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Deadline Approaching for GSE Valuation Compliance

On May 1st, the Home Valuation Code of Conduct (HVCC) takes effect, mandating that all new loans sold to ""Fannie Mae"":https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvccfaqs.pdf and ""Freddie Mac"":http://www.freddiemac.com/singlefamily/hvcc_faq.html comply with strict rules established to mitigate the risk assumed by the two GSEs.
Oxford, Mississippi-based real estate technology company ""FNC, Inc."":http://www.fncinc.com is advising lenders to immediately update their internal systems and processes for any loans they plan to sell to Fannie and Freddie. FNC has been helping its clients - which include many of the nation's major mortgage lenders - ensure HVCC compliance since the rules were announced late last year. But, the company warns that some bank systems could still need updating.
Jon Fisher, FNC's designated HVCC implementation expert, explained, ""They may not be fully aware that their systems and processes will require significant changes to avoid penalties associated with selling their new originations to the GSEs after May 1. Even those that think they are in compliance need to make sure by contacting us or their internal compliance groups immediately.""
The new rules seek to ensure that lenders' processes are in compliance and avoid bias in selecting the appraisers who provide their valuation services, among other issues.
FNC CEO Bill Rayburn explained, ""Documentation of the entire loan process is critical, as is evidence of appraiser independence, compliance to USPAP [Uniform Standards of Professional Appraisal Practice] standards, and indications of appraisal or appraiser violations.""
As the result of legal action almost a year ago, New York Attorney General Andrew Cuomo announced an agreement with Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (formerly OFHEO) to establish a Home Valuation Protection Program. The program demands significant changes to the real estate appraisal process for residential mortgage transactions and includes the Code of Conduct.
Currently, about 85 percent of U.S. mortgages are purchased by Fannie Mae and Freddie Mac, enabling lenders to fund more loans. After May 1, the GSEs will have the right to force the seller to buy back any loans found to be out of compliance with HVCC.
FNC President Jeff Triplette said the company's software solutions can ensure that the lenders' valuation processes are in compliance before the loans are sold to the GSEs. ""Our Collateral Management System (CMS) has handled bank compliance issues with regard to interagency guidelines for 10 years now,"" he said, adding that a newer system, CollateralHQ, works similarly for regional and community banks. ""Compliance with regulations is nothing new to us; our automated systems are designed to help with that.""
According to FNC, the company pioneered real estate collateral information technology. Since 1999, FNC has offered solutions that automate appraisal ordering, tracking, documentation, and review for lender compliance with OCC, OTS, Federal Reserve, FDIC, and other regulations.
With its collateral management platforms and collateral-focused data and analytics, FNC provides insight into the property backing a loan from origination to capital markets. FNC says its lender clients have realized reduced costs and more efficient loan processing through its technology.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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