Home Valuation Code of Conduct Highlights:
- Consumers cannot order an appraisal directly from the appraiser.
- Mortgage brokers cannot be involved directly in selecting an appraiser.
- Lenders must order appraisals through an appraisal-management company or an employee not involved in loan origination.
- Lenders are allowed to own the appraisal-management company they use.
- There is an exception for small banks that can't afford to hire a management company or separate staff to arrange appraisals.
- The rules do not apply to government-insured loans such as FHA or VA loans.
- They also do not apply to appraisals for loss mitigation, such as foreclosures and short sales.
The objective of the new rule is to reduce home-appraisal fraud, however, there are a lot of mortgage brokers and appraisers that oppose the new rule. Read more