HVCC appraisal rules effective May 1

WASHINGTON – March 2, 2009 – Effective May 1, 2009, all home sales backed by Fannie Mae and Freddie Mac must follow the Home Valuation Code of Conduct (HVCC). Federal Housing Administration (FHA) and Federal Home Loan Bank (FHLB) mortgages are not covered in the agreement.

Under HVCC, licensed real estate agents cannot serve as a third party between a lender and appraiser, including selection, retention and compensation.

Brokers who offer lending services must also fully comply if there is an expectation that the loan will be purchased by the government-sponsored enterprises (GSEs) Fannie Mae or Freddie Mac after May 1. Lenders may use “in house” staff appraisers to conduct appraisals. However, the loan production staff cannot select, retain, recommend or influence the selection of an appraiser for an assignment or appraisal roster. Staff also cannot have any substantive conversation with an appraiser or appraisal company regarding valuation.

An Independent Valuation Protection Institute (IVPI) will establish a telephone hotline and e-mail address for complaints from appraisers about improper influence.

The National Association of Realtors (NAR) Appraisal Committee discussed the agreement after it was first announced in January 2008 and decided against adopting a formal policy position. When first announced, the HVCC included a period of time where Fannie Mae and Freddie Mac (as the GSEs) would solicit input from various appraisal stakeholders. The Appraisal Committee provided feedback and comments to NAR staff for a letter drafted to the GSEs. The letter was submitted to both Fannie Mae and Freddie Mac on April 30, 2008.

The complete Home Valuation Code of Conduct can be found on the Office of Federal Housing Oversight Web site (PDF format) at: http://www.ofheo.gov/media/agreements/3308HomeValuationCodeofConduct.pdf

© 2009 FLORIDA ASSOCIATION OF REALTORS®

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