HVCC, the Home Valuation Code Of Conduct, is having a major impact on financing for home purchases. The federal government has instituted a code for Realtors, homeowners, and lenders that determines home-appraisal procedures.

The major points of the system are:

* Lenders and third parties to a real-estate transaction are prohibited from influencing the appraisal process of valuation. This means your loan officer may not talk to the appraiser.

* Realtors may not pay for the appraisal or pressure appraisers for certain results.

* No member of a lender's loan-production staff may be part of the appraisal-ordering process.

As a result, mortgage brokerage companies must order their appraisals through a national appraisal service. These services locate an appraiser, sometimes from a distant city, to complete the appraisal. Most national appraisal service companies negotiate and retain up to 50 percent of the appraiser's fee — not good for the appraiser and not good for the real-estate transaction. Do you want your property valued by an appraiser from another city who has just lost half of his fee? A bad formula if you expect accurate results from the appraisal.

Appraisals now require many more days to accomplish, which is frustrating for the buyer, seller, and Realtor. The buyer must acknowledge receipt of the appraisal, in writing, three days prior to closing of the transaction, according to the new code. Mortgage bankers have an edge in this difficult process. They may have a designated administrative person, not connected to the loan officer, who will order appraisals directly with the appraiser. They may also have a panel of qualified appraisers from the Santa Fe area and will compensate the appraiser the full fee. This procedure, not available to independent mortgage brokers, makes it possible to assure the Realtor that the valuation process will be completed in timely manner and by a qualified appraiser from Santa Fe.

Problems with the HVCC law have popped up quickly. Appraisers not familiar with the Santa Fe market are having problems achieving realistic values for properties.

"The implementation of HVCC has negatively impacted the lending industry," says Nancy Armstrong at Superior Mortgage. "At Superior, we abide by the new rules but I personally hope lobbying efforts will help reverse HVCC in the near future. On the surface, it is designed to curb fraudulent appraisals, but it will ultimately cost the consumer more money, time and aggravation and could negatively affect home values."

The new law, to be perfectly blunt, stinks. Huge resistance and criticism against this law is coming from Realtors, appraisers, and lenders. In many areas, the HVCC system actually conflicts with the appraisal's own guidelines of professionalism.

Jim Gay was a real-estate broker for 20 years and has been a consultant to Fortune 500 companies. He is currently senior loan officer/partner with Superior Mortgage Services, LLC (505-988-4422) in Santa Fe.