Thursday, March 18, 2010


According to folks at Freddie Mac, their Home Valuation Code of Conduct Questions and Answers Page has been updated. The link to the left leads to the updated page.

I don't have a printed copy of the old Q and A page handy. As a result, it's difficult to determine the additions or deletions. These are among the ones we find to be interesting:
Q 2. Does the Code apply to non-origination valuation activities such as appraisals performed for loss mitigation activities?

A 2. No. The Code only applies to the loan origination process. It does not apply to a lender’s foreclosure/REO process, workouts, or any other type of loss mitigation activity.
Q 5. Does the Code apply to Freddie Mac purchases of private-label securities backed by mortgage loans that do not meet the requirements of the Code?

A 5. No. The Code only applies to 1- to 4-unit single-family loans sold to Freddie Mac by mortgage originators; it does not extend to Freddie Mac’s investments in mortgage-related securities.
Wondering why Fannie and Freddie are not interested in a Code of Conduct for rating agencies.
Q 6. How will you handle issues and concerns raised by customers as the Code is implemented?

A 6. Freddie Mac will work with our customers to address any issues or concerns regarding implementation of the Code. We will maintain ongoing contact through our various communications channels including newsletter articles and Web content. If customers have immediate questions, they should contact their Freddie Mac account representative, 800 – FREDDIE, or e-mail us using our Home Valuation Code of Conduct Inquiry Form.
Great! A form. Notice that the form is for sellers only. Where do borrowers, appraisers and others bitch?
Q 8. Does the Code apply to other valuation methods (i.e., automated valuation models, broker price opinions, tax assessments, etc.)?

A 8. No. The Code applies only to appraisals.
There are too many reasons to comment on this question and answer. How about you all have at it in the comments.
Q 39. May an appraiser update an appraisal for another lender?

A 39. Yes. The Code does not prevent an appraiser from performing an update of an appraisal for another lender.
Maybe the HVCC does not prevent it, but that does not mean it can be done easily. Consult your 2010 - 2011 Edition of the Uniform Standards of Professional Appraisal Practice.
Q 61. Can an appraiser’s information be omitted from the appraisal report prior to sending it to the borrower?

A 61. No. A complete, unaltered copy of the appraisal report must be provided to the borrower.
No comment.
Q 62. If two appraisals are obtained as part of the underwriting process, does a lender have to provide copies of both appraisal reports to the borrower or only a copy of the appraisal used to determine value?

A 62. Section II of the Code requires that the borrower be provided with a copy of "any" appraisal report; therefore, copies of all appraisal reports obtained must be provided to the borrower.
And how, exactly, is that being enforced?
Q 65. If I am permitted to use an AVM such as Home Value Explorer® to estimate property value, am I required to meet the Code requirements in Section II and provide the borrower with a copy of the AVM result three days before closing.

A 65. No.The Code does not require lenders to provide borrowers a copy of an AVM result.
Why not?

Independent Valuation Protection Institute

Q 82. When will the Independent Valuation Protection Institute be established?

A 82. We are working with the New York State Attorney General, FHFA, and Fannie Mae regarding establishment of the Institute. Because the Institute has not yet been established, the provisions regarding it in the Code are not yet effective.
Question 82 and the answer do not present any change from prior Q and A lists. In my never so humble opinion, that is the most important question. It's telling that the answer is the same. It's also telling that the LINK to the IVPI has been removed from their answer!

How is it that other parts of the HVCC are deemed to be more important than the Independent Valuation Protection Institute? Why is it acceptable to implement only parts of the HVCC?

There is QUESTION #83. How about an answer to that one, FREDDIE?