Some Baltimore residents are not happy with the drastic changes required to obtain an appraisal for a home loan or to refinance their existing mortgage. They’re not alone. The National Association of Mortgage Brokers is lobbying Washington for a moratorium on the code.

May 1st marked the onset of new legislation regarding appraisals for home loans. The Home Valuation Code of Conduct (HVCC) was imposed to better maintain the integrity of home appraisals. After a year-long investigation of mortgage fraud conducted by New York Attorney General Andrew Cuomo, Fannie Mae and Freddie Mac agreed to the new code. Neither HUD entity will purchase mortgages from any bank that does not adhere to the new code.

The intent of HVCC was to eliminate mortgage and appraisal fraud. Baltimore County resident Eric Holmes is not happy with the ruling, however. Why? He purchased his home eight months ago, but decided to refinance and take advantage of recent lower interest rates. When the appraisal came in, he was stunned. His home had lost 30 percent of its original value.

In the code, mortgage brokers are prohibited from selecting appraisers, and lenders are prohibited from using appraisal companies they own or control.

Some lenders feel that the code has actually created more problems rather than solved them. One challenge noted is that new appraisers being brought into the market are not familiar with prices and home values in neighborhoods where the appraisals are being conducted. The result is appraisals noting lower home values. Another problem is that it now takes two or three weeks to get the results of an appraisal when it used to take only a few days.

If approved, Congressional Bill H.R. 3044, introduced in late June, will place an 18-month moratorium on enforcement of the code.

Bill Garber, a representative from the Appraisal Institute in Washington D.C, encouraged buyers and homeowners that they can require lenders to hire certified and qualified appraisers. In addition, he stated that the appraisal can be appealed and a second one required.

For more information regarding the Home Valuation Code of Conduct, visit the HVCC page on the Freddie Mac website.