In a prior issue, DocMagic, Inc.'s Compliance Department announced the availability of a new Acknowledgment of Receipt of Appraisal Report and Waiver (ARARHVCC.MSC) ("Acknowledgment and Waiver") that satisfies the requirements of the Fannie Mae/Freddie Mac Home Valuation Code of Conduct ("HVCC").  You may read our prior article here.  The Acknowledgment and Waiver gives the borrower the option of either acknowledging that he/she received the appraisal report at no additional cost and not less than three days prior to the closing of the loan or waiving the lender requirement of having to provide the appraisal report at least three days before closing.

The Compliance Department has recently updated the Acknowledgment and Waiver by separating the acknowledgment of receipt of the appraisal report and the borrower's waiver of the three-day deadline into two separate disclosures.  The decision to do this was made, because Fannie Mae indicates in a training video on the HVCC (although it is not in its written materials) that the waiver cannot be executed at closing.  The training video and other HVCC resources may be accessed here.  

Note that Fannie Mae's HVCC FAQs do not indicate expressly that the waiver cannot be executed at closing.  Instead, when asked about the prohibited waiver at closing, a Fannie Mae contact responded that the HVCC FAQs indicate the following:

Q14.  Section II of the Code allows the borrower to waive the three-day requirement for receiving a copy of the appraisal. What is an acceptable procedure if the borrower chooses to waive the three-day requirement?

The lender is responsible for establishing a process and procedure for documenting the borrower's waiver of the three-day requirement.

Based on the above FAQ, the contact advised that Fannie Mae is allowing lenders to develop a process for the three-day waiver, rather than mandating that they follow a particular process.  She added, "I think it's fair to say that if the borrower is to waive a deadline, the waiver should be signed before the deadline.  I don't think an occasional late signing would be a problem, but routine late signings should not occur." 

Accordingly, to prevent the possibility that a borrower may execute the waiver at closing, the Acknowledgment and Waiver has been updated to a simple Acknowledgment of Receipt of Appraisal Report (ARARHVCC.MSC).  The Acknowledgment of Receipt will appear as an Interim/Processing Disclosure from the Forms List in DocMagic (You can read about Interim Processing Disclosures and Forms by clicking here.) and in closing loan packages for conventional loans only when the origination type selected is either a lender or broker. 

The Waiver Regarding Appraisal Report (HVCC) (WRARHVCC.MSC) will be included only as an Interim/Processing Disclosure from the Forms List in DocMagic when the origination type selected is either a lender or broker.  In this way, the Waiver may be selected at any time it is needed.

To read more about the HVCC, please click here for Fannie Mae's Announcement 09-01 and here for Fannie Mae's FAQs.  If you have any questions concerning the subject matter of this article, please contact DocMagic's Compliance Department.