If you keep up with real estate news, you’ve surely heard about the Home Valuation Code of Conduct (HVCC). If you don’t keep up with that stuff, you’re in the right place! Here is a brief summary on what this is, what it means to you, and how things are changing in the real estate world.
WHAT IS HVCC?
Fannie Mae and Freddie Mac adopted this program in 2008 to enhance the overall integrity of the appraisal process, and to reinforce appraiser independence and valuation protections. It effects loans that take effect on or after May 1, 2009. Basically, HVCC ensures that appraisers do not receive any outside influence in determining home valuations, and it provides home buyers with their appraisal 3 days before closing.
WHAT DOES THIS MEAN FOR HOME BUYERS?
Because of this new program, home buyers are better informed, and appraisals are more accurate. Hooray! (Note: if the home buyer decides they don’t necessarily need a copy of the appraisal 3 days before closing, he/she can certainly waive it. More control on the part of the buyer.)
HOW DOES THIS CHANGE THE WAY WE DO THINGS?
Closing dates have typically been chosen by the home buyers and agreed upon between buyer and seller, but things like the HVCC program, the Housing and Economic Recovery Act (HERA), and the Home Ownership and Equity Protection Act (HOEPA) — we’ll get to those in a later post — have changed things a bit in terms of time lines for each transaction. So, it is ideal for lenders to have at least 30 days from contract signing to closing to get their ducks in a row. A lot of paperwork and disclosures have to be signed and sent around, and that takes time. It does benefit home buyers, though, because they are getting more clear information with regards to their home loan.
These programs only effect those contracts with which financing is taking place. If the deal goes down in cash, no problem on the time line!
If you have questions — we know it can be confusing — please let us know. We’d be glad to help! You can also check out this informational FAQ page from Fannie Mae [PDF].