What the Home Valuation Code of Conduct (HVCC) Means to You
Both sellers and buyers must be aware of the Home Valuation Code of Conduct (HVCC) legislation recently enacted in response to the mortgage crisis brought on by lenders who took unacceptable risks. This is a legislative effort to create consistent business practices among lenders and to protect consumers. There are new timeframes regarding appraisals and underwriting, and my efforts are to ensure my clients a smooth settlement in a complex process, as we can no longer expect expedited settlement or appraisal processing.
HVCC went into effect May 1, 2009. The HVCC creates a firewall between lenders and appraisers and applies to Fannie Mae and Freddie Mac mortgages only. HVCC requires appraisers to mail appraisals at least seven days before settlement and provide them for buyer review at least three days before closing. If any financial adjustment to the sales contract is requested or expected by the buyer, e.g., following a home inspection or walk through, the appraisal must go back to the underwriter to determine if the adjustment affects the appraisal and affects the home’s value.
The coordination of timing between completion of the appraisal, approval of the appraisal and home valuation by underwriting, and removal of an appraisal or financing contingency must be carefully managed. The timeframe to expect for a smooth transaction now is settlement 30-60 days after contract ratification. These changes will slow the frequency of last minute closings and limit eleventh-hour rescues of deals. Any late changes to sales contracts in the days just before settlement will affect appraisals and will result in delayed closings.
Hill Slowinski, serving clients in DC, MD, and VA
W.C. & A.N. Miller Realtors, A Long & Foster Company
4701 Sangamore Road, Bethesda, Maryland 20816
Cell: 301-452-1409 Direct: 301-320-8430 Ofc: 301-229-4000