Instead, lenders now interact with what are known as appraisal management companies, or AMCs, which act as the middlemen in the process and choose which appraisers will evaluate which properties. To combat appraisal manipulation, the HVCC stipulates that loan officers are prohibited from influencing the appraisal process, and can have no contact with appraisers.
#TOAU APPRAISAL CODE#
Today’s appraisal process – the over-correction Stafford refers to – has been primarily shaped by the Home Valuation Code of Conduct (HVCC), a 2009 policy jointly adopted by Fannie Mae and the Federal Housing Finance Agency that established a new era of structure and separation for appraisals. But it’s also what needed to happen you have to correct to fix the problem, but we’ve definitely over-corrected.” “Now, do I think we’ve gone too far with it? Sure … the process today is dramatically different than it was before. So the system in itself was broke, at that point,” Stafford says. “The pressure comes from borrowers who want the home to appraise out higher so they can borrow more money the pressure comes from not killing a real estate transaction. It was one component, Stafford explains, of a broken system, one defined by an intense pressure for increasingly strong returns and one that required dramatic action from policymakers to adequately correct. The appraisal process as it exists today is a direct result of reforms that followed the 2008 economic downturn, and as Jed Stafford, the senior vice president for PHH Home Loans’ Midwest Region, explains, although those reforms set out to correct the exuberant speculation that defined the housing boom years, unintended consequences have resulted.ĭuring the housing boom years, when home prices were rising at such an unprecedented pace, Stafford says the appraisal process became a setting for manipulation and abuse, with loan officers pressuring appraisers to positively value properties in a manner that was in-line with the boom mentality but not necessarily in-line with the true marketplace.
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