Real Estate Appraisal Regulations
The home valuation code of conduct, or the HVCC, which was passed in May 2009 by the federal government prescribes new real estate appraisal regulations. The regulations have put in place to protect not just the borrowers, but also the banks and financial institutions that lend the money. |
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The real estate appraisal regulations for HVCC are as follows:
- An independent appraiser affiliated to a certified appraisal management company will be responsible for appraisals. A borrower, owner or broker will not be able to interfere in the appraiser's decision on the valuation of a property.
- Lenders have to give a copy of the appraiser's report to the borrower at least three days before closing the mortgage.
- The lenders will have the responsibility for randomly checking appraisals, and this will amount to around 10 percent of the appraisals done. Any discrepancy in the appraisals should be reported to Fannie Mae or Freddie Mac.
- Lenders will be allowed to have their own appraisers. However, the compensation for these appraisers should be independent of the value of the appraised property.
- If there is a problem with an appraiser, it is the responsibility and duty of the lender to report the matter to the local authority.
- Although mortgage brokers are not allowed to ask for appraisals, they can do so on behalf of the lender.
The new real estate appraisal regulations ensure that the appraisers cannot be influenced, bribed or intimidated in any way to change the value of a property. The HVCC is only to be followed by Fannie Mae and Freddie Mac for single family mortgages. The terms and regulations of the HVCC are not applicable to multi-family mortgages, or mortgages that are guaranteed by the federal government.
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