Fannie and Freddie announce new appraisal rules

A replacement for the Home Valuation Code of Conduct (HVCC) was announced today by Fannie Mae and Freddie Mac in accordance with mandates from the Dodd–Frank Wall Street Reform and Consumer Protection Act. The new standards for appraiser independence will replace what was covered under the HVCC since May 2009. Fannie Mae stated: “The revised requirements will maintain the spirit and intent of HVCC and continue to provide important protections for mortgage investors, homebuyers, and the housing market.”

Key provisions include:

• An appraiser must be at minimum, licensed or certified by the state in which the property to be apprised is located
• No employee, director, officer, or agent of the Seller, or any other third party acting as a joint venture partner, independent contractor, appraisal company, or partner on behalf of the Seller, shall influence or attempt to influence the development, reporting result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner including but not limited to:
  • Withholding or threatening to withhold timely payment or partial payment for an appraisal
  • Withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser
  • Expressly or implied promising future business, promotions, or increased compensation for an appraiser
  • Conditioning the ordering of an appraisal report or payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation reached, or on a preliminary value requested from an appraiser
  • Requesting that an appraiser provide an estimated predetermined or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser completion of the report
  • Providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed target amount to be loaned to the Borrower, except that a copy of the sale contract for purchase transactions may be provided
  • Providing to an appraiser, appraisal company, appraisal Mgmt. Company, or an entity or person related to the appraiser, appraisal company, or appraisal mgmt. company stock or other financial or non financial benefits
  • Removing an appraiser from a list of qualified appraisers, or adding an appraiser to an exclusionary list of disapproved appraisers, in connection with the influencing or attempting to influence an appraisal
  • Any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality or violates law or regulation