QUIZ: Test your knowledge of the new HVCC guidelines
Since it took effect May 1, 2009, the Home Valuation Code of Conduct (HVCC) has generated significant commentary among real estate professionals, appraisers, and lenders—as well as plenty of uncertainty over exactly what the agreement does and does not allow. The HVCC is a set of guidelines to curb inaccurate appraisals developed by New York Attorney General Andrew Cuomo and the two secondary mortgage market companies Fannie Mae and Freddie Mac, with support from their regulator, the Federal Housing Finance Agency.
In general, the guidelines seek to ensure an arm's length relationship between the lender making a loan and the appraiser who assigns a value to the house. It also sets forth a process for addressing incidences in which appraisal misconduct is suspected. Test how much you know about the new appraisal guidelines.
Only a third-party appraisal management company (AMC) can select an appraiser. The lender itself cannot do so.
It's OK for the lender to contact the appraiser with additional information or point out potential errors.
It's OK for a real estate professional, as a third-party independent contractor, to provide additional information to an appraiser or point out factual errors.
It's OK for mortgage brokers to select appraisers.
A lender can accept an appraisal report commissioned by another lender.
In underwriting a loan, the underwriter can't use an appraisal if the appraiser was selected by the lender (or the appraisal management company that acts on the lender's behalf).
Transactions that previously didn't involve an appraisal now must include one.
Use of automated valuation models is strictly prohibited; all appraisals must be conducted by appraisers using onsite requirements outlined in the guidelines.
Borrowers must pay appraisers directly.
Appraisers are required to ensure borrowers are in receipt of the appraisal report no later than three days prior to the closing of the loan.