The HVCC Virus Spreads to FHA

Our good friends at IMMAAG reported today that FHA has enacted a similar appraisal management process to the much maligned & ill-conceived HVCC regulation that has added layers of complexity and cost to conventional (FNMA, FHLMC) mortgage financing.

Excerpts from IMMAAG’s most recent alert:

It is no secret that IMMAAG has opposed HVCC since the first time we had a chance to read the agreement and the code.

We continue to share the belief with thousands of others who now know – HVCC was a poorly conceived, misdirected, inappropriate response to circumstances that were not the result of the causes identified by the New York Attorney General.

For months, IMMAAG has joined others in the industry in advocating grass roots action to tell Congress about the real problems caused by this policy. We have been suggesting to everyone with whom we communicate to ask their congressional representatives to co-sponsor H.R. 3044, the moratorium bill.

During all of this, there have been many who at least felt some comfort in the fact that HVCC only extended to agency loans and FHA had not adopted the same misdirected policies.

Well, so much for that! Two FHA mortgagee letters published yesterday make FHA appraisal management almost identical to the program mandated by HVCC.

Effective with FHA case numbers on or after January 1, 2010, for all intents and purposes FHA mortgagees and their employees will be operating under appraisal rules almost identical to HVCC. Some of the wording looks to be lifted directly from the HVCC.

It now looks like HUD has trumped whatever victory the industry and consumers might have achieved with the passage of H.R. 3044 (which seems unlikely after this FHA move). Looks like after January 1, 2010; everyone will have to learn to live with the cumbersome, costly, negative changes forced on us in May on FHA loans. Will VA and USDA follow suit? Who can predict?

IMMAAG, an information clearing house for independent mortgage brokers, monitors legislative & regulatory activity, mortgage industry events & emerging trends in small business management.