FHFA Claims HVCC Not Responsible for Market Problems

The regulator of the government-sponsored enterprises has moved to clear up some "misinformation" about the Home Valuation Code of Conduct that Fannie Mae and Freddie Mac adopted three months ago and counter criticism that the new appraisal code is causing problems in the real estate market. "Market participants should appreciate the difficulty facing appraisers when valuing properties in a declining market, especially when sharply dropping home prices and foreclosures are prevalent. The challenges of appraising properties exist with or without the Code," the Federal Housing Finance Agency says. The code was designed to shield appraisers from inappropriate pressure from lenders, borrowers and brokers. But critics are complaining that the code has slowed the appraisal process, led to lower appraisals and the use of unqualified appraisers. The HVCC notice issued by FHFA stresses that professionals should report appraisers that are unqualified or unfamiliar with local markets to state licensing agencies. The GSE regulator also notes that lenders are requiring additional comparables and even second appraisals, which slowed processing. "FHFA believes that the Code is serving the intended purpose and will continue its oversight role both as to the implementation of the Code by the enterprises and its market impact," the agency said.