HVCC rule | Home Valuation Code of Conduct

A lot of people may not know, but there is a new that is going to change the mortgage process. It is the HVCC rule, the Home Valuation Code of Conduct. It is set to be implemented on May first, but some banks have already started applying it as of April 19th.

The rule says that loan officer and/or mortgage brokers will be not be allowed to order appraisals, they will need to be ordered thru the banks and an appraisal management company. Banks will require the borrower to pay for it upfront, without any idea of the current value of the home.

If the value is not there, the borrower will not qualify and will be out his $350-400. Also, if the borrower decides to try a different bank for any reason, he will need to order a new appraisal thru the new bank. This does not apply to FHA loans, with the exception of one bank we currently work with.

This was created to help borrowers, but I personally believe it will hurt them. There will be a lot of money being spent on appraisals that do not work, and borrowers will be very upset. I don’t think the time was put into this process to see all of the ramifications it will have. A lot of banks are sending their fees and process; to let us know how we can do it, will all banks putting it into effect next week.

I had hoped the Mortgage Brokers Association would go thru with their lawsuit against this rule, but when they dropped it last week, it was a very disappointing day.