HVCC Morphs into Appraiser Independence
Karen Deis. Publisher, www.Mortgage Currentcy.com
The new Appraiser Independence rule and the sunset of HVCC doesn’t change a thing. There are some publications out there stating that the Interim Rule doesn’t prohibit production staff from ordering, paying for, or participating in the appraisal process directly with appraisers – but we’re here to tell you differently. The link to the Federal Reserve gives you access to the actual Federal Register – it states that Lenders are required to ensure Appraiser Independence from production staff – essentially continuing the HVCC rules regarding ordering, payment, & process. Mortgage Brokers, LO’s, & other production staff are prohibited from selecting, influencing, paying, or having substantive communications with appraisers.
Portability – Reps & Warrants are still required for use of another Lender’s appraisal. Since this is now Federal Law and all Lenders will now be adhering to the Appraiser Independence Requirements, the portability should become easier. What was the problem before? Not all Lenders were selling to Fannie and Freddie and therefore did not need to comply with HVCC – since no one could ever guarantee the compliance across the board, the portability of appraisals was just not happening. If you noticed, there was never an issue with appraisal portability for Government Loans – that’s because ALL Lenders played by the same rules with clear guidance from HUD.
Fannie (SEL 2010-14) and Freddie (2010-23) issued their own interpretations—which are basically the same, HOWEVER, Freddie goes into much more detail—with added instructions on how appraisers are supposed to appraisal REO’s and Short Sales. Fannie’s interpretation leaves a lot to be desired! Can you say buy-backs anyone?
Realtors & Builders are not prohibited from having contact with or providing information to the appraiser – they are however prohibited from inappropriate or illegal behavior – coercion, extortion, collusion, compensation, inducement, intimidation, bribery, etc.
Interim Final Rule – the rule is out for comment for 60 days…a few tweaks are likely, but this was developed with all the HVCC problems in mind and all the players having input – I do not expect much will change.