Borrowers Feel Hurt by New FHA Appraisal Requirements!

Real Estate Appraiser with Residential Services:

After talking to several mortgage professionals within the past few weeks, I am convinced that the result of the new appraisal requirements for cash out refinance transactions means less overall appraisal orders.

How can a new underwriting guideline that requires more appraisals cause less appraisal orders? Well now mortgage originators must either consider the cost of paying for two appraisals when accepting a high loan to value ratio cash out mortgage application or bill the borrower for two appraisal reports. That is expensive and a gamble with alot of money in fees. FHA appraisal fees are typically higher than the conventional appraisals.

Some originators have stated two appraisal reports prices many borrowers right out of the market and this money might not pay off is the appraisal report has a lower than expected opinion of value or the home does not meet FHA property standards. The FHA appraisal is a gamble that might not pay off with the sought mortgage loan.

James S. Graner
Real Estate Appraiser
ph  (636)916-4325
cell (314)277-3336
fax (636)949-2637



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Michael Regan
Deerfield Beach Appraisers - Deerfield Beach, FL

I think what will really hurt the appraisal business is the hvcc rule requiring mortgage brokers to order appraisals through a third party like a management company. We all know the management company, who themselves are not appraisers, charge the consumer anywhere from $350 to $450 and the finds an appraiser who is willing to work for the least money, typically $150 to $175.

Feb 04, 2009 02:00 PM #1
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

James, this is what I see happening, too - FHA was supposed to hold strong in order to help those in need... now it seems like conventional loan appraisals is mainly what I've been doing since hvcc is coming.  I don't think a lot of LOs even consider FHAs as an option anymore ... just like in the 'creative lending' days.

Michael - Exactly!

Feb 05, 2009 12:08 PM #2
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

James - Thanks for taking time out of your day to talk with me this afternoon. Keep up the good work!

Aug 03, 2009 10:42 AM #3
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