What is most frustrating to me about the HVCC is that it is NOT legislation. If it were, we would have much more information and opportunity for input. If you still aren’t sure what HVCC is, check out one of our earlier blogs.
Since that first blog posting, the only word we had about this work altering document was a comment made on September 25th. In response to questions posed during a congressional hearing regarding oversight of Fannie and Freddie, Director James Lockhart told the House Financial Services Committee that implementing the HVCC agreement has "taken us longer than we expected". Lockhart told the committee that the January 1 implementation deadline may be delayed one to three months and that potential changes to the agreement are still being worked out. There was no word as to what those changes may be, and nothing about it in his written statement.
And now we have this, less than half a page of details on the HVCC in a several hundred page report released November 17, 2008:
FHFA RELEASES 2008 PERFORMANCE & ACCOUNTABILITY REPORT
New Appraisal Code to Combat Mortgage Fraud (pg 95 of the report)
In March 2008, Fannie Mae and Freddie Mac took steps to combat appraisal fraud by signing an agreement with the New York Attorney General and OFHEO to strengthen the independence of the appraisal process. Appraisals estimate the market value of a property to secure mortgage finance. They are completed by a licensed and certified real estate appraiser. However, during the last few years when house prices were growing rapidly, not all appraisers followed best practices and some were pressured to provide flawed appraisals. The agreement outlines additional guidelines for appraisals that add to the underwriting standards of Fannie Mae and Freddie Mac.
For example, the agreement includes provisions that prohibit coercing appraisers and that assure lenders take appropriate steps to receive valid, accurate, and reliable appraisals. The agreements also enhance quality control in the appraisal process and would establish a complaint hotline for consumers.
An important part of the agreement is a Home Valuation Code of Conduct, known as the Appraisal Code, which is expected to be implemented early in 2009. The Appraisal Code is one way that Fannie Mae and Freddie Mac seek to ensure that homebuyers and secondary mortgage market investors get fair and independent property valuations.
In addition, FHFA is working with other federal regulatory and law enforcement agencies to report suspected mortgage fraud and encourage state regulatory agencies to actively police appraisal practices.
The report says nothing of the thousands of loans that were granted without appraisals at all, or that the code encourages continued use of AVMs. For a laundry list of problems associated with the HVCC, check out our prior blog.
Fearful that the HVCC in its current form is going to ruin your business and cost consumers more of their hard earned money? I have two suggestions:
http://www.ofheo.gov/contact.aspx
Let them know how the HVCC will hurt consumers and drive out our most experienced appraisers who can’t afford to work at 60% of their previous income while meeting ridiculous turn times.
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