Real estate appraisals aren’t new. Indeed, lenders have long required an appraiser’s opinion of a home’s value before they will approve a loan for a buyer to purchase that home. What is new, however, is that the rules that dictate how lenders order home appraisals have changed significantly this year.
The new rules, known as the Home Valuation Code of Conduct, or “HVCC,” became effective May 1, 2009, and apply to most, though not all, mortgages. The rules were intended to reduce appraisal fraud and help ensure that appraisers aren’t subjected to improper pressures to inflate the home’s value.
Accurate and credible appraisals are certainly a laudable goal, yet the new rules also have resulted in some unintended consequences.