On February 15, 2010 The Federal Housing Administration adopted new appraisal guidelines that include "geographic competency" requirements. Effective June 30, 2010 Fannie Mae adopted similar requirements, a move that we think is important.
The HVCC ruling came from NY Attorney General Cuomo and it is intended to protect appraisers from coercion from lenders. Since May of 2009, large banks have been using the HVCC (Home Valuation Code of Conduct) as a way to create "revenue" centers. Because the ruling prohibits lenders to SPEAK to an appraiser (or email, txt whatever) Big Banks set up "companies" that collect (for instance) $450 for an appraisal, and then pay the appraiser $275. Appraisal Management Companies (AMC)are at times, because of their size, working against the system.
Many appraisers refused to do this... and subsequently the Large Banks "hired out" people from 100's of miles away (or more) to do appraisals. My theory is "you get what you pay for..."
In the June 30th memo, Fannie Mae and Freddie Mac agreed that the new rules for appraisals adopted last year need some additional "guidance."
- The HVCC does NOT bar Realtors, or other authorized third parties, from requesting that appraisers correct factual errors in their reports, or provide additional information or explanations about the basis for their valuations.
- Fannie Mae put lenders on notice that they can only use appraisers who are knowledgeable about the area in which they are being asked to value property, and who have the ability to access records on recent sales in those markets.
- Fannie Mae also clarified previous guidance to lenders on the selection and use of comparable sales, saying appraisers must consider a property's condition when choosing to use foreclosure sales or short sales as comps.
The current Financial Reform Bills being debated in Congress create a Consumer Finance over site unit that will blend current National Predatory lending requirements and HVCC - so the CURRENT appraisal system will be out the window on November 1, 2010... but it's unlikely that whatever replaces it will be much better.
If you are interested in purchasing a home in North Carolina, or refinancing a home in Raleigh, please call Steve and Eleanor Thorne, FFSi 919-649-5058. We know the rules, and we have the best mortgage interest rates available! We are still closing USDA Home Loans!