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Create A BlogAppraisal guidelines on the way out... |
Posted at Los Gatos, California by Chris Morris
Jul. 2, 2009
New appraisal guidelines on the way out!
The “Home Valuation Code of Conduct” that was introduced on May 1st seems to be on the way out to the relief of most of the real estate and lending industry. The code was the result of negotiations between the New York attorney general, Freddie Mac and the Federal Housing Finance Agency in an effort to end abuses in appraisals that led to bad loans in the marketplace. The problem was that it didn’t work.
The idea was to stop lenders from hiring appraisers for a specific loan. What it prevented was hiring appraisers for knowledge of a specific area. We have had appraisers sent out from lenders into areas where they have no experience, just because their name came to the top of the lender’s list. Of course this only happens with the major banks and lenders because the new system and the major banks have cut the mortgage brokers out of the business.
If you don’t think that the mortgage brokers have been cut out, you need to look at the comments in the listings on Real Estate Owned properties from the banks. Many of them state on the listings that they want prequalification letters from a major bank only. Some go as far to say that they will not take prequalification letters from brokers.
Another way to tell what the major banks are doing to the mortgage brokers is to look at their pricing. Some of the lenders are pricing their broker loans a percent higher than what they price their loans at out of their branches.
The Home Valuation Code is under fire from the National Association of Realtors, from Congress and from several appraisal groups. Since it has been implemented it has been a disaster with sales killed across the country by bad appraisals from appraisers assigned blindly to areas they do not normally work. Of course these appraisers could turn down the work where they have a lack of experience of knowledge. Sure, and the same appraisers could have not inflated appraisals prior to the loan crash… right.
The person who takes a real hit on this is New York Attorney General Mario Cumo Jr. who is trying to build a political career based on protecting people. The Home Valuation Code of Conduct was his piece of work. Unfortunately, as a politician, Jr. doesn’t understand how real estate or appraisals work.
There is a real need for a set of rules that protect the public and provide for fair and honest appraisals. This isn’t it, but it is a start. A lot of business ventures and many computer software upgrades fail the first time around. Once you work out the bugs, they come out with a second version that works. Hopefully we can do that with appraisal guidelines.
If I can show you how to have an easier, smoother transaction, would you work with me?
Chris Morris
Broker Associate
Alain Pinel Realtors
408.357.8783 direct
Brokers License 00780130
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1. RE: Appraisal guidelines on the way out...
Thanks for posting the new guidelines. Appraisal is a practice of determining the value of real or chattel properties. It is a delicate task, there must be a thorough understanding on the field of assessing the property. Appraiser should come up with a reliable appraisal report. The report will be used by the bank as a basis for the collateral. Be careful in making appraisal to avoid any conflict or lawsuit, which may be filed due to unreliable information. Just what happened to the The suit against Children's Place alleges that executives for the company had doctored information to drive up the stock value of the company artificially. The company has lawsuit insurance, so they are settling out of court, and might not need personal loans to cover the damage. The company has been having fiscal difficulties over the past few years, and has been cutting costs as fast they can to restore some profitability. If the actions were taken as policy it might constitute securities fraud, which would mean the Children's Place would need more than installment loans to get out of trouble.