New HVCC Appraisal Rules Blamed for “Destroying the Housing Market”

A recent AP article contends that there is strong backlash against the new Home Valuation Code of Conduct (HVCC) rules that were enacted on May 1, 2009.

“The new guidelines bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender. Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.”

Players in the real estate market, including realtors, homebuilders, mortgage brokers, and some appraisers, argue that the rules have created a number of problems, including the undervaluation of properties and delays in sales closings.

The changes state that rather than going to an appraiser directly, lenders must order a real estate appraisal through a third party, such as an appraisal management company. The new HVCC appraisal rules were put in place to prevent conflict of interests that led appraisers to inflate the value of a property, which have been partially seen as responsible for the current crisis in the real estate market. As part of a settlement between New York Attorney General Andrew Cuomo and Fannie Mae and Freddie Mac, the policy was intended to eliminate the pressure appraisers might be under by lenders and brokers to overinflate property valuations to increase profits.

Organizations like The National Association of Mortgage Brokers and The Appraisal Institute have come out against all or portions of the new regulations.

You can find Present Value’s other blog posts on HVCC here.

By: Present Value

Tags: HVCC, Real Estate Appraisal

This entry was posted on Friday, July 17th, 2009 at 3:45 am and is filed under Fannie Mae, HVCC, Real Estate Appraisal. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.