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How the HVCC is affecting the Mortgage Process

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By : Roby Hicks    99 or more times read
It is important to understand what HVCC is before discussing the effects it made in the mortgage processes. This is the Home Valuation Code of Conduct adapted last May 1, 2009. The HVCC has presented a big change in the appraisal system of the real estate industry. The change affects the lenders, the sellers and the buyers. This is implemented because of the fraudulent appraisals done by the various appraisers in the past.

Among the changes made is the giving of order of an appraisal. The loan officer can no longer do this. He should not be part in the selection of the appraiser as well or anyone who will gain from the appraisal. The chosen appraiser should be a member of a group of appraisers. If the property has to undergo a second appraisal, a new appraiser who is a member of an entirely different group should do it.

As mentioned earlier, the goal of the HVCC is to eradicate malicious appraisals done by appraisers for personal gain. In the past, appraiser values a property more than its actual value because of the share they will get from the loan. Although its intention is good, many are questioning it. Many have been questioning its capacity to resolve the issues in the real estate industry. According to others, this adds problem to the industry because it prolongs the process. It also affects the various parties in the market.

Due to HVCC, most sellers would opt for a cash transaction because mortgage takes too long. This also discourages buyers who rely on mortgage to purchase a home. Many complain that the process is more tedious, it is stricter and it is more difficult to qualify. The appraisers are having problems too. They have to be part of a group where the rate is lower. Those who are not comfortable with this will not agree to the arrangement. This is why many would turn to the less experienced appraiser, which also stirs another problem.

The goal of the HVCC is good. This is to promote independence of the appraisers by eliminating the pressures coming from the loan officers. The industry definitely needs honest appraisals. However, this can cause more burden to the home buyers as many professionals would look at it. Since the rate of the appraisers with their group is lesser, an additional rate may be asked from the home buyers. Others will turn to new appraisers, which could affect the quality of the job done.

There are various problems and complains cast against the HVCC even if it has good intentions. The fraudulent appraisals should be stopped and this new processes will help eradicate that. However, this has also paved way for some negative results. Inaccurate appraisals have wasted big transactions. The process has discouraged a lot of borrowers from making a purchase and the experienced appraisers are not very open to it. It will probably take time before everyone will fully be adjusted to it.

If everyone starts to appreciate the beauty and the advantage of HVCC, the mortgage transaction will not be as tedious and as strict as it seems.
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