In a statement on Friday, Fannie Mae said that until new appraisal rules take effect, the HVCC will continue to provide the guidelines for home appraisals. Fannie Mae and the Federal Housing Finance Agency (FHFA) are working together to finalize the new appraisal guidelines which are expected to be completed by October 21, 2010. The new guidelines are a requirement of the Dodd-Frank Financial Reform Legislation that was passed earlier in the summer.
The HVCC, which was put into effect in 2009, was an attempt by regulators to give appraisers increased independence from lenders in an attempt to improve the accuracy of appraisals and stop interested parties from influencing appraisers and home prices. One of the ways the HVCC was to achieve this was through the use of appraisal management companies (AMCs) that would serve as a buffer between appraisers and interested parties. Many appraisers felt this squeezed their profits to the extent that appraisal quality suffered and many veteran appraisers had to leave the industry. Of all the topics I have written about in this space, the HVCC drew the most negative comments from readers by far.
According to Fannie Mae’s statement,
“The revised appraiser independence requirements will be based on Fannie Mae’s experience under the HVCC and will continue to support the integrity of the appraisal process. As part of the process to develop the revised requirements, Fannie Mae has received input from key industry participants”.
The new appraisal guidelines will allow Fannie or Freddie to accept appraisals from appraisers chosen and/or paid by mortgage originators. It also mandates that appraisers will be paid at competitive market rates. With some luck, the new guidelines will improve the quality of appraisals and allow appraisers to make competitive salaries.
Are you an appraiser? What are your thoughts on the upcoming changes? Let me know in the comments section below.
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