The impact of the home valuation code of conduct on appraisal and mortgage outcomes

Lei Ding and Leonard Nakamura

No 14-23, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Superseded by Working Paper 15-28. During the housing crisis, it came to be recognized that inflated home mortgage appraisals were widespread during the subprime boom. The New York State Attorney General?s office investigated this issue with respect to one particular lender and Fannie Mae and Freddie Mac. The investigation resulted in an agreement between the Attorney General?s office, the government-sponsored enterprises (GSEs), and the Federal Housing Finance Agency (the GSEs? federal regulator) in 2008, in which the GSEs agreed to adopt the Home Valuation Code of Conduct (HVCC). Using unique data sets that contain both approved and nonapproved mortgage applications, this study provides an empirical examination of the impact of the HVCC on appraisal and mortgage outcomes. The results suggest that the HVCC has reduced the probability of inflated valuations and induced a significant increase in low appraisals. The HVCC also made it more difficult to obtain mortgages in the aftermath of the financial crisis.

Keywords: Property Valuation; Mortgage; Regulation; Appraisal (search for similar items in EconPapers)
JEL-codes: G21 G28 R38 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-08-01
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Impact of the Home Valuation Code of Conduct on Appraisal and Mortgage Outcomes (2016)
Working Paper: The impact of the home valuation code of conduct on appraisal and mortgage outcomes (2015)
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