In efforts to limit the interactions between appraisers and those originating the loan, the Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009 in an attempt to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisals.
This has led to increasing demand for appraisal management companies (AMCs), while also acting as a magnet for complaints from independent appraisers who claim they’re being undercut out of the market according to HousingWire.
While many in the reverse mortgage industry like to see HVCC eliminated, the US Department of Housing and Urban Development would have to change its stance on handling appraisals for FHA insured loans to have any real impact on the industry since it didn’t totally adopt HVCC requirements.
The agency announced in 2009 that mortgage brokers and commission based lender staff are prohibited from ordering appraisals, but it wasn’t requiring the use of AMC’s or other third party providers. However, it does require that lenders take responsibility to assure appraiser independence, which has lead to the use of AMC’s throughout the reverse mortgage industry.
With HUD holding approved mortgagees responsible for ensuring compliance with FHA requirements in all aspects of loan transactions, whether performed by the approved mortgagee or by its sponsored third party originator, industry experts tell RMD it’s unlikely the usage of AMCs would change even if HVCC is eliminated.
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