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The Home Valuation Code of Conduct (HVCC) is a set of federal guidelines designed to enhance the integrity of the home appraisal process to be more reliable and restrict the interaction between mortgage lenders and appraisers.

Since the HVCC went into effect on May 1, 2009, lenders can no longer work directly with appraisers. Instead, lenders must schedule appraisals through third-party management companies. This adds a buffer between the lender and appraiser. The Code applies to borrowers with conventional conforming loans backed by Fannie Mae and Freddie Mac. It doesn’t apply to borrowers with FHA loans or VA loans insured by the Federal Housing Agency.

Prior to the inception of the HVCC, all agents and lenders had their own appraisers that they used regularly. And, while there is nothing wrong with creating strategic partnerships, many were concerned that perhaps there were some appraisers that were not being totally objective when generating appraisals for properties of their friends and associates.

The HVCC is designed to help avoid all that. However, many agents have noticed that the new method may not be working in their favor. Often appraisers are sent by Appraisal Management Companies (AMCs) and those appraisers are from out of area. Local is everything when it comes to selling real estate, and an out-of-area appraiser who provides a poorly generated home valuation can blow an entire deal out of the water.

For agents just getting into the business, it helps to understand how the HVCC works, so that you can explain to your clients the importance of the appraisal process when buying a home and obtaining a home loan.

Transaction 911 can assist you in providing your buyers with the latest information on the home buying process. Contact us today to learn how we can help you save time and money in your next real estate transaction.