The new Home Valuation Code of Conduct that became de facto law on May 1st has already started to increase the appraisal costs to the borrower.   One of my lenders is now asking for $450 for an appraisal that used to cost $375.  Another one of my lenders, Idaho Housing is asking for a $500 check up front to order the appraisal.  In one case we have an appraiser quote $675 for her fee on one of our loans.

For those not yet familiar with the HVCC, it requires the loan officer to be disconnected from the appraisal ordering process.  Most wholesale lenders have taken this a step further and have a separatedepartment or an appraisal management company that orders the appraisal for the loan.  This eliminates the ability to choose known appraisers who have demonstrated a level of competence and service in the past.  The appraisal may not be assignable to other lenders should the loan have to be moved.  It is possible that a borrower will get stuck paying for multiple appraisal on a property.

How do we plan on avoiding this?  On purchase transactions, the bulk of my business, we submit the loan with out an appraisal. If the lender doesn't like it, too bad.  The appraisal will be ordered after we have underwriting conditions back and have reviewed the conditions.  This will slow down the process as I have typically sent in a complete package to the lender.

It sounds like a mess, but as ususal we will rise to the new challenges that our industry faces.