HVCC and the Mortgage Process

HVCC stands for Home Valuation Code of Conduct. The HVCC law was initiated in May 2009 and was expected to significantly improve the fortunes of the housing industry by making the process of property valuation transparent for the consumers and giving more independence to the appraiser officer. The law has been a controversial subject ever since it came into being and has been hotly debated and discussed amongst the various stakeholders in the real estate sector namely, the brokers, real estate agents, realtors and the consumers. The law has been severely criticized by the National Association of Mortgage Brokers and they have collected enough evidence by way of public opinion against this law.

In order to understand the pros and cons of the HVCC law, it is essential to understand the law. The HVCC law was enacted to prevent fraudulent practices in the process of property valuation by the appraiser. The objective of the law was to ensure that the real estate agent, broker, or a realtor does not have a say in the process of valuation of the property by the appraisal officer and protect the interest of the consumers who needed to get their property valuated for the purpose of undertaking a loan from the lender. The law laid down the eligibility criteria for the appraiser and its most critical regulation included that the appraiser has to have a license or a certificate from the state in which he is undertaking his practice. As per the provisions of the law, it was obligatory for the lender to provide a copy of the property valuation report with the buyer This copy is made available to the buyer free of cost and must reach him at least three days prior to the closure of the loan. The law restricts the usage of an appraisal report on property valuation which has been finalized by the lender or any of his related parties.

There has been a lot of hue and cry raised on the provisions of the law by the members of the National Association of Mortgage Brokers (NAMB). Their biggest concern is that the HVCC law would result in property valuation exercise being carried out by appraisers who are not familiar with the area and negatively impact the appraisal quality. The other big concern of the mortgage brokers is that HVCC law would increase the appraisal costs and delay the mortgage process because of the inferior quality of the appraisal report. All this is likely to result in further lowering of the property prices and erode home prices. The mortgage brokers believe that the HVCC law is not in the interest of the mortgage process and have requested the government to discontinue the same. They also opine that the government can do more to put regulations in place which would force the mortgage brokers to adhere to the ethical standards which have already been established.