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Choosing an Appraiser?-No Longer Your Choice

By
Mortgage and Lending with Allied Home Mortgage Capital Corporation

In the past, when home buyers were financing the purchase of their home through a lender, or refinancing their home, an appraiser was selected by either the loan officer, Realtor or borrower.  That choice is no longer available to those utilizing home financing and for a reason.

On December 23, 2008, the FHFA, (Federal Housing Finance Agency which regulates Fannie mae, Freddie Mac and 12 Federal Home Loan Banks), announced the 'Home Valuation Code of Conduct'.  This code will help assure that borrowers and secondary mortgage market investors receive a fair and independent property valuation.   Additionally, this code will be used to conduct fewer review appraisals and to create broker protection against appraisal misrepresentation.  This code will officially be implemented as of May 1, 2009, however conforming and non-conforming lenders have slowly begun implementing this process since December of 2008. You will notice a vast majority beginning to place this into effect next month.

For future, the loan officer will request an appraisal to be performed directly through the lender.  The appraiser will now be chosen by the lender out of their list devised of selected certified appraisers.  Most lenders are managing this process through their own in-house Appraisal Management Service. 

Please know that should your home purchase be a cash transaction, obviously the choice of appraisers is still yours.

Overall I agree with this implemented code of conduct. I'm putting my faith in those appraisers chosen by the lender that they will indeed perform a fair valuation of every home. With this code of conduct implemented, there should be less stress, fewer arguments, and less chance of manipulation of the system. More importantly, this should benefit and provide fair valuation to the prospected borrowers and mortgage market investors.  When a future appraisal is preformed, THE VALUE IS THE VALUE AND THAT'S THAT!  

For more information, please view the following two links: 

Link of the announcement:  http://www.fhfa.gov/webfiles/277/HVCC122308.pdf?elqIsAgent=True

Home Valuation Code of Conduct:  http://www.ofheo.gov/media/news%20releases/HVCCFinalCODE122308.pdf

 

Comments (7)

Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA

Yes this change a little while ago.  This may prevent a lot of fraud.

Mar 17, 2009 10:29 AM
Sara Goodwin
Estimation Nation Corporation - Portland, OR
Portland, Oregon Appraiser

Hi Melissa - There's a lot of good info about this on the appraisers forum where you posted.  One thing though, the HVCC does not allow the AMC to be owned by the lending institution, so they're going with outside management companies (which is a huge mistake in most appraisers' opinions).

Mar 17, 2009 03:16 PM
Ed Walter
Ed Walter, Realtor-Appraiser - Safety Harbor, FL
St. Cert. Res. REA #RD1571

Actually with good lobbying efforts by the major Banks, something appraisers do not have, lenders are allowed to own their own VMC as long as they keep it separate which many lenders are doing. Not much has really changed for the lender, only the appraisers and mortgage brokers are taking it on the chin! I personally don't see any good coming out of this change at all. I'm waiting for the IRS now to really rock the arena when they tell the VMC's that their appraisers will have to be considered and treated as employees. Anyway, I've decided not do anymore appraisals for lending purposes after May 1st unless the mortgage broker's law suit actually stops this mess and I'm hearing many other appraisers are dropping lending work as well. I suppose we'll see how smart of a decision this was after the market does finally pick up and it takes 4 to 6 weeks to get an appraisal. Somebody should regulate the regulators.

 

 

Mar 19, 2009 04:40 AM
Lori Lewis
Allied Home Mortgage Capital Corporation - Bethlehem, PA

Thank you for your comments. I realize this may seem like old news but you would be shocked to know how many realtors are not aware of this change.  In all this, I fear we will lose alot of great appraisers if not choosen to be on 'the list'.

Mar 19, 2009 12:45 PM
Tom Horn
Thomas Horn, Real Estate Appraiser - Alabaster, AL
Appraising The American Dream

As most appraisers know already, in theory the HVCC sounds good.  There are loopholes in everything.  This will really hurt the appraiser because the management company is taking a large cut of the appraisal fee for doing next to nothing.  The smaller net fee to the appraiser will force alot of good appraisers out of this type of work because it will not be cost effective.  You will then be left with beginners trying to get into the market (who will take any fee).  I think the quality of the appraisal will be compromised.

Mar 23, 2009 02:07 AM
Shelly Fisher
Lake Burton Club Realty-Clayton Ga - Clayton, GA
Property Specialist - Lake Burton Club, Rabun County

Thank you, Tom Horn, my husband is an appraiser.  And has the reputation for the most truthful  values in our county.  So now for his good work he will be put in with the pile and judged for work he was not responsible for.  I am not sure where this is going but personally in my house we are very upset! My only hope is that the cream may be able to rise to the top instead of who you know. But our frustration about this government is growing.

Mar 27, 2009 02:53 PM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

It's about time. Commercial appraisals have been ordered by the lender ever since FIRREA in 1989.

Apr 04, 2009 01:16 PM