It's not garnering as much press as it perhaps should, but new appraisal guidelines set forth in the Home Valuation Code of Conduct are set to go into effect on May 1 -- and a recent study suggests that while U.S. mortgage lenders are confident their systems will be ready, few say they have actually completed system upgrades designed to ensure compliance. That's the finding from a recent survey distributed to more than 1,000 key industry personnel by mortgage technology company FNC, Inc. -- the company's client base includes major mortgage banks as well as regional and community banking outfits. 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 the Code. According to the survey, almost 80 percent of respondents felt confident that their systems would be ready to comply -- but with the deadline looming only a month away, only 14 percent had completed the necessary upgrades. “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,” said Jon Fisher, FNC’s designated HVCC implementation expert. “Even those that think they are in compliance need to make sure by contacting us or their internal compliance groups immediately.” When asked what systems they would use—their own or a third-party solution—the response was mixed: About 21 percent said they would use their own internal proprietary processes and system; 18 percent would 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 had already secured a compliance solution prior to completing the survey, most said they chose either their own proprietary system or a full-purpose software vendor; 13 percent selected multiple VMCs; and 6.7 percent chose a single VMC, the study found. Editor's note: The April issue of HousingWire Magazine takes an updated look at the expected impact of the HVCC. Don't subscribe? Click here. Write to Paul Jackson at