Loans By Kathy: HVCC - A Consumer's Friend or Foe?

HVCC - A Consumer's Friend or Foe?

HVCC is the Home Valuation Code of Conduct that was implemented in March 2008.  Basically, this took away a loan officer's ability to select or have any communication with an appraiser regarding a transaction in their pipeline.  The reason stated for implementing this change was to eliminate the possibility of undue influence by those involved in the transaction.

So now, the appraisal is ordered through an Appraisal Management Company.  Once they receive the appraisal report it is usually reviewed by the Quality Control Department.

So, even though this was implemented as the "fix" to prevent mortgage fraud it is not without its problems.  

Here is a story I heard from another mortgage professional this week.  The home being appraised on in Boca Raton, FL and had direct access to the Intercoastal Waterway.  The appraiser made adjustments to the comps based on whether or not access was by way of a "fixed" bridge or not.  He abbreviated on the report "fix".  The Quality Control Department about 1500 miles away, said that they couldn't accept the appraisal until the bridges were fixed.

The best appraisals are from local appraisers that know the market and special features of the community.



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Kathy Sheehan Senior Loan Officer






Bay Equity LLC

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.


Comment balloon 11 commentsKathy Sheehan • September 02 2012 06:22PM


Learning the real estate biz from some great pros who are not in favor of HVCC might have skewed my  thinking somewhat.  But, really, is this helping or hindering the homebuying process when you have appraisers from far out of our area looking for comps and have no idea what they probably realistically should value property at?

Posted by Ron Marshall, Birdhouse Builder Extraordinaire (Marshall Enterprises) over 6 years ago

Ron, I am not a fan of HVCC.  I think the consumers are paying more for the appraisals and there is no guarantee that they are more accurate.  Just my opinion.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 6 years ago

Kathy -- my reaction can be summed up in one word "YIKES".  A great example of what has gone awry and gone wrong with the appraisal process at the consumer is paying and often dearly.

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 over 6 years ago

Michael, you are so right!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 6 years ago

Kathy - I heartily agree with you. Having an appraiser come from several counties away that knows nothing about the local area is absolutely ridiculous and is accounting from the many bad appraisals we are getting. Suggesting.

Posted by Toni Weidman, 26 Years Selling Homes in New Port Richey, FL (Sailwinds Realty) over 6 years ago

Toni, I agree with you completely!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 6 years ago

Kathy. the unintended consequences of HVCC have resulted in poor appraisals that have helped to further erode home values. Appraisers are required to be "geographically competent" and an agent can challenge this and ask the appraiser where they are from and their knowledge of the area to stop this practice.


Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 6 years ago

I'm with Sharon - the conequences are appraisals that don't make any sense. . . and limit the "wisdom" that can be given by a lender and a realtor regarding a home.  I try to limit the damage as much as possible by only agreeing to work with appraisers in my area.

Posted by Joy Daniels (Joy Daniels Real Estate Group, Ltd.) over 6 years ago

Sharon and Joy, thank you for your comments.  It is nice to see we are all on the same page.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 6 years ago

This was a "fix" (LOL) in my opinion that complicated the issue much more than it helped.  I hate the HVCC because my clients nearly always suffer with appraisers who have no clue.

Posted by Suzanne McLaughlin, Sabinske & Associates, Realtor (Sabinske & Associates, Inc. (Albertville, St. Michael)) over 6 years ago

Suzanne, you are not alone!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 6 years ago