A bill recently approved by the federal House Financial Services Committee may signal the end of Freddie and Fannie’s much-reviled Home Valuation Code of Conduct (HVCC). The numerous critics of the HVCC (brokers, agents, appraisers, sellers and buyers) claim it does not live up to its purpose of controlling collusion between brokers and appraisers in setting prices.
The appraisal management companies currently in charge of assigning appraisers to value properties are assigning appraisers outside their geographic areas of competence. When appraisal values come in low, buyers and sellers (and their brokers and agents) squabble over what is to be done with the lower value, often delaying or even canceling a deal.
If passed, the bill would establish a new Consumer Financial Protection Agency which would have the authority to replace the existing code with a more functional set of rules. Should the bill fail to pass, there are still alternatives to the HVCC on the table, among them an 18-month moratorium of the existing rules.
first tuesday take: The HVCC couldn’t have come at a worse time, and there are few people out there that disagree. We’ve written previously about the slipshod nature of that code in our July 2009 first tuesday article, The Home Valuation Code of Conduct, and we echo here what we wrote there. The constricting nature of the HVCC merely worsens a housing market already chock full of roadblocks like reluctant lenders, underwater properties and a dearth of buyers.
The bill that would abolish the HVCC is still a long way from being passed, but it is a heartening sign that despite some significant challenges and some rather large missteps, Congress is responding to the industry’s feedback in a productive manner. Hopefully, this correction will come in time to aid the slowly, if not too distantly, burgeoning recovery.
Re: “Home valuation code could undergo major revamp” from the Los Angeles Times