New Rules for Appraisals

By Elke Duffy, Broker
Amador Realty, www.amadorrealty.com

 
The new Home Valuation Code of Conduct (HVCC) went into effect on May 1, 2009. The code dictates a number of practices that lenders must follow with respect to appraisals with regard to loans they intend to sell to Fannie Mae or Freddie Mac. HVCC does NOT apply to FHA or VA loans.

Real estate professionals find the code not only challenging and somewhat bizarre but also loaded with problems. Following are just some of the negative effects of the new code which baffle real estate agents:

1. A substantial and inexplicable increase in the cost of appraisals
2. Valuations that differ substantially from perceived market values
3. Delays of several days and even as long as three weeks in completion of appraisals
4. An increase in alleged factual errors in appraisals
5. Appraisers who have been assigned to value properties as far as 40 miles away.

It appears that the code specifically prohibits practices that may influence or attempt to influence an appraiser's opinion of a home's value. The code requires lenders to order appraisals themselves, rather than accept any appraisal completed by an appraiser who was chosen, hired, or paid by a mortgage broker, real estate agent, or other third party. The code allows an
appraisal to be transferred from one lender to another, but only if the original lender gives written assurance that the appraisal is HVCC-compliant and the new lender accepts that assurance.
C.A.R. (California Association of Realtors®) is supporting H.R. 3044 which was introduced by California Congressman Gary Miller that would place an 18-month moratorium on the new HVCC as there has been little opportunity up to now to lodge formal complaints about the code since the telephone hotline
which was supposed to receive complaints has not been implemented.

COPYRIGHT 2009 AMADOR COUNTY CHAMBER OF COMMERCE
September 2009 News