Origination News Feature Story

Vendors Moving to Help Lenders with HVCC

By Anthony Garritano

WILMINGTON, DE - The Home Valuation Code of Conduct deadline has arrived. Are lenders compliant? Technology vendors are doing their part to ensure that their lender clients are.

"HVCC compliance is of great concern. We want to get out awareness," said Diane Valadez, senior vice president and solutions advocate at First American. "We are going to work directly with clients and through portals like Ellie Mae."

She said, "I think [HVCC] will get rid of some of the problems of appraisal fraud. The enforcement is important, though. HVCC establishes an agency to gather and investigate the code. That’s important because some states don’t have the ability to enforce the code."

In fact, said Chris Azur, chief operating officer at ServiceLink, most vendors were HVCC compliant before Washington even thought up the regulation. "We were developed for HVCC before HVCC. We can be a panel manager or they can use us for the actual appraisal. We’ve always been designed to fulfill the order, provide tracking and status, and never have the lender interact with the appraiser. We even have rules that check the appraisal for errors before it’s submitted to the lender."

And where existing technology was not suited for compliance, those vendors are quickly upgrading to get the tool to that level. For example, MDA Lending Solutions, a provider of settlement services to the mortgage industry here, has updated ePolicy, an automated product selection workflow system from MDA MindBox, a division of MDA Lending Solutions. The upgrade adds appraisal management functionality to comply with HVCC regulations and improves the rules management architecture. ePolicy is a configurable software that enables lenders to manage business rules and credit policy in loan origination.

"HVCC requires that lenders order their appraisals from non-biased third-party sources," added Bill Richer, president of MDA MindBox. "The challenge lies in quickly identifying those appraisers who are qualified, affordable and eligible. ePolicy’s new managed appraisal portal takes the guesswork — and compliance risks — out of ordering appraisals. Lenders can screen and rate appraisers based on business rules, ensuring that originators have access to only the highest performing options."

But is this the end or will Washington come up with more regulations to ensure appraiser independence going forward? "I don’t think there should be more legislation," answered Mr. Azur. "I think this defines the process."

While HVCC is designed to eliminate appraiser collusion, one sticking point is how investors interpret it. "Depending on their type of business — banker, broker, direct lender, correspondent, or wholesale mortgage broker — originators will have different requirements for compliance with the new HVCC," explained Jonathan Corr, chief strategy officer at origination vendor Ellie Mae. "It will become even more complex as firms participate in multiple channels with an array of investors. Management will need to establish and enforce policies for ordering from different approved appraisers and appraisal management companies, vary policies based on property location and loan type, control which users can order appraisals, and generate regular reports to demonstrate compliance."

"Today, lenders are placing orders on behalf of brokers to an [AMC] of their choice," added Ms. Valadez. "We handle the panel to ensure compliance. However, Fannie Mae does not allow a broker to place an order with anyone, including an AMC, but Freddie Mac does allow brokers to deal with AMCs. My understanding is there may be some coming together and providing of a consistent message."