Appraiser CooperativeAlternative To Appraisal Management Companies
Frequently Asked Questions
Appraiser Related
Under HVCC, how can I be sure my favorite appraiser gets all my appraisal work? Under HVCC, no lender can specify exactly which appraiser is assigned to perform an appraisal. However, we do give preference to the appraisers that are listed in a company’s appraiser profile. If you cover a large geographical area, our system also calculates the distance between the subject property and our appraisers in that state.
How many appraisers can I list as preferred? Our system can track an unlimited number of appraisers and lenders. Some brokers that serve a large area have many appraisers listed and we are currently researching the legality of having lenders rank their appraisers in order of preference.
What are the minimum credentials that an appraiser must possess to be in compliance with HVCC? As required today, an appraiser must be licensed or certified by the state in which the property is located.
Are lenders permitted to use in-house appraisers to obtain appraisals? Yes. Lenders are permitted to use in-house appraisers to obtain and prepare appraisal reports if the lender is in compliance with Section IV.B. of HVCC.
Are lenders permitted to use appraisers who have been selected or retained by a mortgage broker or real estate agent? No. HVCC specifically prohibits lenders from accepting appraisal reports completed by an appraiser selected, retained or compensated in any manner by mortgage brokers and real estate agents. Please refer to Section III.A. of HVCC for further information regarding who is authorized to select and retain appraisers.
Are lenders allowed to use appraisals ordered by appraisal management companies that provide other settlement services for the same transaction? Yes. Lenders may use appraisal management companies to obtain appraisals as long as they comply with the requirements of Section IV.C. of HVCC.
If a lender finds an error or problem with an appraisal, is the lender allowed to contact the appraiser to correct the error? Yes. Nothing prohibits the lender from requesting that an appraiser (i) provide additional information or explanation about the basis for valuation or (ii) correct objective factual errors in an appraisal report as outlined in Section I.C. of HVCC.
HVCC Impacts and Requirements
What loans are impacted by HVCC? On and after May 1, 2009, Fannie Mae and Freddie Mac will not purchase mortgages from Sellers that do not adopt HVCC with respect to single-family mortgages that are delivered to Fannie Mae and Freddie Mac.
Is HVCC only applicable for loans originated in New York State? No, HVCC applies to all fifty states.
Was industry feedback taken into consideration in revising HVCC? FHFA, the New York Attorney General, Freddie Mac, and Fannie Mae all received thousands of comments from customers and industry participants during the open comment period from March 14 through April 30, 2008. These comments were shared, taken into consideration, and the revised version of HVCC reflects much of the feedback received. Freddie Mac and Fannie Mae have both adopted the same revised HVCC.
What does the implementation of the revised version of HVCC mean for Freddie Mac Sellers? The revised version of HVCC reflects changes based on industry comments received on the operational impacts, the need for clarification of terms, and unintended consequences of the original HVCC. The revised HVCC will enhance the integrity of the appraisal process as appraisers gain more independence from inappropriate influence.
What information are lenders required to provide to borrowers to comply with HVCC? Lenders are required to provide the borrower with a copy of each appraisal report a minimum of three days prior to closing, unless the borrower waives this requirement.
Appraisal Transfers, Second Appraisal, and AVMs
Can an appraisal be transferred to a second lender if the borrower decides to move from one lender to another? Yes, the original lender can transfer the borrower’s original appraisal to the new lender as long as the requirements of Section III.A. are met.
Is a second appraisal or Automated Valuation Model (AVM) permitted in a lender’s foreclosure/REO processes? Yes. HVCC does not apply to the lender’s foreclosure/REO process.
Are lenders permitted to order a second appraisal or AVM on high-value or unique properties to ensure the most accurate value is obtained? Yes, as long as such appraisal or AVM is done pursuant to:
- Written, pre-established bona fide pre- or post-funding appraisal review or quality control process or underwriting guidelines.
- Lender adherence to a policy of selecting the most reliable appraisal as stated in Section I.B.(9) of HVCC.
Exemptions to HVCC
My institution is already required to comply with federal regulations regarding appraisals. Does this exempt my institution from HVCC? No. All Fannie Mae and Freddie Mac Sellers must comply with HVCC.
How do I know if my organization will be exempt from Section IV(a) of HVCC as a “small bank?” In general, to be exempt from Section IV(a) of HVCC, according to Section IV(e) of HVCC, a Seller must (1) meet the definition of a “small bank” as set forth in 12 U.S.C. Section 2908 (which currently provides, among other factors, that the institution’s aggregate assets are no more than $250,000,000) and (2) Freddie Mac determines that the Seller would suffer hardship due to the provisions. Additional information on this topic will be provided in the future.
Non-Compliance with HVCC
Is a loan eligible for sale to Fannie Mae and Freddie Mac if the lender purchased the loan from a correspondent that did not comply with HVCC in originating that loan? No. It is the lender’s responsibility to ensure that all loans it purchases with intent to deliver to Freddie Mac are in full compliance with HVCC. Effective May 1, 2009, Freddie Mac will no longer purchase mortgages from Sellers that do not adopt HVCC with respect to single-family mortgages that are delivered to Freddie Mac. Also, effective for single-family mortgages with loan application dates on or after May 1, 2009, Freddie Mac Seller/Servicers must represent and warrant that the appraisal report is obtained in a manner consistent with HVCC. See also Section III.A. of HVCC.
What does HVCC require a lender to do if a lender has reason to believe that an appraiser or appraisal management company is violating the law or practicing unethical conduct? As outlined in Section VII of HVCC, the lender must promptly refer the matter to the applicable state appraiser certifying and licensing agency.
What are the penalties for violations of HVCC? As discussed in Section VIII of HVCC, Freddie Mac will treat breaches of HVCC the same as any other breach of a Seller’s representations and warranties. This could include suspension or termination of the lender’s eligibility to sell loans to Freddie Mac if the lender fails to remediate violations.
Implementation Plans and Moving Forward
How will Freddie Mac implement the requirements of the Code? Freddie Mac issued a Guide Bulletin on January 7, 2009, announcing the addition of HVCC to the Guide as a new Exhibit. They will continue to communicate with their customers about our implementation plans as they finalize their approach.
When will the Independent Valuation Protection Institute be established? Freddie Mac is currently working with the New York State Attorney General, FHFA, and Fannie Mae regarding the creation of the Institute and the timing is still being determined. As details are finalized, Freddie Mac Sellers will be notified. Because the Institute has not yet been established, the provisions regarding it in HVCC are not yet effective.
How will issues and concerns raised by customers be handled as HVCC is implemented? Freddie Mac will work with their customers to address any issues or concerns regarding implementation of HVCC. They will maintain ongoing contact through their various communications channels including newsletter articles and Web content.
To view the Home Valuation Code of Conduct, Click here.