12 FebHVCC on FHA Loans

It’s official…FHA is adopting the same basic premise as the HVCC ruling on Conventional Mortgages.

We posted on May 1, 2009 about HVCC on Conventional loans which stated:

Up until now the loan officer had the control to select an appraiser they felt had the best ability to appraise the house that would be used for the collateral for the mortgage loan.  That was the idea.  The problem was that some lenders would influence or coerce appraisers to appraise a property at a certain value in order to make the transaction work.

We went on to explain and quote the Home Value Code of Conduct:

the Code of Conduct also states that all members of the lender’s loan production staff…shall be forbidden from:

selecting, retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or for inclusion on a list or panel of appraisers approved to perform appraisals for the lender or forbidden from performing such work

having any substantive communications with an appraiser or appraisal management company relating to or having an impact on valuation, including ordering or managing an appraisal assignment

Those changes only impacted Conventional Mortgages.  Effective February 15, 2010 FHA Mortgages have a similar ruling.  In HUD’s Mortgagee Letter 09-28 they implemented Appraiser Independence which states:

Prohibition of mortgage brokers and commission based lender staff from the appraisal process

Although this mortgagee letter explained this was to go into effect January 1, 2010 the effective date was extended out until February 15, 2010.

So What Impact Does this Have?

Minimal.  The reason the impact of this change will be minimal is because when the HVCC ruling went into place for Conventional Mortgages many lenders adopted a similar process for FHA Mortgages, even though it wasn’t required.  Most lenders, and customers are already having to deal with this change even though it has not “officially” been in place.

Lending A Hand

Scott Wynn

The Wynn Team

About the Author | Scott & Marla Wynn

Scott & Marla Wynn are mortgage lenders with a focus on education. We believe an educated customer is our best customer. The mortgage industry has complicated the process of obtaining a mortgage so much that most customers believe the best way to select a mortgage lender is to inquire about rates and fees. Although rates and fees are an important part of the mortgage process, there are much more important areas to be concerned with. Lending A Hand was created to pass along our experience, knowledge and research to YOU to allow you to become a more educated mortgage customer. If you are planning a home purchase or refinance and live in the state of Colorado, we hope you select the Wynn Team as your mortgage lender!