Appraisal issues continue to be a problem for competing Lenders, Banks, and Mortgage Brokers. I receive calls from Attorneys and Realtors ... even Borrowers themselves (after the loan has not closed through a competing lender), asking, "What can you do to help this situation"? Currently, this is happening more often that you would think ... or like.
I definitely do not mind receiving phone calls or pleas for assistance regarding this issue. I'm always happy to have a chance to help and also grow my business. And, this is a problem where I think I hold a definite edge over many other lenders. I am a Mortgage Banker through Chicago Bancorp ... and I retain some control over the appraisers we conduct business with. A definite plus that pays off during the processing of a loan.
But as a former Appraiser, I can tell you ... we are seeing issues of a nature that we have not faced prior to the passing of the HVCC ... and seeing them much more often. We have been left to face a huge "fire-storm" of troubles with nothing but a fire-bucket of water with which to put it out. In other words, when problems arise ... many times we have few routes of recourse.
Why are appraisals such an issue now? What are some of the appraisal issues we're seeing?
- Low Appraisals
- Longer turnaround times for delivery of Appraisals from Appraisers
- Appraisers called in to appraise in areas they are unfamiliar with
- Appraisal Fees re-structured (Some too high, others way too low)
- Inflexible Appeal processes
- Communication totally disallowed
- Delays in Underwriting Responses
These issues are causing huge losses of time in processing of loans and much frustration. Many times, they shut down a transaction completely. I believe that is when I hear from the totally frustrated professionals and buyers. They have reached a stalemate with their current lender and are hoping that maybe a new lender's appraisal will prove more friendly or beneficial to the progress of their stagnant transaction.
This is a particularly hard issue to explain to buyers and sellers wishing to complete an important deal. Communication between professionals should be key in the processing of a loan/sale ... but here we are, unable to communicate in many cases (or another professional unwilling or incapable of listening). How can they possibly fathom the reasoning for that ... fraud issues or not? They are justifiably frustrated and angry.
In May, 2009, the Home Valuation Code of Conduct (HVCC) came into practice as a means of "providing better appraisals" to the Lenders, protecting Loan "Servicers", eliminating "undue pressures" applied by mortgage officers, and perhaps most importantly ... to reduce greatly, or eliminate, mortgage/bank fraud.
If the latter items are deemed to be more important in the total scope of things then there will not be a reversal of this new Act, (currently under consideration). If the former list of items (annoyances), prevents the market from recovering, then there must be some time spent studying the affects of the Home Valuation Code of Conduct (HVCC). There is alot at stake.
If you are currently facing this issue all too often within your transactions, suffered through these problems within your own real estate transaction, or just believe that review of HVCC is needed ... make your feelings known to HUD, Fannie Mae, and your representatives in Congress.
If you are a real estate professional .... please contact and urge any professional organizations that you are a member of to seek this review as soon as possible. The more reasonable voices they hear, the better ... and the more quickly this issue is re-examined and resolved.