GSEs Make Shift Toward Appraiser Independence Requirements

Appraiser Independence Requirements are replacing the Home Valuation Code of Conduct (HVCC) at government-sponsored enterprises Fannie Mae and Freddie Mac. At this point, the requirements, which the companies announced Friday, are largely the same as the HVCC, with Fannie Mae's single-family chief risk officer, John S. Forlines, saying they ‘pose no significant changes to core principles of the HVCC.’

Forlines explains that Fannie Mae has also removed certain provisions from the updated requirements as they already exist elsewhere in the selling guide, such as the need for lender quality control testing for appraisals.

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the GSEs are required to review rules of appraiser independence. Both companies indicate that they may issue future rules relating to conflicts of interest and fee disclosure by appraisal management companies.

Freddie Mac's bulletin to seller/servicers included several other noteworthy changes. On the appraisal end, Freddie Mac will soon require specific interior photos to be provided with all appraisals that include interior and exterior inspections. Photographs showing any physical deterioration of a mortgaged property will also be required. These rules will be effective for mortgages with applications dated on or after Feb. 1, 2011.

Freddie Mac is also increasing its net worth requirements for seller/servicers.

SOURCES: Fannie Mae, Freddie Mac


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