What You Need to Know About HVCC Guidelines
Are you planning to purchase a home or to refinance the home that you already own? 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. Rather, they are guidelines that Freddie Mac and Fannie Mae have put into place. Since the above two finally purchase about 80% of mortgages in the United States, however, these guidelines essentially govern the entire mortgage market. Under HVCC guidelines, mortgage brokers and lenders cannot hire their own appraisers to determine the value of a property. As such, they generally must go through an appraisal management company to assign an appraiser.
There are many reasons for the implementation of the HVCC guidelines, though the biggest reason is because inflated appraisals have been largely blamed for the inflated housing prices that helped create our current economic situation. Therefore, HVCC guidelines were put into place in order to help prevent the problem from occurring again. Apparently reasonable, these guidelines though they seem reasonable on the surface, have lead to a multitude of complaints from mortgage brokers, appraisers, and real estate agents.
The main complaint against the HVCC guidelines is the fact that it slows down the entire loan approval process. Of course, during a time when we are trying to jumpstart the economy, slowing down the loan approval process is certainly not something that most people want to see.
HVCC guidelines result in an increase in fees that consumers have to pay for their appraisals and this forms another complaint. Whereas appraisals once 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 more sales are failing to close according to this.
The bottom line for you someone who wants to refinance your home or as a buyer is that you may find yourself spending more on your appraisal than you would have prior to the HVCC guidelines being put into place. In addition, the process of getting your loan will likely take about a week longer than it used to. You should also know that, although the lender and you cannot select the specific appraiser that you want, you do have the right to insist on receiving one who is properly qualified to assess the particular property you are interested in financing. So, exercise this right in order to get the best results possible.
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