New Appraisal Requirements

As of May 1st, guidelines will change for appraisals on mortgages that want Fannie Mae or Freddie Mac's blessing. Up until now, your lender chose the appraiser when you applied for a loan. The fee was typically in the $350 range. Each lender had a list of appraisers that they had approved. And, you, as the home buyer, paid for the appraisal at settlement. In this market the seller often gave you money to pay for the appraisal.

Now, lenders will not be allowed to choose the appraiser they use. You can see the reasoning for this. There was a lot of fraud over the last few years. There were crooked lenders using crooked appraisers to "cook" the appraisals to come up with the numbers they wanted/needed. And, that's one piece of why we're in the financial mess we're in.

But no one is very happy about the medicine they'll be taking on this one. Lenders will now go to third party companies who will then assign it to an appraiser they have on their books. Because of the change, appraisers will likely get paid less. But, because another layer has been added in, the consumer will likely pay more.

And, because of the change, buyers will no longer be able to pay for the appraisal at settlement. They'll be required to pay up front. At a time when buyers are putting out cash for other things like home inspections as well, it'll make the money a little tighter. Hopefully, seller's contributions to settlement costs can still be used at settlement to reimburse the buyer for this expense.

As we begin to use the new system, no doubt we'll notice other changes. Stay tuned for more.

RE: New Appraisal Requirements

Wonder how this will affect programs like Wells Fargo's three step refiannce program for existing customers where the customer pays no fees except for a notary fee on closing.