Fannie Mae and Freddie Mac agreed yesterday to require greater independence for real estate appraisers. Industry leaders expect the changes to apply nationally. The agreement will:
* Ban mortgage brokers form selecting appraisers.
* Prohibit lenders from using staff appraisers or appraisers working for
for appraisal companies they own or control.
* Institute an 11-part "Home Valuation Code of Conduct, " which all
lenders dealing with Fannie Mae and Freddie Mac will have to follow, to
eliminate "coercion, extortion, collusion" and other means for
influencing appraisals.
* Establish the "Independent Valuation Protection Institute" to monitor
appraisal practices.
* Set up a consumer hot line to handle complaints about questionable
appraisals.
Jim Park, a Denver appraiser said, "This is going to be a good thing for borrowers, very good for consumers", because they can presumably rely on appraisals to be accurate. Park predicts that the cost of an appraisal will remain the same, typically $350 to $450 for a home. On the other hand, Roy DeLoach, executive director of the National Association of Mortgage Brokers, said the agreement will remove "thousands of Small-business competitors from the marketplace" and thereby increase consumer costs.
Some observes think the time it takes to obtain an appraisal might increase, especially if an appraisal sought from one lender is not accepted as valid by another lender.
These changes will be affective January 1, 2009.
Excerpts taken from signonsandeigo.com. by Roger Showley
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