Top 10 Real Estate Developments of the ’00s: #6

By Brian Summerfield, Online Editor, REALTOR® Magazine

Five down, five to go! In this installment of our top real estate developments of the decade, we examine an infamous issue for practitioners:

#6: HVCC

For a demonstration of the problems caused by the Home Valuation Code of Conduct (HVCC), adopted by Fannie and Freddie on May 1 of this year, look no further than this blog. Back in July, my colleague Rob Freedman published this post featuring a video interview with NAR policy analyst Jerome Nagy, which set off a firestorm of comments that criticized or defended the HVCC and appraisals generally.

As Rob and I noted at the time, neither the blog nor the video have anything especially controversial to say about the HVCC. The code itself was just that controversial. As with Tiger Woods’ recent peccadilloes, merely bringing the subject up could trigger a heated larger discussion about everything that went wrong and how to fix it.

So what, exactly, was wrong with the HVCC? Well, the most persistent criticism was that it led to more out-of-area appraisers assessing properties, but from the real estate professional’s perspective, it was more than that. Many of these appraisers—not being from the area—didn’t value homes correctly, the appraisals weren’t taking place in a reasonable amount of time, and in many cases, deals were falling through as a result.

Compounding the frustration was the fact that the HVCC was implemented in the worst real estate environment in more than a quarter century. The market was already tough enough as it was, and this made things even more difficult for practitioners.

But did the HVCC get a bad rap? Some think so. The trouble might not have been caused so much by the code itself as misinterpretations of it and poor practices of appraisal management companies (AMCs). And, of course, the timing didn’t help.

The HVCC—or at least the most problematic provisions of it—could be eliminated early in the next decade. The most likely route to its demise would be an amendment in the Consumer Financial Protection Act of 2009 that would sunset the code next year. That bill has made it through the House Financial Services Committee, but hasn’t been voted on in the House or Senate. However, Fannie, Freddie, and the FHA have essentially incorporated the HVCC into their own guidelines, so even that might not kill it altogether.

Regardless of the eventual outcome there, we’re stuck with HVCC—a system that more than one-third of REALTORS® say has caused a lost sale this year—for the rest of this decade.

Other Major Real Estate Developments of the Decade

1. Housing Goes Boom and Bust

2. The Fall of Fannie and Freddie

3. Government-Led Recovery

4. The Practitioner Explosion

5. Commercial Crash

7. Record Lows in Mortgage Rates


9. Real Estate on TV

10. Going Green

Brian Summerfield

Brian Summerfield is Manager of Business Development and Outreach for NAR Commercial and Global Services. He can be reached at

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