Appraisal Integrity

by Amy Avery, Director of Compliance

The Home Valuation Code of Conduct (HVCC) is intended to improve the integrity of the appraisal process in the mortgage finance industry.  The HVCC must be applied to all non-government mortgage loans originated on or after May 1, 2009 that will be delivered to either Fannie Mae or Freddie Mac.  Lenders must rep and warrant that the appraisal report was obtained in a manner compliant with the Home Valuation Code of Conduct.

The appraisal process must be completely independent of a lender’s loan production to meet HVCC guidelines.  No anticipated, estimated, predetermined or desired property value can be conveyed to the appraiser.  One exception is that the sales contract is required to be provided for purchase loans.  Lenders can also communicate with appraisers to request additional information or correct factual errors.  

Under the HVCC, brokers may not select, retain, or compensate appraisers.  They are allowed to initiate the appraisal process by providing loan application information to an appraisal management company (AMC) that has been specifically authorized by the lender, or through an online interface established by the lender.  The broker is not allowed to choose an appraiser from a list, even if the list is provided by the lender.

The borrower may not pay the appraiser directly under the HVCC.  They can only give the appraisal payment to the lender, broker, or AMC.  The broker may pay the lender or AMC, but they are also not allowed to pay the appraiser directly.

Appraisals obtained in compliance with the Home Valuation Code of Conduct may be transferred from one lender to another, provided the lender who did not order the appraisal obtains written assurance from the other lender that the HVCC requirements were followed.

The appraisal report can be delivered to the borrower by any means including mail, overnight delivery, email, etc.  The borrower must be provided a copy of the appraisal report at least three business days before loan closing.  The borrower may waive the three day requirement if they wish to do so.

There are no standard forms provided by FNMA or FHLMC to meet the loan documentation requirements of the HVCC.  Lenders must establish their own processes and documentation.  DocuTech is currently providing a borrower HVCC Verification of Receipt of Appraisal (Cx14078) by default in all Conventional loan closing packages. This form also includes a checkbox for the borrower to elect to waive the three day requirement.  Other documents, such as an HVCC Certification of Non Influence and Compliance (Cx14203) and other custom HVCC forms are available upon request.

There are several HVCC resources available on the Fannie Mae website at, https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/

Resources at this site include a copy of the Home Valuation Code of Conduct, HVCC Announcement 09-01, FAQs, and a Home Valuation Code of Conduct Recorded Web Seminar.