HVCC Rules Set for Mortgage Loan Appraisals


– New York Times

Fannie Mae and Freddie Mac have agreed to improve the reliability of appraisals on mortgage loans bought by the two financing companies.

The amended guidelines were agreed upon by the two companies and their regulator, the Federal Housing Finance Authority, as well as Attorney General Andrew M. Cuomo of New York, the regulator said on Tuesday.

Among the main changes is that lenders will be able to use internal assessors, a step banned in the initial code of conduct, but must use various firewalls to ensure their independent views. The intent is to prevent improper influence in the valuation process, according to the agreement.


This is big news, and certainly should be reviewed closely by residential lenders of all sizes. A few highlights of the new requirements include:

– Lenders must ensure there is no influence upon the appraiser in the development or valuation conclusion of the appraisal. A clear line must be drawn between loan origination / production staff and the appraisal process.

– Members of the lender loan origination and production staff are forbidden from selecting or even recommending the selection of the appraiser.

– Lenders or their agent (vendor management company or correspondent lender) must be responsible for the selection and payment of the appraiser. Mortgage brokers are specifically barred from such appraiser selection, meaning the appraisers must be selected by the upstream lender rather than the mortgage broker.

– A lender shall not utilize an appraiser employed by the lender or an affiliate of the lender, unless the appraiser, or affiliate for which the appraiser works, is wholly independent of loan origination and production.

– Lenders are not to provide estimated or targeted property values to the appraiser. This also includes a prohibition against providing the appraiser with the estimated or targeted loan amount.

– Removal of appraisers from approved vendor lists, or addition to exclusionary lists, requires a prompt written notice to them including the specific reasons for such action.

We are continuing to review these new requirements and will provide further information as we learn more. In addition, Fannie and Freddie have each promised to provide further information in early January to address implementation questions.

Our office is part of the national IRR-Residential appraisal organization. A benefit of utilizing IRR-Residential at the corporate level is their commitment to providing clients with HVCC compliant solutions. Please contact us if you have any questions or desire to hear more about the services available through IRR-Residential.
Michael Dodds, MAI, CCIM, MRICS

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