Solidifi Announces Early Compliance with FHA’s Version of HVCC Appraisal Rules in Effect January 1, 2010
To ensure smooth adoption of new rules, Next Generation Appraisal Management Company already enables lender compliance

Chicago, Illinois, November 9, 2009 – Solidifi, a leading technology-focused appraisal management company, has announced its compliance with the new FHA Appraiser Independence and Appraiser Engagement regulations announced by HUD last month.  The new rules are very similar to the Home Valuation Code of Conduct (HVCC) regulations intended to insulate the appraisal process from undue influence by loan originators, and apply to all FHA loans in process after the first of the year.  Solidifi has the ability today to ensure that lenders are working in compliance with the new regulations taking effect on January 1st when they use the company’s technology-enabled “Next Generation” appraisal management services.

The introduction of the HVCC triggered many protests from loan originators, and the FHA version of the guidelines adds new complexities to the issues.  With a lender’s production staff required to have a “hands off” approach to ordering appraisals, many turned to traditional AMCs to manage the process -- but most keep a significant portion of the appraisal fee, leaving as little as 50 percent to the appraisers.  The more professional, local appraisers are less willing to work for lower fee structures, so traditional AMCs often must find more distant and less qualified appraisers to perform the work.  The new FHA guidelines require that appraisers be compensated at rates that are reasonable and customary rates in their markets, which means that traditional AMCs will either have to modify their business models, charge far more for appraisals, or simply go out of business.

“As a next generation AMC, Solidifi has always paid full fees to appraisers,” says Griff Straw, CMB, president of Solidifi U.S. and a mortgage banker for over 30 years.  “Appraisers set their own market rates with us and they receive full compensation while our clients receive prompt, top quality work at reasonable and customary rates.  I am not certain how traditional AMC’s who take a split as high as 50% of an appraiser’s fee are going to be able to comply with these new rules.”

Solidifi Executive Vice President of Sales and Marketing Loren Cooke also notes the new FHA guidelines require a lender to ensure an appraiser has geographic competency and knowledge of the subject property area.  “As a next generation AMC, this is already built into our service as we openly track and display our appraisers’ performance metrics and credentials – including geographic competency and real time distance to subject properties,” he says.  “We allow lenders to set their minimum performance and credential levels of an appraiser they want to work with – including geographic competency, which can be as specific as setting a tolerance of a 20 mile radius of the property.  Geographic competency will be another challenge for traditional AMCs to deal with as they struggle to comply, especially within the constraints of their already-high cost structures.”

The new FHA rules are also causing lender concerns regarding operational and efficiency losses due to potential extended turn times when trying to procure and manage FHA case numbers.  With the new FHA rules, loan originators will no longer be able to generate the FHA case number and this task will fall to the non-production staff, causing newly-introduced inefficiencies in ordering appraisals.  Solidifi’s next generation appraisal management service not only delivers faster-than-industry turn around times as a result of full fee payment and its premium quality appraiser network, it also provides a simple FHA case number workflow tool to drive internal efficiencies and allow for an easy transition come January 1st.

“Today’s changing market needs proactive and compliant solutions, and Solidifi provides flexible technology to help lenders originate quality loans in this new era of mortgage banking,” says Straw.  “Whether accessing our platform via the Internet or using it fully integrated with their own systems, lenders no longer have to worry about keeping compliant, working with appraisers who do not have local market knowledge, or concerns about their customers paying too much for appraisals.”

About Solidifi
Solidifi is a leading provider of collateral valuation, risk management and data analytic services to the North American mortgage industry. Solidifi provides mortgage lenders, professionals and third party service providers with a flexible service platform for procuring collateral valuations from marketplace vendors and appraisers, with complete transparency and data to make "incredibly smart decisions." Solidifi currently serves leading global financial institutions with its United States head office in Chicago and Canadian head office in Toronto.