Yesterday, the Federal Reserve Board released an interim final rule on appraiser independence. The much-anticipated interim final rule is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203). In their release, the Fed states that the purpose is to “protect the integrity of the appraisal process when a consumer’s home is securing the loan.” The interim final rule covers a host of appraiser independence issues, including reasonable and customary fees, which has been a topic of debate in the industry.
The promulgation of the interim final rule also results in the termination of the Home Valuation Code of Conduct (HVCC). So, it shouldn’t be too surprising to see that just prior to the release of the interim final rule both Fannie Mae and Freddie Mac released new appraisal independence guidelines. The GSE’s new guidelines look similar to HVCC but there are differences. That said, mortgage brokers are still prohibited from ordering the appraisal.
The interim final rule is 135 pages and much of the industry is still digesting it. Compliance to the rule begins April 1, 2011, so the industry has time to adjust. Come back to Appraisal Insight for more information on the rule as events unfold.