
             noted in the loan file, or unless such appraisal or automated valuation
             model is done pursuant to a bona fide pre- or post-funding appraisal
             review or quality control process; or
     10)     any other act or practice that impairs or attempts to impair an appraiser’s
             independence, objectivity, or impartiality.
     Nothing in this section shall be construed as prohibiting the lender (or any third
     party acting on behalf of the lender) from requesting that an appraiser (i) provide
     additional information or explanation about the basis for a valuation, or (ii)
     correct objective factual errors in an appraisal report.
II.  The lender shall ensure that the borrower is provided, free of charge, a copy of
     any appraisal report concerning the borrower’s subject property immediately upon
     completion, and in any event no less than three days prior to the closing of the
     loan. The borrower may waive this three-day requirement. The lender may
     require the borrower to reimburse the lender for the cost of the appraisal.
III. The lender or any third-party specifically authorized by the lender (including, but
     not limited to, appraisal management companies and correspondent lenders) shall
     be responsible for selecting, retaining, and providing for payment of all
     compensation to the appraiser. The lender will not accept any appraisal report
     completed by an appraiser selected, retained, or compensated in any manner by
     any other third-party (including mortgage brokers and real estate agents).
IV.  All members of the lender’s loan production staff, as well as any person (i) who is
     compensated on a commission basis upon the successful completion of a loan or
     (ii) who reports, ultimately, to any officer of the lender other than either the Chief
     Compliance Officer, General Counsel, or any officer who is not independent of
     the loan production staff and process, shall be forbidden from: (1) selecting,
     retaining, recommending, or influencing the selection of any appraiser for a
     particular appraisal assignment or for inclusion on a list or panel of appraisers
     approved to perform appraisals for the lender; (2) any communications with an
     appraiser, including ordering or managing an appraisal assignment; and (3)
     working together in the same organizational unit, or being directly supervised by
     the same manager, as any person who is involved in the selection, retention,
     recommendation of, or communication with any appraiser. If absolute lines of
     independence cannot be achieved as a result of the originator’s small size and
     limited staff, the lender must be able to clearly demonstrate that it has prudent
     safeguards to isolate its collateral evaluation process from influence or
     interference from its loan production process.
V.   Any employee of the lender (or if the lender retains an appraisal management
     company, any employee of that company) tasked with selecting appraisers for an
     approved panel or substantive appraisal review must be (1) appropriately trained
     and qualified in the area of real estate and appraisals, and (2) in the case of an
     employee of the lender, wholly independent of the loan production staff and
     process.
VI.  In underwriting a loan, the lender shall not utilize any appraisal report prepared by
     an appraiser employed by:
     (1) the lender;
     (2) an affiliate of the lender;
     (3) an entity that is owned, in whole or in part, by the lender;
     (4) an entity that owns, in whole or in part, the lender
     (5) a real estate “settlement services” provider, as that term is defined in the Real
         Estate Settlement Procedures Act, 12 U.S.C.§ 2601 et seq.;
     (6) an entity that is owned, in whole or in part, by a “settlement services”
         provider.
     The lender also shall not use any appraisal report obtained by or through an
     appraisal management company that is owned by the lender or an affiliate of the
     lender, provided that the foregoing prohibitions do not apply where the lender has
     an ownership interest in the appraisal management company of 20% or less and
     where (i) the lender has no involvement in the day-to-day business operations of
     the appraisal management company, (ii) the appraisal management company is
     operated independently, and (iii) the lender plays no role in the selection of
     individual appraisers or any panel of approved appraisers used by the appraisal
     management company.
     Notwithstanding these prohibitions, the lender may use in-house staff appraisers
     to (i) order appraisals, (ii) conduct appraisal reviews or other quality control,
     whether pre-funding or post-funding, (iii) develop, deploy, or use internal
     automated valuation models, or (iv) prepare appraisals in connection with
     transactions other than mortgage origination transactions (e.g. loan workouts).
VII. The lender will establish a telephone hotline and an email address to receive any
     complaints from appraisers, individuals, or any other entities concerning the
     improper influencing or attempted improper influencing of appraisers or the
      appraisal process, which hotline and email address shall be attended only by a
      member of the office of the General Counsel, Chief Compliance Officer or other
      independent officer. In addition: (1) each appraiser now or hereafter on any list of
      approved appraisers, or, upon retention by the lender, will be notified, in a
      separate document, of the hotline and email address and their purpose; and (2)
      each borrower, as part of a cover letter accompanying the provided appraisal, will
      be notified of the hotline and email address and their purpose. Within 72 hours of
      receiving any complaint, the lender will begin a preliminary investigation of the
      complaint and upon completing the inquiry (or, after a period not to exceed 60
      days, whichever shall come first) shall notify the Independent Valuation
      Protection Institute and any relevant regulatory bodies of any indication of
      improper conduct. The name and any identifying information of the person or
      entity that has filed such a complaint shall be kept in strictest confidence by the
      office of the General Counsel, Chief Compliance Officer or other independent
      officer, except as required by law. The lender shall not retaliate, in any manner or
      method, against the person or entity which makes such a complaint.
VIII. The lender agrees that it shall quality control test, by use of retroactive or
      additional appraisal reports or other appropriate method, of a randomly-selected
      10 percent (or other bona fide statistically significant percentage) of the appraisals
      or valuations which are used by the lender, including the results of automated
      valuation models, broker’s price opinions or “desktop” evaluations. The lender
      shall report the results of such quality control testing to the Independent Valuation
      Protection Institute and any relevant regulatory bodies.
IX.   Any lender who has a reasonable basis to believe an appraiser is violating
      applicable laws, or is otherwise engaging in unethical conduct, shall promptly
      refer the matter to the Independent Valuation Protection Institute and to the
      applicable State appraiser certifying and licensing agency.
X.    The lender shall certify, warrant and represent that the appraisal report was
      obtained in a manner consistent with this Code of Conduct.
XI.   Nothing in this Code shall be construed to establish new requirements or
      obligations that (1) require a lender to obtain a property valuation, or to use any
      particular method for property valuation (such as an appraisal or automated
      valuation model) in connection with any mortgage loan or mortgage financing
      transaction, or (2) affect the acceptable scope of work for an appraiser in
      connection with a particular assignment.