Survey: Few Lenders Ready for HVCC

On May 1st, the Home Valuation Code of Conduct (HVCC) is scheduled to take 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/docs/030308_valuationcodeofconduct.pdf comply with strict rules established to mitigate the risk assumed by the two GSEs.
According to a recent survey conducted by Oxford, Mississippi-based ""FNC, Inc."":http://www.fncinc.com, a mortgage technology company whose clients include the nation's major mortgage lenders as well as regional and community banks, at just one month out, few U.S. mortgage lenders have actually completed system upgrades designed to ensure compliance with the new rules.
According to FNC's survey of more than 1,000 key contacts, almost 80 percent of respondents felt confident that their systems would be ready to support compliance with HVCC by the imposed deadline, but only 14 percent have completed the necessary upgrades.
FNC says it is strongly urging its clients and other lenders to immediately update their internal systems and processes for any loans they plan to sell to the GSEs.
Jon Fisher, FNC's designated HVCC implementation expert, said, ""Some lenders 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 ... immediately.""
When asked what systems they would use--their own or a third-party solution--the response was mixed, FNC reported. About 21 percent of the lenders surveyed said they would use their own internal proprietary processes; 18 percent would use a vendor management company (VMC) to ensure compliance on their behalf; 15 percent would choose a full-purpose software vendor, such as FNC; and 12 percent indicated they would choose multiple VMCs.
Of those who were ahead of the pack and had already secured a compliance solution prior to completing FNC's survey, most said they chose either their own proprietary system or a full-purpose software vendor. Thirteen percent selected multiple VMCs, and 6.7 percent chose a single VMC.
FNC President Jeff Triplette said FNC solutions can ensure that lenders' valuation processes are in compliance before their loans are sold to the GSEs. ""FNC pioneered real estate collateral information technology,"" he said.
Triplette explained, ""Since 1999, FNC has offered solutions that automate appraisal ordering, tracking, documentation, and review for lender compliance with OCC [Office of the Comptroller of the Currency], OTS [Office of Thrift Supervision], Federal Reserve, FDIC, and other regulations, including appraiser independence and GSE guidelines. As a result, FNC's lender clients--the nation's major lenders--have realized reduced costs and more efficient loan processing.""