On December 23, 2008, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would implement the Home Valuation Code of Conduct (HVCC) effective May 1, 2009. The HVCC places new requirements on lenders with regard to loans they sell to Fannie and Freddie May 1st and after.

On September 18, 2009,  HUD released a FHA Mortgagee Letter regarding new lender requirements.   Effective January 1, 2010, new appraiser independence requirements will be effective for all FHA loans with case numbers on or after January 1, 2010.  In many ways, the new FHA requirements are similar to the HVCC appraiser independence requirements that became effective May 1, 2009. 

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.

A complete copy of the HVCC can be accessed at: http://www.ofheo.gov/media/news%20releases/HVCCFinalCODE122308.pdf

The FHA Mortgagee Letter may be accessed at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-28ml.doc 

IRR-Residential is committed to providing our clients with HVCC and FHA compliant solutions that meet industry needs for appraiser selection , oversight and independence. Let us help you create a customized compliant solution for your organization and help you get ahead of the curve.

To learn more about how IRR-Residential can help your organization, contact our Business Development department at busdev@irr-residential.com or (913) 261-1890 for further information.