Are you planning to refinance the home that you already own or to purchase a home? Is it better to learn more about the Home Valuation Code of Conduct (HVCC) guidelines, as this new rule could have a significant impact on the entire process!
The HVCC was designed in order to protect property appraisers from being pressured into overvaluing the property in order to help get the mortgage or refinancing loan approved. The HVCC guidelines aren’t a law. Rather, they are guidelines that Freddie Mac and Fannie Mae have put into place. Since they ultimately purchase about 80% of mortgages in the United States, however, these guidelines essentially govern the entire mortgage market. Under HVCC guidelines, mortgage brokers and lenders cannot hire their own appraisers to determine the value of a property. As such, they generally must go through an appraisal management company to assign an appraiser.
There are various reasons for the implementation of the HVCC guidelines, though the biggest reason is because extravagant appraisals have been largely blamed for the overblown housing prices that helped create our current economic situation. To ensure that these problems do not crop up again, the HVCC guidelines were put into place. While the guidelines do seem reasonable on the surface, they have lead to a multitude of complaints from appraiser, real estate agents and mortgage brokers.
The main complaint against the HVCC guidelines is the fact that it slows down the entire loan approval process. Slowing down the loan approval process is certainly not something that most people want to see during a time when we are trying to kick-start the economy.
Another complaint regarding HVCC guidelines is that they result in an increase in fees that consumers have to pay for their appraisals. Whereas appraisals once cost about $200 to $300 to complete, they now cost $400 or more because mortgage brokers and lenders have to pay the appraisal management company for its services.
According to some critics of the HVCC guidelines, they also force lenders and real estate agents to work with appraisers who are not as skilled as independent appraisers. Apart from this, they also claim that appraisal management companies are hiring appraisers from other regions, which means they are not familiar with the local markets and are giving undue weight to distressed properties and foreclosed properties when determining their appraised values. Hence, they are actually getting more inaccurate appraisals by being forced to work through appraisal management companies. They say more sales are failing to close according to this.
The bottom line for you someone who wants to refinance your home or as a buyer is that you may find yourself spending more on your appraisal than you would have prior to the HVCC guidelines being put into place. Apart from this, the procedure of getting your loan will likely take about a week longer than previously. You should also be aware that, although you and the lender cannot select the specific appraiser that you want, you do have the right to insist on receiving one who is properly qualified to assess the particular property you are interested in financing. Exercise this right in order to get the best results possible.