New rules to safeguard the integrity of home appraisals are complicating the deals they’re supposed to protect. Real estate agents, mortgage brokers and buyers, as well as homeowners who want to refinance their loans, are feeling the effects of rules designed to prevent inflationary appraisals that helped fuel the housing boom.
Since May 1, home appraisals must be ordered at an arm’s length, often through a national management company. Gone are the days when a mortgage broker or lender could hire a familiar appraiser to close a deal. Now, communication between the appraiser and real estate agents is discouraged
The new rules were proposed by New York Attorney General Andrew Cuomo, who pushed for the standards after spending more than a year investigating industry appraisal practices. They govern only loans that will be sold to Fannie Mae and Freddie Mac, government run mortgage companies that buy most of the nation’s home loans, and not loans guaranteed by the FHA or VA.
One problem, real estate agents and mortgage brokers say, is that the management companies assign appraisers who don’t know the area and lose experienced appraisers by taking a large percentage of the fees.
Another common complaint: appraisers value properties on the low end to appease lenders, which are scrutinizing appraisals now after suffering large loan losses in recent years.
This is not a small problem. Nearly every home loan is backed by Fannie Mae or Freddie Mac. Most real estate agents have experienced the results of these rules. Worse yet, whole neighborhoods are feeling the result of these low appraisals in the form of lower property values.
The values of our homes, neighborhoods and property are being affected by a knee-jerk reaction to poor decisions and business practices. We simply need to require that an appraiser do his or her job as described in the USPAP rules. While here in Florida, appraising is defined as an “Art”, not a “Science”, methods and practices are still outlined and required by law. They should produce similar results regardless of who performs them.
Ultimately, Property Appraisers are responsible for providing accurate, timely opinions of value. They have a responsibility to every home owner and property owner near their subject property to establish current values without being influenced by lenders, sellers, buyers or real estate brokers.
I can climb up on my soap box and go on about this topic but I’ll leave it here for now.
In the Tampa Bay area, Team Sumberg wants to help y0u sell your home or find your new home. Contact us: info@TeamSumberg.com (866) 323-3981
