Got this in an email from a real-estate agent. With everything how it currently is, I can see how “they” would make this the new way for real-estate to be done. However, it does seem pretty harsh. Can anybody verify that this is legit? If it is… Ouch! this should make things “fun” :crying
As of the 1st, no real estate agent nor loan officer, can now directly order an appraisal for a client. All appraisals have to be ordered through a national appraisal service company or from a pool of appraisers. This applies to ALL lenders including Banks, Credit Unions, and Mortgage Companies. The lenders will not know who the appraiser will be until the lender receives the appraisal from the appraiser.
All appraisals will be ordered by a person or company employed by the lender as a liaison between the lender and national service company. All contact between the liaison and the appraisal company is to be strictly confidential and will be monitored by a separate agency. This means that only the liaison can have any contact with the appraisal company. If I, as an agent, or a mortgage officer calls or emails an appraiser directly, we can be fined or lose our license. The only contact I can have is if the appraiser contacts me. I, nor any lender, can question an appraiser on the value given on an appraisal. If I do, the appraiser just has to call the division and I accuse me of harassment and I lose my license.
Appraisals for FHA loans will have a case number attached to the property when an appraisal is done. That case number stays with the property for 12 months. If another appraiser is assigned to appraise the property, he will find that the property has already been appraised by another appraiser and will have to petition the first appraiser to release the case number in addition to having the original lender release the case. This rule is to keep borrowers from shopping appraisers for the highest values. Sounds like fun, doesn’t it!
Conventional loans can still be reappraised but it will have to be through a different lender; the same lender can not order up two different appraisal on the same property. Conventional appraisals are requiring at least one of the comparables be within the last 90 days. This is usually not a big issue unless you are borrowing on a property in a rural area that has not seen much activity within the last 90 days, especially if the only recent sale was of a property that really is not comparable to the subject property. This can be an issue if the most recent sale was 75 days old and it takes 30 days for the loan to go through final underwriting. That creates an issue of the newest comparable now 105 days old, 15 days past the rule. That can then create a citation in which a new appraisal has to be ordered or at least an update of the first appraisal done. Either way, more expense for the borrower.
On refinances, the appraiser can not be told or have any indication of what the borrower needs to make the refinance feasible. So if the appraisal comes in $1,000 short on a $300,000 refinance, the refinance will fall through. Unless the borrower can come up with the difference, there will be no refinance. This is just an example, but it illustrates the point that many refis, will fail for ridiculously small differences between what values are needed by the borrower and what values are given by the appraisers. After all, appraisals are one persons opinion of value. I am not at all promoting the inflation of value and getting someone in a property that really is not worth what the borrower paid for it; we don’t need any more foreclosures. I just feel that having been an appraiser, I recognize that appraising is not a perfect science. Appraising is one persons opinion that should be based on solid data and a knowledge of the market and the area. That being said, the t!
ruest measure of market value is what a knowledgeable seller and buyer agree to accept and pay for a property. I also understand that this definition is based on a free market economy.
Bottom line is that the appraisal industry is going through some big changes right now and is still adjusting to the changes. This means that everyone should be aware that business as usual may not be quite as usual as expected.
Additionally, I have been told that it is almost impossible to get loans closed in the 2.5-3 week time frames now. The time frames now are 4-5 weeks and could be getting worse. This at a time when we finally have buyers doming back into the market wanting to take advantage of the most affordable housing market in 50 years.