HVCC: Appraisal Rules Are Posing a Challenge

By Robert Freedman, Senior Editor, REALTOR® Magazine

Since taking effect on May 1, the Home Valuation Code of Conduct (HVCC) has been a source of considerable concern among NAR members, both sales professionals and appraisers. The new rules were forged in an agreement between the New York State Attorney General and the two secondary mortgage market companies, Fannie Mae and Freddie Mac. The two companies’ federal regulator, the Federal Housing Finance Agency, weighed in on the agreement, too.

By now the main concern is widely known. The rules create a hard firewall between those who underwrite loans and those who hire appraisers. So, many lenders, even though they can hire appraisers themselves if they put appropriate safeguards in place, are choosing to work with appraisal management companies (AMCs) to select appraisers.

A survey of NAR members finds that, as a result of the increased use of AMCs, fees to appraisers are going down, appraisals are taking longer, and, perhaps most importantly, deals are falling through when appraisers are chosen who aren’t familiar with a market area.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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