New Property Appraisal Process May Delay Your Closing:

May the Home Valuation Code of Contact (HVCC) took effect. This new code applies to loans which lenders plan to sell to Fannie Mae or Freddie Mac.  The Code was written in order to prevent fraud and undue pressure on appraisers from banks, etc. to ensure that a property will appraise for the contract amount.

How HVCC Affects the Appraisal Process

REALTORS® and mortgage brokers are prohibited from selecting appraisers. Lenders may use “in house” staff appraisers to conduct appraisals. However, the loan production staff is prohibited from:

• selecting, retaining, recommending, or influencing the selection of an appraiser; and,
• conducting any substantive conversation with an appraiser or appraisal management company regarding the appraisal assignment.

For the consumer, the appraisal process has remained largely intact. However, consumers may find the process takes longer than and may be more costly than it has been in the past.  Some banks are using large Appraisal Management Companies to do their appraisals.  These companies may send out appraisers who know very little about the nuances in the local market.

These factors often adversely affect the sales process when the property does not appraise, which can result in the loss of a sale or a homeowner’s inability to refinance into today’s lower rates.

NAR member survey:

•76 %had experienced an increase in appraisal time since the new HVCC rules were enacted.

•71 %noted an increase in the use of appraisers who were not from the local area. Source: NAR 7/09