Federal Reserve Rule Eliminates HVCC

The Federal Reserve Board published an interim final rule seeking to ensure appraisal independence and eliminate the Home Valuation Code of Conduct on Monday.

According to the Fed, the interim rule ensures that real estate appraisers are free to use their independent professional judgment in assigning home values without influence or pressure from those with interests in the transactions.  The interim final rule includes several provisions that protect the integrity of the appraisal process when a consumer’s home is securing the loan and ensures that appraisers receive customary and reasonable payments for their services.

Additionally, the Fed clarifies that an employment relationship or affiliation between the appraiser and the lender is not a conflict of interest.  However, the person who prepares a valuation or who performs valuation management services may not have an interest in the property or the transaction.

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Other provisions include a requirement that creditors or settlement service providers that have information about appraiser misconduct must file reports with the appropriate state licensing authorities.

The interim final rule is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Obama earlier this year.  Compliance will be mandatory on April 1, 2011. Public comments are due 60 days after the interim final rule is published in the Federal Register, which is expected soon said the Fed.

To view a copy of the rule, see here.

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  • Does the Fed ruling have any bearing on HUD’s position? It does not seem so. If the HECM community is held to a different standard, it seems that the quality of appraisals will only deteriorate further. I hope HUD takes notice and modifies its position accordingly.

  • The Critic is right, The Fed’s ruling will have no bearing on HUD’s position. The ruling, in my opinion holds no water. It is also a waste of tax payers money.

    All this is is a spin off of the Financial Regulatory Reform Bill. Believe you me, we will be seeing a lot more of this. This is just the beginning my friends. I feel we are going to see the ignorant and lack of knowledge of the so call, “Consumer Protection Bureau” members as time goes on.

    I am very unhappy and fear what I see coming down the pike for our industry. Primarily because of the power the people will have on this committee to rule and make decisions. These are people with out the experience or passion for our industry. These same people will make policies and judgment calls in areas they have no right to tread on! That is my take on it folks.

    Thank you,

    John A. Smaldone

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