New Appraisal Law and How it Will Affect Investors

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New Appraisal Law and How it Will Affect Investors

One of the factors contributing to the collapse of the housing market was collusion between appraisers, mortgage brokers, attorneys, and brokers. They were inflating values and creating comparables.  A new law came into effect on May 1, 2009 is aimed at stopping that.

The Home Valuation Code of Conduct may have a huge affect on real estate investors. Typically, investors have long-term relationships with mortgage brokers and appraisers because they rely on quick and responsive service to purchase or refinance investment properties.

HVCC essentially removes the ability of a local mortgage broker to choose their own appraiser and moves the relationship management to appraisal management services or the central banks home office.

Here are some of the key points from mortgage
blog Lenderama
:

1) Disables brokers from choosing appraisers or having any contact with appraisers, as these tasks are delegated to lenders.  This creates a bias that shifts power to large institutions.

2) Requires independent appraisers to join AMC’s (Appraisal Management Companies) where they are forced to pay 40 percent or more of their income to the AMC, ending the existence of independent appraisers.

3) Since appraisals are not in the broker’s name but the lender’s, if you or your client needs to change lenders, a new appraisal is required.

4) If consumers want to shop their loan, they must pay for a new appraisal; they can’t have an appraisal reassigned.  This creates a disincentive to shop for the best deal, which is never good for consumers.

To
learn more about new law directly from Freddie Mac CLICK HERE.

Categories : Training

2 Comments

1

I think the fact that appraisals cannot be transferable for borrowers is a great injustice your doing to the consumer with regards to their ability to shop rates with different companies or having to change mortgage brokers due to that broker’s inability to deliver on promises or statements made with regard to the borrower’s loan! This should be amended to allow the CONSUMER to be able to find the best loan possible and have the ability to transfer what is an INDEPENDENT appraisal remaining good for at least a 30-60 period. Shame on this law from a consumer’s point of view! As far as being regulatory with associations with brokers and appraisals it’s a good law though.

Ronald Moore
Realtor and Mortgage Consultant

2

I am a consumer and I agree with Mr. Moore. Just having been the victim of a Broker changing the Good Faith Estimate(in his favor of course) after the appraisal was was completed and paid for. The house appraised for what the original estimate was calculated for and the broker still added a 0.3 point and 600 more dollars in fees. After weighing it out and checking with other institutions, I stayed with the changed deal the broker provided. He made some excuses about the loan percentage and fannie mae rule changes yet he should have known this information prior to the first estimate. A deal is a deal though and I think that this was merely a well calulated tactic to get my business. I guess if I accept the deal then I can’t complain. Brokers are no different than car salesmen.

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