A new bill is in Congress for reform of the financial and mortgage industry. This bill includes the formation of a new Consumer Financial Protection Agency. This giant bill, nearly 1,300 pages long, now heads to the Senate, which is working on its own version.
What about HVCC, the controversial Home Valuation Code of Conduct? This was Fannie Mae and Freddie Mac's rules that have been criticized for producing low ball, inaccurate valuations; cutting appraisers' fees to the point where the most experienced professionals refuse to accept low-pay assignments; plus encouraging the use of inexperienced appraisers unfamiliar with local markets, and a long list of other problems. The National Association of Realtors and National Association of Home Builders have fought the code since it was first imposed last spring. Mortgage brokers and appraisers have circulated petitions asking Congress to ban it.
Now the House is on record as favoring the code's termination, when the new consumer protection agency takes affect (providing the passage of this bill).
Under this bill, the consumer agency's rules would require lenders to compensate appraisers their full fess, rather than splitting them with management companies and pocketing part of the money themselves. This would encourage use of the more experienced appraisers on assignments.
Whether the Senate ultimately goes along with creation of the consumer protection agency won't be known until next year. The House bill should be a warning to Fannie and Freddie that their controversial appraisal code may have a very limited lifespan.