In the ever-changing world of real estate regulations yet another announcement was made today: Fannie Mae and Freddie Mac will be establishing a complaint reporting system for violations of the Home Valuation Code of Conduct (HVCC). This targeted complaint process will use standardized forms that can be submitted online.
The announcement was made in the form of a letter from Acting Director of the Federal Housing Finance Agency (FHFA), Edward J DeMarco, to New York Attorney General Andrew Cuomo. The letter includes a summary of the current developments with HVCC and also states that Freddie Mac will not be funding the Independent Valuation Protection Institute (IVPI).
[For those who don’t know the IVPI has been an ongoing proposal supported by the National Association of Realtors to help maintain HVCC compliance by addressing unintended consequences created by the Home Valuation Code of Conduct. It was intended to work with appraisal organizations and state regulatory agencies to ensure appraiser independence and integrity. In March 2008 Freddie and Fannie committed to this Institute in an agreement with Cuomo, but it still has not been implemented, and doesn’t look like it will be any time soon.]
Here is an excerpt from the FHFA letter: “As conservator of Fannie Mae and Freddie Mac, our priority is to keep the Enterprises focused on the important role they play in supporting the mortgage market,” said DeMarco. “The need for a complaint process is being addressed in a way that we believe is more practical than with the Institute.”
The complaint process, to be public in the next few weeks, will address potential violations via a mechanism that provides crucial information to state regulatory and enforcement departments.
In addition to the complaint process, the letter also tried to look at HVCC in a positive light by reiterating that the Code has improved appraiser independence and aided efforts to combat mortgage fraud- which is obviously considered the leading contributor to the housing finance crisis.