As service providers boast about compliance with Federal Housing Administration appraisal requirements and the Home Valuation Code of Conduct, legislation is pending that would prohibit a big HVCC provision. Another pending bill will attempt to establish regulation for appraisal management companies.
FHA's Appraisal Independence Standards, which took effect on Jan. 1, are very similar to those of HVCC. Both require that appraisers be independent of loan originators.
But FHA's requirements have some unique provisions, including that appraisers receive reasonable and customary compensation and that appraisers have familiarity, experience and knowledge in the geographic location of the properties they appraise.
San Diego-based AppraiserLoft.com, an online national appraisal management company that has long been in compliance with HVCC, boasts of having 15,000 appraisers in all 50 states and being able to meet FHA's new case number procurement and management requirements, as well as other new FHA provisions, according to a news release.
Similarly, Chapel Hill, N.C. AIMSdashboard's says its AIMS 4.3 can electronically match appraisers with the characteristics of the subject properties and the requirements of the loans.
Lincoln Appraisal & Settlement Services announced that it has revamped its Web site and made its appraisal platform compliant with HVCC and FHA regulations. More importantly, the Providence, R.I.-based company's updated platform is customizable to each lender's requirements.
Gaithersburg, Md.-based Coester Appraisal Group and other service providers are also promoting their compliance with both HVCC and the new FHA regulations.
Another step in the appraisal process is offered by DartAppraisal.com's online tool, DartTracker Plus, which the Troy, Mich.-based company says allows loan originators to visually track their appraisal orders as they move through a six-step pipeline before final delivery.
Similarly, eTEC Appraisal Management Solutions' new appraisal management platform, ARCSM, through its tracking system, improves process management, shortens turn-around times and provides quality assurance, according to the Phoenix-based company.
Indianapolis-based StreetLinks National Appraisal Services -- a MortgageDaily.com advertiser -- provides appraisal-related procurement, management, accounting, tracking and reporting services in compliance with FHA as well as HVCC regulations. It also, says Chief Executive Officer Steve Haslam, provides clients with a dedicated phone line and an e-mail address to one of its senior staff appraisers.
The importance of the independence of appraisers from influence by loan originators was underscored when Ohio Attorney General Richard Cordray, on Dec. 4, filed a lawsuit against Weststar Mortgage Inc. The lawsuit charged that the Woodbridge, Va.-based company violated state laws through a series of actions including using pre-printed "estimated value" forms for appraisals and shopping for a higher appraisal amount on behalf of clients.
Last fall, three other companies accused of attempting to influence home appraisals in Ohio settled lawsuits filed against them by Cordray's office.
This independence of appraisals as required by HVCC would become moot under provisions of HB 4173, the Wall Street Reform and Consumer Protection Act of 2009, which was approved by the House on Dec. 11 and will soon be brought up in the Senate -- although it currently is not on the Senate calendar, Sen. John Kerry's office told MortgageDaily.com.
That bill states that lenders, Fannie Mae and Freddie Mac cannot be prohibited from "accepting any appraisal report completed by an appraiser selected, retained or compensated in any manner by a mortgage loan originator" and that the HVCC "shall have no effect" on this legislation.
But even if the provisions of HB 4173 became law, and some provisions of HVCC negated, the lender and appraisal business would have to deal with these requirements as spelled out in the FHA regulations.
And if appraiser independence is followed for FHA loans, it may also be followed for appraisers on all loans.
"Additionally," StreetLinks' Haslam said in a press release, "many states have instituted appraiser-independence rules that demand the same. Furthermore, rating agencies have indicated loans and portfolios not subject to defined appraiser-independence policies may be downgraded."
And lenders, "to protect themselves from the loan repurchase risk that elevates when appraisal values and appraisal-independence procedures appear compromised," he added, will continue to follow HVCC.
Another bill, HR 1728, approved by the House last May and now before the Senate Banking Committee, would establish a new regulatory body for AMCs. Under the bill, states would establish minimum standards for the registration and oversight of AMCs, explained the Consumer Mortgage Coalition in a Dec. 8 letter to House leaders. The group objected to the bill's provision that state regulation would be placed in the hands of state appraisal boards, which it described as "dysfunctional, under-resourced state agencies that have been ineffective at meeting their basic regulatory mission." Instead, the letter stated, regulation should be placed in the hands of state bank regulatory agencies.