Big news on the home appraisal front: the new legislation that would create a federal consumer protection agency, which appears to be on the brink of becoming law, is likely to have the power to regulate the home appraisal process, reports Kenneth Harney in a Washington Post article today.  This may include the outright elimination of the Home Valuation Code of Conduct (HVCC).

The new agency will eliminate many of the risky mortgage loans, predatory lending processes, and poor underwriting process that helped to cause the housing meltdown.

Some of the other highlights of the legislation include:

    * The new agency will have broad powers to regulate and control the mortgage industry and lending practices.
    * Elimination of many mortgage prepayment penalties.
    * Standardized underwriting practices aimed at curbing risky lending.
    * The new agency will be able to regulate and create standards for home appraisals, as well as the probable elimination of the HVCC.

The last bullet point is the one I would like to focus on.  The HVCC has been much maligned by many in the appraisal and mortgage industries.  It was designed to promote independence in appraisals and to curb appraisal fraud.  Like many regulations, it had unintended consequences, namely it reduced the profits many appraisers were able to make and drove a lot of experienced, qualified appraisers from the industry.  In many ways it has made it more difficult to get an accurate appraisal price.

source: http://www.totalmortgage.com/blog/mortgage-rates/home-appraisal-process-likely-to-change-as-legislation-may-eliminate-hvcc/4124