 gmakerley
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Joined: 09 Nov 2007
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Location: bloomfield, ct
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Posted: Tue Jan 12, 2010 12:34 pm Post subject: Appraisal rules to change soon
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Effective on February 15, mortgage brokers will not be able to order appraisals directly on FHA-insured loans, similarly as with conventional loans already. The fine mess we found ourselves in a few years ago, with some lenders urging their appraisers to "meet" a specific price, brought about this reform movement.
What had happened in all too many cases was that brokers/lenders, etc. had a vested interest in the appraised value "coming in" on their loans; because, of course, they profited from a closed loan. Allegations of coercion and steering brought out the regulatory wolves, of course.
Changes made during 2009 have caused much consternation, however. The Appraisal Institute and NAR (National Association of Realtors) have complained that new rules implemented have caused much turmoil. Appraised values have often been well under sales prices, in part because appraisers chosen are unfamiliar with the given market or lack experience.
In May of 2009, Fannie Mae and Freddie Mac instituted new controls that brought about the creation of management companies who now do the ordering directly with appraisers.
These third-party vendors have been said to hire less-qualified appraisers, those from areas far from the subject property and those who'd work for far less than the sort of fees generally commanded by appraisers.
In some cases, the fees allowed by the vendors for an appraisal are well under what the standard fees have been, and that has driven away many firms, who find that they simply cannot do the work for less, given staffing and office needs.
Relationships that have been built up over many years - above-board relationships between lenders and appraisers - are being severed. Some appraisers around the country are simply folding up shop as a result of many of the assignments going to those who do the job for drastically reduced fees.
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George M. Akerley
Independent Contractor - Mortgage Consultant
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860-221-5044
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sara
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