May 11, 2008

Appraisal Process under Fire

Fannie Mae and Freddie Mac have certainly been busy. First (see my blog below) we see new programs designed to help the home owner to the tune of $300 billion dollars.

Now we see them tackle part of why the mortgage mess got so bad. Appraisals designed to facilitate the liers loan process, amounting to certainly unprofessional, if not fraudulent practices. This is not a done deal, because many of the players in the industry such as the Mortgage Bankers Association, are howling because it will be more costly and time consuming to institute the changes.

Here is What Fannie and Freddie Want to Do

1. Mortgage brokers originate more than half of all new loans, will no longer be allowed to choose or pay appraisers. This should help eliminate some of the collusion that took place where some independent appraisers could not give a fair evaluation if they wanted to work.
2. Appraisers working for lenders such as banks or mortgage bankers can no longer do appraisals for loans handled by their employers.
3. Lenders would not be able to use appraisals generated by management companies that have associations with lenders

This will slow down the process because in house appraisers will no longer be doing the work on loans. Lenders will have to hire outside appraisers. It may even require more than one appraiser, if you have more than one lender. True its more cost, but not as costly as all those people who really shouldnt have been approved. Now they have foreclosed and are driving the price down after having been part of a over stimulated and ultimately false demand that drove prices up. The fight for better and more accurate appraisals without pressure from lenders who want the commission and to hell with what happens later is good for the consumer.

Thanks for Reading
Howard Bell
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
A blog for San Francisco owners and managers of real property

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