just thought this is of interst to nay any one buying or selling

Learn more about the Home Valuation Code of Conduct:

                        Call (800) FREDDIE

                        Visit www. FreddieMac.com/singlefamily/home_valuation.html

 

 

 

• Requires absolute independence within a lender’s organization between the appraisal function and loan production and limits communication with the appraiser.

 

􀂃 A lender’s loan production staff is prohibited from being involved in the selection of the appraiser, or having any substantive communications with an appraiser or appraisal management company about valuation.

 

􀂃 The loan production staff consists of those responsible for generating loan volume or approving loans, as well as their subordinates. This includes an employee whose compensation is based on loan volume or the closing of a loan transaction. Employees responsible for the credit administration function or credit risk management are not considered loan production staff.

 

• The lender’s use of an appraisal report prepared by an in-house appraiser or an affiliate in underwriting a loan must meet certain conditions including:

 

􀂃 The appraiser, or the company for which the appraiser works, reports to a function of the lender independent of sales or loan production, and sales and loan production staff have no involvement in the operation of appraisal functions or selection of the appraiser.

 

􀂃 Sales and loan production staff are not allowed to have substantive communications with in-house appraisers relating to or having an impact on valuation and do not provide the appraiser any estimated or target value of the property or loan amount (except a copy of the purchase contract may be provided.)

 

􀂃 The appraiser’s compensation does not depend on the final estimate of value or the closing of the loan.

 

• The lender has written policies and procedures implementing the Code and has mechanisms to report and discipline any violators.

 

• The lender’s appraisal functions are either annually audited by an external auditor or are subject to federal or state regulatory examination, and the lender provides to Freddie Mac any adverse audit findings indicating Code non-compliance.

 

 

                        Allows lenders to also use in-house staff appraisers to: 1) order appraisals; 2) conduct appraisal reviews and other quality control functions; 3) develop, deploy, or use internal automated valuation models; and 4) prepare appraisals in connection with transactions other than mortgage origination transactions, such as workouts, if the lender complies with the terms of the Code.

                        Lenders may use appraisal reports prepared by other entities engaged by the lender to provide other settlement services for the same transaction, as long as certain conditions are met.

                        Requires lenders to quality control test a randomly selected 10 percent (or other bona fide statistically significant percentage) sample of appraisal reports or valuations used by the lender, and report any adverse findings, including non-compliance of the Code, to Freddie Mac with respect to loans sold to us.

                        Allows Sellers with an asset size of less than $250 million to be considered a small bank as defined in 12 U.S.C. Section 2908 and exempting them from the requirements in Section IV of the Code. Sellers that qualify for this exemption must represent and warrant that they have in place appropriate policies and procedures, as well as adequate controls to prevent undue appraiser influence.