Are you planning to refinance the home that you already own or to purchase a home? If so, it is in your best interest to learn more about the Home Valuation Code of Conduct (HVCC) guidelines, as this new rule could have a significant impact on the entire process.
The HVCC was chalked out keeping in mind the pressure property appraisers were being subjected to into overvaluing the property in order to help get the mortgage or refinancing loan approved. The HVCC guidelines aren't a law contrary to what some believe. They are guidelines put into place by Fannie Mae and Freddie Mac and Fannie Mae. Since Fannie Mae and Freddie Mac ultimately purchase about 80% of mortgages in the United States, however, these guidelines essentially govern the entire mortgage market. Under the guidelines of the HVCC, mortgage brokers and lenders cannot hire their own appraisers to determine the value of a property. Hence they generally must go through an appraisal management company to assign an appraiser.
There are various reasons for the implementation of the HVCC guidelines, though the biggest reason is because extravagant appraisals have been largely blamed for the overblown housing prices that helped create our current economic situation. To ensure that these problems do not crop up again, the HVCC guidelines were put into place. Apparently reasonable, these guidelines have lead to a multitude of complaints from appraiser, real estate agents and mortgage brokers.
The primary complaint regarding the HVCC guidelines is the fact that it slows down the entire loan approval process. Slowing down the loan approval process is certainly not something that most people want to see during a time when we are trying to kick-start the economy.
One more complaint on the subject of HVCC guidelines is that they result in an increase in fees that clients have to pay for their appraisals. At one time appraisals used to cost about $200 to $300 to complete, they now cost $400 or more because mortgage brokers and lenders have to pay the appraisal management company for its services.
Some critics also say about the HVCC guidelines, that they also force real estate agents and lenders to work with appraisers who are not as skilled as independent appraisers. Also, they claim that appraisal management organizations are hiring appraisers from other regions, which means they are not familiar with the local markets and are giving more than due weight to distressed properties and foreclosed properties when determining their appraised values. Therefore, by forcing them to work through appraisal management companies, they are actually getting more inaccurate appraisals. They say that the end result due to this is that more sales are failing to close.
The bottom line for you as a buyer or as someone who wants to refinance your home is that you may find yourself spending more on your appraisal than you would have before the HVCC guidelines were put into place. Apart from this, the procedure of getting your loan will likely take about a week longer than previously. Be aware that you do have the right to insist on receiving and appraiser who is properly qualified to assess the particular property you are interested in financing, although you and the lender cannot select the specific appraiser that you want. So, exercise this right in order to get the best results possible.
The HVCC was chalked out keeping in mind the pressure property appraisers were being subjected to into overvaluing the property in order to help get the mortgage or refinancing loan approved. The HVCC guidelines aren't a law contrary to what some believe. They are guidelines put into place by Fannie Mae and Freddie Mac and Fannie Mae. Since Fannie Mae and Freddie Mac ultimately purchase about 80% of mortgages in the United States, however, these guidelines essentially govern the entire mortgage market. Under the guidelines of the HVCC, mortgage brokers and lenders cannot hire their own appraisers to determine the value of a property. Hence they generally must go through an appraisal management company to assign an appraiser.
There are various reasons for the implementation of the HVCC guidelines, though the biggest reason is because extravagant appraisals have been largely blamed for the overblown housing prices that helped create our current economic situation. To ensure that these problems do not crop up again, the HVCC guidelines were put into place. Apparently reasonable, these guidelines have lead to a multitude of complaints from appraiser, real estate agents and mortgage brokers.
The primary complaint regarding the HVCC guidelines is the fact that it slows down the entire loan approval process. Slowing down the loan approval process is certainly not something that most people want to see during a time when we are trying to kick-start the economy.
One more complaint on the subject of HVCC guidelines is that they result in an increase in fees that clients have to pay for their appraisals. At one time appraisals used to cost about $200 to $300 to complete, they now cost $400 or more because mortgage brokers and lenders have to pay the appraisal management company for its services.
Some critics also say about the HVCC guidelines, that they also force real estate agents and lenders to work with appraisers who are not as skilled as independent appraisers. Also, they claim that appraisal management organizations are hiring appraisers from other regions, which means they are not familiar with the local markets and are giving more than due weight to distressed properties and foreclosed properties when determining their appraised values. Therefore, by forcing them to work through appraisal management companies, they are actually getting more inaccurate appraisals. They say that the end result due to this is that more sales are failing to close.
The bottom line for you as a buyer or as someone who wants to refinance your home is that you may find yourself spending more on your appraisal than you would have before the HVCC guidelines were put into place. Apart from this, the procedure of getting your loan will likely take about a week longer than previously. Be aware that you do have the right to insist on receiving and appraiser who is properly qualified to assess the particular property you are interested in financing, although you and the lender cannot select the specific appraiser that you want. So, exercise this right in order to get the best results possible.
About the Author:
Crystal Guthrie is a Texas real estate agent that has been actively selling real estate in Austin since 2004. Crystal specializes in Canyon Creek real estate and has sold properties in every price range and area around Austin, Texas.
