With today’s Single-Family Seller/Servicer Guide (Guide) Bulletin, we are providing additional details on our requirements for implementing the Home Valuation Code of Conduct (the Code). The Code has been added as an Exhibit to the Guide.
On December 23, 2008, in conjunction with the Federal Housing Finance Agency (FHFA) and New York State Attorney General’s announcement of the revised Code’s availability, we published the revised Code on our Web site in order to provide you with as much time as possible to assess impacts to your operations and prepare for the effective date of May 1, 2009, for adopting the Code.
Effective May 1, 2009, Freddie Mac will no longer purchase mortgages from Sellers that do not adopt the Code with respect to single-family mortgages that are delivered to Freddie Mac.
Also, effective for single-family mortgages with loan application dates on or after May 1, 2009, Freddie Mac Seller/Servicers must represent and warrant that the appraisal report is obtained in a manner consistent with the Code.
The sale of the following mortgages is excluded from the representation and warranty: FHA/VA Mortgages, Section 184 Native American Mortgages, and Section 502 Guaranteed Rural Housing Mortgages.
We wish to thank all of our customers who took the extra time and effort required to prepare and submit comments on the Code. Industry feedback on the Code was provided to FHFA and the New York State Attorney General and taken into consideration during the process of revising the Code.
Key Changes in the Revised Version of the Code Some of the revisions from the March 3 version of the Code include:
• Allowing lender use of appraisal reports prepared by settlement services providers, in-house appraisers, and affiliates as long as certain conditions are met.
• Allowing lenders, in connection with the loan being originated, to accept an appraisal prepared for a different lender that has adopted the Code, including when a mortgage broker facilitated the mortgage application but did not order the appraisal when certain conditions are met.
• Removing requirements that lenders implement and maintain a toll-free telephone number and e-mail address to receive complaints regarding appraiser independence.
• Removing requirements that lenders provide reports of suspected appraisal misconduct to the Independent Valuation Protection Institute (Institute).
• Allowing exemptions to the provisions of Section IV(a) of the Code for institutions that meet the definition of a small bank. In general, to be exempt, a Seller must (1) meet the definition of a “small bank” as set forth in 12 U.S.C. Section 2908 (which currently provides, among other factors, that the institution’s aggregate assets are no more than $250,000,000) and (2) Freddie Mac determines that the Seller would suffer hardship.
Frequently Asked Question on HVCC
The Independent Valuation Protection Institute
We will be working with FHFA, the New York State Attorney General, Fannie Mae, and other industry participants to establish the Institute, an entity that we agreed to fund as part of our agreement with FHFA and the New York State Attorney General. We will provide you with updates as this work progresses. The Institute has not yet been established, and therefore, the provisions regarding the Institute are not yet effective.
Additional Information It is important that you review today’s Guide Bulletin and the revised Code carefully in order to prepare for the required adoption of the Code beginning on May 1, 2009. Additional information about the Code and our implementation requirements is available on our Web site. As always, feel free to direct your questions to your Freddie Mac representative.
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