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Understanding HVCC 

By C. J. Coury

As you all know, the Federal government has now implemented the Home Valuation Code of Conduct (a.k.a. Appraisal Independence) and all lenders must adhere to it if they are going to sell the loan to Fannie Mae or Freddie Mac. The rules, regulations and requirements do not apply to FHA or VA loans.

The pressure that appraisers felt to hit a predetermined figure when appraising real estate is what ultimately led to this momentous change for our industry. We now must work our way through some new routines while we develop a clear understanding of what is, and is not, acceptable behavior.

One of the main misconceptions is that you are not allowed to speak with the appraiser – that is simply not true. The only thing that you are prohibited from doing is pressuring them to hit a number or questioning their evaluation. My suggestion is that you help the appraiser to arrive at an accurate market value by providing the most accurate comparable data available to you at the time you are contacted for the inspection. Don’t pass over short sales and foreclosures as they are simply too prevalent in today’s market to be ignored. However, as you know, foreclosed properties, and possibly short sales, are in varying states of disrepair. Make certain that you have done the legwork to provide the appraiser with knowledge that he or she might not be able to easily obtain.

A few months ago I wrote about a $150,000 spread between the sale price of two foreclosed properties in my neighborhood – both of which sold at approximately the same time and were virtually identical in square footage and amenities. The reason for the large discrepancy (almost 30%) was the fact that one had been meticulously maintained while the other was completely ignored – inside and out. What do you think the odds are that the listing agent will take the time to provide a comprehensive report of condition to the appraiser? It is highly likely that a telephone call to them would never even be returned. Your transaction may depend on the appraiser obtaining accurate and detailed information about the comps beyond what the MLS might provide – take it upon yourself to see that this happens.

Once the appraiser has completed their report it is allowable to send in additional information via the lender and request a reconsideration of their evaluation. However, it is a time consuming and ineffective manner of doing business, not to mention that there is rarely much, if any, adjustment made after the fact. Please make it a part of your routine to gather and provide this invaluable information to the appraiser as early in the process as possible – you will like the results!

C. J. Coury is a Senior Vice President with Bank of America and oversees their residential mortgage division serving Sarasota, Manatee and Charlotte Counties. Prior to joining Bank of America in 1995, C. J. was President of Mortgage Brokers of America in Birmingham, MI for 7 years. He has been an active mortgage finance professional since 1983. C. J. may be reached at (941) 952-2888 or by email at charles.j.coury@bankofamerica.com.