Home Valuation Code of Conduct
I. Appraiser Independence Safeguards
 
A. An “appraiser” must be, at a minimum, licensed or certified by the state in which the property to be appraised is located.
 
·          Our Vendor Service team ensures that every approved appraiser is licensed or certified by the state that the property to be appraised is located in. By checking appropriate databases, licensure verification is an important part of our Vendor Services team’s daily responsibilities to our clients.
 
B. No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal company, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner including but not limited to:
 
(1) Withholding or threatening to withhold timely payment or partial payment for an appraisal report;
 
·          We guarantee payment to all appraisers 30 days after report is completed. This is gone over with every appraiser at the time they are approved with Nationwide Appraisal & Settlement Network in the appraiser vendor agreement.
 
(2) Withholding or threatening to withhold future business for an appraiser, or demoting or terminating or threatening to demote or terminate an appraiser;
 
·          Nationwide Appraisal & Settlement Network expressly prohibits and discourages all non-compliance with the HVCC. As the third party vendor our appraisers are ranked on every completed assignment based on communication, turn time, and quality of report based on difficulty of assignment. If an appraiser ever becomes ineligible to receive work from Nationwide Appraisal & Settlement Network, they are sent a letter citing the reasons which will be due to non-compliance with USPAP regulations, state licensing standards, substandard performance, improper or unprofessional behavior or other substantive reason for removal.
 

(3) Expressly or impliedly promising future business, promotions, or increased compensation for an appraiser;
 
·          Approved appraisers receive work on a rotational basis pending their proximity to the subject, their current workload, and their qualifications in order to complete the assignment.
 
(4) Conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary value estimate requested from an appraiser;
 
·          Never at any point are values or estimates given to or discussed with any appraiser at any time. Our software is designed to prohibit any dollar values not including sale/purchase transactions. Purchase orders are always accompanied with a purchase agreement.
 
(5) requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report;
 
·          See compliance point addressed above (4).
 
(6) providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided;
 
·          See compliance point addressed above (4).
 
(7) providing to an appraiser, appraisal company, appraisal management company, or any entity or person related to the appraiser, appraisal company, or appraisal management company, stock or other financial or non-financial benefits;
 
·          All appraisers are subcontracted and receive 1099’s at year end. At no point are appraisers offered employee positions or ownership opportunities.  
 
(8) allowing the removal of an appraiser from a list of qualified appraisers, or the addition of an appraiser to an exclusionary list of disapproved appraisers, used by any entity, without prompt written notice to such appraiser, which notice shall include written evidence of the appraiser’s illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice (USPAP) or state licensing standards, substandard performance, improper or unprofessional behavior or other substantive reason for removal (except that this prohibition will not preclude the management of appraiser lists for bona fide administrative reasons based on written, management-approved policies);
 
·          See compliance point addressed above (2)
 
(9) ordering, obtaining, using, or paying for a second or subsequent appraisal or automated valuation model (AVM) in connection with a mortgage financing transaction unless: (i) there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such basis is clearly and appropriately noted in the loan file, or (ii) unless such appraisal or automated valuation model is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control process or underwriting guidelines, and so long as the lender adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; or
 
·          Communication with lender/client in regards to quality control can be done on a per order basis. If at any time the report should be determined as insufficient with outstanding stipulations preventing the loan from closing, for reasons other than value, a new appraisal may be ordered to be used for review purposes. Should the first report be considered unreliable and a lesser quality for reasons other than value, then the decision about the appraisal fee will be determined on an individual basis.
 
(10) any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality or violates law or regulation, including, but not limited to, the Truth in Lending Act (TILA) and Regulation Z, or the USPAP.
 
·          As a third party management company it is our responsibility to carry out the HVCC to the fullest degree. Our systems and procedures are designed to protect the appraiser from any outside influences or communication. All communication and management of each order is done in house by the Nationwide Appraisal & Settlement Network team. Our lender certificate of non-influence is our promise that all HVCC guidelines were followed and carried out properly and with care.
 
 
 
C. Nothing in this section shall be construed as prohibiting the lender (or any third party acting on behalf of the lender) from requesting that an appraiser (i) provide additional information or explanation about the basis for a valuation, or (ii) correct objective factual errors in an appraisal report.
 
·          Our HVCC Lender Certification letter included in every completed report certifies the objectivity of the Appraiser and the outcome of the appraisal report. This ensures that the value was derived in compliance with the HVCC process and without influence. Nothing in the report is misrepresented with regards to subject property, comparable sales, and general market conditions.
 
·          All Nationwide Appraisal & Settlement Network approved appraisers sign a compliance agreement at time of approval. This agreement states that Appraisers will be paid for all fees for all assignments within 30 days of completion of the assignment.
 
·          Nationwide Appraisal & Settlement Network assigns work to appraisers based on quality ranking, proximity, availability to get report scheduled and completed within the time frame requested, and current workload.
 
·          We do not support or perform any preliminary searches for an estimated value loan amount, target value, or condition appraisers based on these items. If a client should send a request with any acknowledgement of such values, this information is not passed on to the appraiser. Our staff is well trained in the practices of the HVCC and implements the practice of disregarding all such stated information. 
 
·          Upon approval, the appraiser’s fees are set based upon the average fees for the area for particular products. An increase in fee is only warranted and approved based upon complexity or quick turn time request, but will never be based on the final outcome of the report.
 
·          Demotion or termination of an appraiser is dealt with by management team only who adheres to specific policies which comply with HVCC and USPAP.
 
 
II. Borrower Receipt of Appraisal
 
The lender shall ensure that the borrower is provided a copy of any appraisal report concerning the borrower’s subject property promptly upon completion at no additional cost to the borrower, and in any event no less than three days prior to the closing of the loan. The borrower may waive this three-day requirement. The lender may require the borrower to reimburse the lender for the cost of the appraisal.
 
·        Nationwide Appraisal & Settlement Network has the capability to ensure that the borrower receives a copy of the final appraisal report via email or post mail at no extra cost to the borrower if the lender requests.
 
 
III. Appraiser Engagement
 
A. The lender or any third party specifically authorized by the lender (including, but not limited to, appraisal companies, appraisal management companies, and correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents). The lender may accept an appraisal prepared by an appraiser for a different lender, including where a mortgage broker has facilitated the mortgage application (but not ordered the appraisal), provided the lender: (1) obtains written assurances that such other lender follows this Code of Conduct in connection with the loan being originated; and (2) determines that such appraisal conforms to its requirements for appraisals and is otherwise acceptable.
 
·        Our HVCC Lender Certificate clearly states that Nationwide Appraisal & Settlement Network is responsible for appraiser selection, retention and compensation. We also securely house all final unaltered copies of appraisal reports indefinitely.
 
 
B. All members of the lender’s loan production staff, as well as any person (i) who is compensated on a commission basis upon the successful completion of a loan or (ii) who reports, ultimately, to any officer of the lender not independent of the loan production staff and process, shall be forbidden from (1) selecting, retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or for inclusion on a list or panel of appraisers approved to perform appraisals for the lender or forbidden from performing such work; and (2) having any substantive communications with an appraiser or appraisal management company relating to or having an impact on valuation, including ordering or managing an appraisal assignment. If absolute lines of independence cannot be achieved as a result of the lender’s small size and limited staff, the lender must be able to clearly demonstrate that it has prudent safeguards to isolate its collateral evaluation process from influence or interference from its loan production process.
 
·        Nationwide Appraisal & Settlement Network’s secure online ordering and tracking system maintains and facilitates confidential communication between the lender client and Nationwide Appraisal & Settlement Network. We are able to ensure that only appraisal orders submitted by appropriate individuals are processed and that communications only take place between Nationwide Appraisal & Settlement Network and the lender client. The only communication to appraiser is done by team members of Nationwide Appraisal & Settlement Network who are fully trained in compliance with HVCC and USPAP regulations and guidelines.
 
 
C. Any employee of the lender (or if the lender retains an appraisal company or appraisal management company, any employee of that company) tasked with selecting appraisers for an approved panel or substantive appraisal review must be (1) appropriately trained and qualified in the area of real estate appraisals, and (2) in the case of an employee of the lender, wholly independent of the loan production staff and process.
 
·        Our Vendor Services team members are fully trained and continuously educated in real estate appraisals, regulation changes and updates, and quality control.
 
 
IV. Prevention of Improper Influences on Appraisers
 
A. In underwriting a loan, the lender shall not utilize any appraisal report:
 
(1) Prepared by an appraiser employed by:
 
(a) the lender;
 
(b) an affiliate of the lender;
 
(c) An entity that is owned, in whole or in part, by the lender; or
 
(d) an entity that owns, in whole or in part, the lender.
 
(2) Prepared by an appraiser
 
(a) employed,
 
(b) engaged as an independent contractor, or
 
(c) otherwise retained by any appraisal company or any appraisal management company affiliated with, or that owns or is owned, in whole or in part by, the lender or an affiliate of the lender.
 
 
B. Section IV.A. Shall apply unless:
 
(1) the appraiser or, if an affiliate, the company for which the appraiser works, reports to a function of the lender independent of sales or loan production;
 
(2) employees in the sales or loan production functions of the lender have no involvement in the operations of the appraisal functions and play no role in selecting, retaining, recommending, or influencing the selection of any appraiser for any particular appraisal assignment or for inclusion on a list or panel of appraisers approved to perform appraisals for the lender or forbidden from performing such work;
 
(3) employees in the sales or loan production functions of the lender are not allowed to have any substantive communications with an appraiser, appraisal company, or appraisal management company relating to or having an impact on valuation or to be provided information about which appraiser has been given a particular appraisal assignment before completion of that assignment;
 
(4) the lender, or its agents, and any appraisal company or appraisal management company providing the appraisal to the lender do not provide the appraiser any estimated or target value of the property or the loan amount applied for (except that a copy of the sales contract for purchase transactions may be provided);
 
(5) The appraiser's compensation does not depend in any way on the value arrived at in any appraisal or upon the closing of the loan for which the appraisal was completed;
 
(6) the lender and any appraisal company or any appraisal management company providing the appraisal to the lender has adopted written policies and procedures implementing this Code of Conduct, including, but not limited to, adequate training and disciplinary rules on appraiser independence (including the principles detailed in Part I of this Code of Conduct) and has mechanisms in place to report and discipline anyone who violates these policies and procedures;
 
(7) the lender’s appraisal functions are either annually audited by an external auditor or are subject to federal or state regulatory examination, and, unless prohibited by law, the lender promptly provides to Fannie Mae or Freddie Mac the results of any adverse, negative, or irregular findings of such audits and examinations indicating non-compliance with any provision of this Code of Conduct, whether or not the examination was conducted for the purpose of determining compliance with this Code of Conduct; and
 
   
C. In underwriting a loan, the lender shall not use an appraisal report prepared by an entity that is affiliated with, or that owns or is owned, in whole or in part by, another entity that is engaged by the lender to provide other settlement services, as that term is defined in the Real Estate Settlement Procedures Act, 12 U.S.C.§ 2601 et seq., for the same transaction, unless the entity that provides the appraisal:
 
(1) has adopted written policies and procedures implementing this Code of Conduct, including, but not limited to, adequate training and disciplinary rules on appraiser independence (including the principles detailed in this Code of Conduct) and has mechanisms in place to report and discipline anyone who violates these policies and procedures;
 
(2) recognizes that, once the Independent Valuation Protection Institute is established, the Institute will receive complaints for review and referral regarding non-compliance with the Code of Conduct. Referrals and reports shall be made to Fannie Mae and/or Freddie Mac regarding such complaints and the Institute will provide information on the results of its review of such complaints to Fannie Mae and/or Freddie Mac and make them available to the other parties to the Home Value Protection Program and Cooperation Agreement.
 
 
D. Notwithstanding the requirements herein, the lender also may use in-house staff appraisers to (i) order appraisals, (ii) conduct appraisal reviews or other quality control, whether pre-funding or post-funding, (iii) develop, deploy, or use internal automated valuation models, or (iv) prepare appraisals in connection with transactions other than mortgage origination transactions (e.g. loan workouts), if it complies with the terms of this Code of Conduct.
 
 
 
E. The provisions of this section do not apply to institutions (including non-banking institutions) that meet the definition of a “small bank” as set forth in 12 U.S.C. § 2908, and which Freddie Mae or Fannie Mae determines would suffer hardship due to the provisions, and which otherwise adhere to this Code of Conduct.
 
 
 
V. The Independent Valuation Protection Institute
 
An Independent Valuation Protection Institute (Institute) shall be created as approved by the parties. Subject to section IX, when the Institute is established, the lender will provide information to appraisers and borrowers regarding the availability of the Institute's services, which are expected to include: (1) a telephone hotline and email address to receive any complaints of Code of Conduct non-compliance, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, which the Institute will review and report as provided in IV.B(8) and IV.C(2) of this Code of Conduct; and (2) the publication and promotion of best practices for independent valuation. The lender shall not retaliate, in any manner or method, against the person or entity that makes a complaint to the Institute.
 
·        We encourage all appraisers to contact the management team at Nationwide Appraisal & Settlement Network for any complaints or compliance issues as we support 100% appraiser independence.
 
 
VI. Appraisal Quality Control Testing
 
he lender agrees that it shall quality control test, by use of retroactive or additional appraisal reports or other appropriate method, a randomly selected 10 percent (or other bona fide statistically significant percentage) of the appraisals or valuations that are used by the lender, including the results of automated valuation models, broker’s price opinions, or “desktop” evaluations. The lender shall provide to Fannie Mae or Freddie Mac a report of any adverse, negative, or irregular findings of such quality control testing, and any findings indicating non-compliance with any provision of this Code of Conduct, with respect to loans sold to Fannie Mae and Freddie Mac respectively, and the Enterprise may enforce all applicable rights and remedies, including requiring the lender to repurchase mortgages or the Enterprise’s participation interest in mortgages.
 
·        Nationwide Appraisal & Settlement Network works with all lenders to ensure lender compliance to section VI of the HVCC.
 
 
VII. Referrals of Appraisal Misconduct Reports
 
Any lender that has a reasonable basis to believe an appraiser or appraisal management company is violating applicable laws, or is otherwise engaging in unethical conduct, shall promptly refer the matter to the applicable State appraiser certifying and licensing agency or other relevant regulatory bodies.
 
·        Our Vendor Services team will ensure the proper communication of reporting any and all appraiser impropriety that is identified throughout the appraisal transaction.
 
 
VIII. Representations and Warranties
 
A lender shall certify, warrant, and represent that the appraisal report was obtained in a manner in compliance with this Code of Conduct. If the Enterprise determines, on its own or from a referral made by the Institute, that a lender is in breach of a material aspect of this Code of Conduct or in violation of a provision of the Code by a complaint referred from the Institute, the Enterprise will enforce all applicable rights and remedies, including suspension or termination of the lender’s eligibility to sell loans to the Enterprise, if the lender fails to remediate.
 
IX. Scope of Code
 
·        Our HVCC Lender Certificate states: “The appraisal/valuation report attached was ordered, received and processed under the guidelines set forth within the Home Valuation Code of Conduct.” This certificate also ensures that this report was completed in sole compliance with the strictest standards of appraiser independence.
 
Nothing in this Code of Conduct shall be construed to establish new requirements or obligations that: (1) require a lender to obtain a property valuation, or to use any particular method for property valuation (such as an appraisal or automated valuation model) in connection with any mortgage loan or mortgage financing transaction; (2) affect the acceptable scope of work for an appraiser in connection with a particular assignment; or (3) require the lender or any third party acting on behalf of the lender to take any action prohibited by federal or state law or regulation.