What is the Home Valuation Code of Conduct (HVCC)?

The HVCC is a set of rules meant to stop collusion between lending institutions and appraisers. The rules of the HVCC say that individual banks and mortgage brokers who sell conventional loans in the secondary market to Fannie Mae and Freddie Mac cannot hand-select their own appraisers anymore. The New York State Attorney General Andrew Cuomo in 2007 filed a lawsuit against eAppraise IT and its parent, First American, for caving in to Washington Mutual, which allegedly pressured appraisers to submit so-called inflated appraisals. As a result of the lawsuit, Fannie Mae and Freddie Mac, the largest purchasers of home mortgage loans in the United States, elected to adopt the Home Valuation Code of Conduct. All conventional lenders who sell mortgages to Fannie Mae or Freddie Mac must now follow the Home Valuation Code of Conduct. The new appraisal process went into effect on May 1, 2009. It affects FHA loans from February 15, 2010 and forward. See the complete list of rules here - HVCC (pdf 25kb)

New rules present new problems

What is wrong with the Home Valuation Code of Conduct?

The Home Valuation Code of Conduct, known as HVCC, sounds like a good idea. However, it does have some birth defects. Before we just complain about the Home Valuation Code of Conduct (HVCC), we took a step back, identified and examined the issues and problems surrounding the appraisal profession and lending industry and considered solutions that would be effective and in the end, resolve more issues than they cause. We believe we have created a solution for each problem the new rules have created.

The following are the top complaints from the enactment of the new rules:

• Out-of-Area appraisers are performing appraisals.
• Appraisers with less experience are performing appraisals.
• Experienced appraisers are going out of business.
• The consumer pays an increased cost for the appraisal.

 

Appraiserline provides a one-stop solution

There are two key components to a lender’s HVCC compliance. The first is the lender’s responsibility for assigning appraiser panel creation, ordering, and communication to someone in their office who is not compensated based on the closing of loans. The second is the technology that the lender chooses and the compliance features the technology offers. Appraiserline.com offers a number of compliance features, including:

• The tracking, ordering, and messaging between lender and appraiser in a printable log. You always know who had a hand in every appraisal that is ordered every step of the way – either electronically or on paper.


• With the use of anonymous geographic routing technology, the lender does not know to whom the appraisal order was placed. Our appraiser panel is geographically diversified and the actual appraiser that is assigned to the order is unknown to the lender until the appraisal is delivered.

 

 

HVCC compliant features:

The AppraiserLine network structure is completely HVCC compliant. AppraiserLine offers a very efficient communication center hub that channels the workflow without any direct contact between the client and appraiser. This structure provides the required buffer between lenders and appraiser's. Lenders and brokers simply go to the AppraiserLine.com website and put in the zip code of the subject property. AppraiserLine then engages the office locator to assign the assignment to the appraiser with the best geographic location, feedback and performance rating in the local market. The selection system is fully automated, ensuring the lender, loan officer or mortgage broker is not in contact with the appraiser completing the assignment. This allows full compliance with the home valuation code of conduct (HVCC) AppraiserLine does not charge lenders for the service, the appraiser has previously agreed to a split the arrangement with the AppraiserLine network. 

To ensure all assignments are HVCC compliant, our system offers the following features:

Feature: Communications Log for every order.

Purpose: HVCC Compliance. Tracks all activity and messaging on an appraisal order. Log is printable for hardcopy in case of audit to show that no appraiser influence occurred.

Feature: Ability to email appraisal to borrower on completion.

Purpose: HVCC Compliance. Allows lender to email copy of completed appraisal. This fits with the HVCC requirement to provide the borrower with a copy of the appraisal at least 3 days prior to closing. Tracks when the appraisal is emailed, and tracks when the borrower clicked the link to view the appraisal.

Feature: Organized setup for Rotation Managers and Managed Users (LO’s, LP’s)

Purpose: HVCC Compliance. For use with organizations that want LO’s or LP’s to initiate the appraisal process. The Rotation Manager (who is not compensated through closings) creates an approved user base who can then initiate appraisals through the lender-approved process.

Feature: Anonymous order placement and anonymous messaging.

Purpose: HVCC Compliance. The lender does not know to whom the order was placed, or to whom messages are sent. Appraisers can view the lender/client info to prepare the appraisal. Exceptions are for
Rotation Managers (who are not compensated through closings), and on FHA orders where a case number is required.

Feature: Appraiser compensation.

Purpose: HVCC Compliance. Allows the Rotation Manager (who is not compensated through closings) to manage all billing transactions. Rotation Manager decides how appraiser payment will be satisfied and communicates with appraisers.

 

AppraiserLine offers a unique alternative to an Appraisal Management Company.

Appraisers are selected by geographic location, not selected by lowest fee or fastest turn times. Typical appraisal management companies allow appraisers to select their coverage area with no limitations. The appraisers selected in the AppraiserLine network, are always within 10 miles of the subject property.

Contact our office at info@appraiserline.com with any questions or for more information.

 

Local appraisers that know local values at Appraiserline.com
info@appraiserline.com (888) 876-VALUE / 8258