Effective on May 1, 2009 there is yet a new wrinkle involved in buying a home – specifically in the process of acquiring a mortgage. It is the HOME VALUATION CODE OF CONDUCT. Although just now put into effect, the plan was developed in March and April of 2008.
The rationale behind this is to protect consumers and to help prevent inaccurate home appraisals that could over value a home which some believe to have been a factor in the current housing slump. Not everyone agrees that this will be of value, in fact, many believe it could slow down the process, and could even prevent some folks from getting loans that they otherwise might qualify for.
The code has a number of components but the big “new” thing is that in a lender’s organization the “Loan Production Staff” will not be involved in the selection of an appraiser. Basically it is creating a stronger division between the lender and the appraiser. The appraisal will be ordered and the appraiser selected by a new entity called an Appraisal Management Company – AMC. Your loan officer, will have to pick up the phone and contact the AMC who will then select and order an appraisal. Prior to HVCC, the loan officer would order the appraisal directly from a local appraisal company.
The fear (isn’t everything based on fear these days) is that the appraiser, who is an independently licensed professional, could, in theory, be influenced by a lender to place a value on a home that is higher than it should be in order to match the selling price – thus making for a smoother loan approval process but, if this happened, could put a home buyer into a home that he purchased higher than the market value.
There is no evidence of any widespread fraud in the marketplace – this is just one of the new pieces of tighter control of the mortgage market being put in play. Whether we agree with it or not, it is now a factor in the process. You can read the details of the HVCC by clicking here.
