HVCC, the acronym for “Home Valuation Code of Conduct”, is the result of a legal settlement between NY attorney general Andrew Cuomo and Fannie Mae & Freddie Mac to assure that appraisers would not be unduly influenced by lenders in the appraisal process. Before this ruling, mortgage brokers and bank loan officers would order the appraisal for a new home loan from any licensed appraiser, usually one they knew professionally for many years. After this ruling, appraisals are not allowed to be ordered by the mortgage broker or loan officer, the bank now orders them from an “Appraisal Management Company” (AMC). Mortgage brokers and loan officers are no longer allowed to have any direct contact with the appraiser.  Appraisers are supposedly being more scrutinized by the AMC’s. The law became effective on May 1st 2009 and has been causing problems ever since for buyers, sellers, and industry professionals across the country.

With evidence of mismanagement and fraud in the industry in the past, the attempt to ensure that residential properties are not appraised for more than their true worth is understandable. The intention was to stop lenders from pushing appraisers for higher values to help “make the deal work.” The belief was that this, in part, is what drove property values to unrealistic levels. The process under the new law takes ordering the appraisal away from anyone with a vested interest in getting the loan done. Read the rest of this entry »