Home Valuation Code of Conduct

The National Association of Realtors (NAR) continues a lobbying push for an 18-month moratorium on the Home Valuation Code of Conduct, arguing that they produce deal-killing appraisals and encourage the use of appraisers unfamiliar with local conditions. Adopted to curtail corrupt appraisal practices, it has caused quite a bit of problems as well. Under the HVCC, neither a mortgage broker nor a Real Estate agent may select an appraiser. A lender may select the appraiser, but the person who does the selecting can have nothing to do with the loan production staff. Many have opted to enlist a third party Appraisal Management Company (AMC). An AMC receives a request from a lender and then assigns an appraiser from its approved list of appraisers. Too often the appraiser does not live in the area of the subject property; he or she may not be a member of the local MLS and does not have access to relevant comparable information. If all real estate is local, how does it make sense to use an appraiser who does not have specific local-market knowledge? The Federal Housing Administration (FHA) announced it would not implement the HVCC for its mortgage insurance programs. Although they are currently reviewing its appraisal policies and may adopt changes that take HVCC into account.