Fannie Mae & Freddie Mac Appraisal Order Changes.

Back in March I wrote a blog New Proposed Appraisal Regulations ............ "Home Valuation Code of Conduct" giving every one a heads up on changes to the way Fannie Mae & Freddie Mac Appraisals will be done from tomorrow (May 1, 2009) forward.

Starting tomorrow, May 1, a new code of conduct, the "Home Valuation Code of Conduct" (HVCC) will go into affect for ALL appraisal on Fannie Mae and Freddie Mac Loans.  Anyone with a vested interest in the approval of a mortgage can not have any contact with Appraisers or have any say on who the appraisal will be assigned to.  Those that will be most affected by this change will be Loan Officers and Brokers, but in reality Realtors and Buyers will feel the impact of this change as well.

Right now if an Appraiser feels that a property is not going to appraise, because of preliminary work that he/she might have done before going out to actually appraise the property, he can give the Loan Officer or Broker a call and discus it with him to try to determine if it is even worth doing the appraisal.  Many times the amount that the property needs to appraise at and what the Appraiser initially feels that it will appraise, is pretty wide.  If this is the case, the Loan Officer or Broker has the opportunity to cancel the appraisal, and if they have a good relationship with the Appraiser, the Appraiser will not charge for the preliminary work, thus saving the Borrower money.  This is just one example, there are others, such as maybe being aware of a FSBO that has recently sold, that the Appraiser might not know about, but with this additional information it might enable the property to appraise.

We all have heard reports of Loan Officers, and Brokers, and yes even Realtors, who have teamed up with Appraisers in fraudulent activity. This change in the appraisal order process is suppose to try to deter that.  But in reality this is only going to affect those who are NOT involved in fraudulent activity.  Those who have committed fraud in the past will continue to find ways around the system.  Something that was said to me many years ago, long before I became a Loan Officer keeps on popping into my mind "locks and barriers only help to keep honest people honest, but will not deter the crooks from breaking in if they really want to".  If this new procedure is being implement to help honest Loan Officers and Brokers from being tempted into doing something wrong, then it might achieve that goal.  But if it is being implemented to stop the sleazy element of this business it will fall far short of what is needed to do that.

If I sound unhappy with this change is because I am.  I am tired of paying the price for those who do things wrong, and politicians who are trying to gain publicity by implementing meaningless changes that will do nothing to stop Con Artists.  This may sound good, but it is just a lot of fluff and smoke and mirrors in my opinion.

This change will NOT affect FHA at this time, and hopefully will not be adopted by FHA in the future.  FHA appraisals will continue to be order the same way that they have always been, as well VA appraisals.

For all the details on this new act go to "Home Valuation Code of Conduct".

 

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com