HVCC: Don't Be Surprised

Posted on June 24 By Justin McHood

When buying a home and ordering an appraisal, starting in May of this year, the rules have changed. In fact, because of the new HVCC rules, many things are now somewhat confusing. Let's start with the simple part: If you are planning on getting a conventional loan, the HVCC rules apply -- namely:

1. Your loan officer cannot order the appraisal directly from the appraiser. The loan officer is required to order the appraisal from the lender who often times will use an Appraisal Management Company (AMC) to handle this process.

2. Your loan officer cannot speak to the appraiser about appraisal related issues.

3. Your loan officer cannot speak to the appraiser about getting appraisal conditions taken care of that the underwriter wanted changed on the appraisal once the file has been underwritten.

The end result of these three things is that there is a higher chance that you will experience a surprise when getting your appraisal back for your new home -- and the most common "surprise" is for you to find out that your home's appraised value is lower than your contracted sales price.

Now for the more confusing part:

What if you are financing your home with an FHA loan? If you are financing your new home with an FHA loan, your loan officer may have to follow HVCC rules... depending on what lender they work for. As of today, some lenders are requiring HVCC rules for all loans -- and some are requiring HVCC rules for only conventional loans.

Whether you are financing your home with a conventional or FHA loan, one thing is for sure -- no one likes surprises so it is important to ask your loan officer ahead of time about HVCC and what impact it may have on your loan.

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