Despite the opposition of appraisers, real estate brokers and other housing market participants to the newly-implemented Home Valuation Code of Conduct, the Federal Housing Finance Agency has reiterated the importance of the home appraisal code in the recovery of the housing market and in the prevention of another foreclosure crisis.
Nonetheless, the FHFA, Fannie Mae and Freddie Mac have been listening to complaints about the HVCC and have been making adjustments and making clarifications to help appraisers, realtors and other real estate professionals.
Recently, Charles McMillan, the president of the National Association of Realtors, announced to its members that he has obtained two important clarifications from the federal agencies about HVCC when he met with officials from the New York Attorney General?s Office, the FHFA, Fannie Mae and Freddie Mac.
First, McMillan said, mortgage lenders should hire appraisers who have strong appraisal experience in the location of the property to be appraised. Secondly, appraisers are allowed to talk to real estate brokers about the appraisal.
Additionally, Fannie Mae and Freddie Mac have posted a comprehensive FAQ section on their web sites to answer several questions raised by NAR when HVCC was first implemented in May.
McMillan also added that he lauds the efforts of the federal agencies in keeping open communications with the real estate sector, but he reiterated that there are more things about the HVCC that should be revised.
More importantly, McMillan pointed out that NAR will continue campaigning in Congress for a moratorium of 18 months on the HVCC, so market participants would have more time in addressing additional concerns about the HVCC.
The Appraisal Institute also released its own updates on the HVCC and clarified several myths surrounding the valuation code. The institute clarified that lenders are not required to use appraisal management firms. They can hire appraisers without going through third parties.
The institute also clarified that loan production personnel can talk with appraisers, but they cannot recommend or influence the selection of appraisers.
Mortgage lenders, according to the institute, can comply with the HVCC even if they do not outsource appraisals. All they need to do is to separate the appraisal function and the loan production function.
The institute also presented its clarifications about outsourcing to third parties in relation to costs, competency and risk management.
Lastly, the institute wishes to impart the objective of the federal agencies when it implemented HVCC, which is to promote the independence of appraisers and promote good underwriting processes.
