Appraisals and the new HVCC

by | Jul 20, 2009 | How to Guides, Uncategorized

On May 1st, 2009 the Home Valuation Code of Conduct [HVCC] went into effect. This new program sounds like a good idea on first glance but has some serious flaws. FAQ on HVCC guidelines HERE.

Basically it prohibits lenders from choosing an appraiser, they now have to randomly choose from a list or go through a 3rd party clearinghouse. This increases the cost but lowers the amount the appraiser actually gets for their work. It also makes the assumption that most lenders and appraisers are breaking the rules and this simply isn’t true. The biggest problem from my perspective is that it does not take into account the value in having an appraiser that knows the area or the property type. It also doesn’t allow lenders to choose someone with experience. The result of this has been appraisals coming in under value even on purchases where you have two consumers that have agreed on the price! How can anyone say that the market value is anything other than what a buyer and seller agree to? Isn’t that the definition of “market value” what someone is willing to pay on the market?

NAR is fighting to have this overturned but for now we’re stuck with this unfortunate rule.
Detailed article HERE

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