HVCC Frequently Asked Questions

Below is a list of frequently asked questions regarding the Home Valuation Code of Conduct (HVCC).

Q: What does the HVCC require?
A: The HVCC requires the appraiser to have complete independence when determining the opinion of value. Production employees (Branch Employees), bankers and brokers are prohibited from having substantive communication with the appraiser regarding value and an appraiser is not permitted to receive a target value of any kind. In addition, the HVCC sets out guidelines regarding quality control of appraisals, delivery of the appraisal to the borrower, and reporting of any violations of the code.

Q: What loans are required to be HVCC compliant?
A: Loans that have application dates of 5/1/09 or later are required to be fully HVCC compliant. The application date is determined by the earlier of the date the loan disclosures are signed by the borrower or the date the initial loan application is signed by the borrower.

Q: When is the banker/broker required to order the appraisal?
A: In order to correctly disclose fees to the borrower, the appraisal must be ordered before the file is submitted.

Q: Has there been a change in interest rate lock policies in light of the HVCC?
A: No. The banker/broker must allow sufficient time for the appraisal to be completed. Appraisals are expected to be returned in five days but does not guarantee this since there are issues that are out of their control, such as the borrower not returning the appraiser’s call immediately, difficulty scheduling the inspection, lack of comparable sales, volume of appraisal business, etc. It is unreasonable for a banker/broker to order an appraisal and lock a loan at the same time. Lenders encourage banker /brokers to verify the scheduled inspection date of the property in order to determine the best time to lock a loan.

You may be wondering why these new rules have been imposed on bankers and brokers and ultimately you the borrowers. The answer is simple. Over the past few years we have seen hundreds of successfully prosecuted lender fraud cases where the real estate investor, banker/broker and appraiser conspired to create artificially inflated values and "stole money" from the real estate market place. Therefore, taking the communication equation away from the banker/broker - appraiser may help curb future cases of this type of lender fraud. Fraud hurts everyone so even if these new appraisal rules require some new thinking, it's ok, regulation of this kind is necessary. Kudos's to the Fraud investigators!