Wednesday, April 29, 2009

Has your mortgage professional talked to you about the HVCC?

This is not about your HVAC (Heating Ventilation and Air Conditioning). This is about the HVCC which stands for the Home Valuation Code of Conduct. You can do your own search for its hsitory and draw your own conclusions about its need. But the reality is that the HVCC takes effect on Friday, May 1st, 2009 and it will have an effect on your next mortgage. This Code is currently only directly related to loans originated by mortgage brokers and to conventional loans - those delivered to Fannie Mae & Freddie Mac - originated mortgage bankers. FHA, VA, USDA and some other programs are not required to comply, but many lenders will choose to do so for sake of consistency.

The Home Valuation Code of Conduct essentially puts a wall between mortgage lenders and appraisers so that there can be no influencing of appraisers to manufacture false values. This is well intended and may seem like a small, behind the scenes change. But, in practice the HVCC will make your loan take longer to obtain.

Do not make the mistake of not asking your mortgage lender about the HVCC and how it will effect you.

Mortgage brokers are the ones most impacted since they are seen as having no "skin in the game". Mortgage bankers fund the loans in their own name and have some risk. Mortgage brokers will no longer be able to engage appraisers directly at all. If the broker needs to take your loan to another funder, he will have to order a new appraisal from a different appraisal management company. This will cost you more money. (Note: This post is not intended to enflame or start a debate on the merits of working with a mortgage banker vs. a mortgage broker. This is only intended to inform of the facts of how the HVCC impacts borrowers.)

What is the direct impact to Oklahoma consumers and Realtors who are not getting an FHA/VA,USDA loan OR who are working with mortgage brokers?
  • It means that you can’t expect an appraisal to be done in 3 days any more if you are if you are working with a mortgage broker.
  • It means that you can’t get an appraisal done with one lender and take it to another lender if you are working with a mortgage broker.
  • It means that your mortgage broker no longer has “control” over which appraiser and/or the quality of the appraisers. That control has probably all been relegated by an appraisal management company.
  • It means that your either your appraisal will cost more or the appraiser will make less if it is ordered through an appraisal management company.
  • It means that it’s important to work with a mortgage banker who is on top of things and plans ahead - such as ...
Tim Epps
Fairway Independent Mortgage

1 comment:

Jim Bigelow said...

Great post! You really explained the HVCC really well!