Credit union group considers interim rule eliminating HVCC a "serious burden"
The National Association of Federal Credit Unions said Monday that it opposes an interim rule issued by the Federal Reserve Board in October that eliminates the Home Valuation Code of Conduct and encourages independent appraisals. The trade association said that although it supports the intent of the rule — to prevent inappropriate or fraudulent home valuations — it stands in opposition because "NAFCU does not believe it is appropriate to require any party involved in a home mortgage transaction to report the activity targeted by this proposal." The NAFCU sent a letter with its comment to the Federal Reserve. The rule was open to public comment from the time is was issued until Monday. As written, the rule would impose new requirements on credit unions to report inappropriate activity if the credit union has a “reasonable basis” to believe a third party is substantially influencing a home valuation. The NAFCU said it would be a "serious burden" to require all staff involved with the mortgage process to become familiar with appraisal guidelines. The organization said the rule is not necessary for credit unions because of how they are structured. "Because of the not-for-profit structure of credit unions, there is less incentive for credit union lending officers to approve questionable loans; a fact born out by credit unions’ low mortgage default rate, relative to the rest of the lending industry," the letter said. The NAFCU suggested that the Federal Reserve reconsider reporting requirements and offer it only as a "best practice" for covered parties. "Lenders, title inspectors, mortgage insurers and other parties involved in the mortgage process should not be required to act in a regulatory capacity, reporting appraisal violations that may or may not have actually occurred," the NAFCU letter said. Write to Christine Ricciardi.