Living Out Of Debt

When the government enacted some new rules about who is entitled to hire an appraiser to complete a market analysis on a property, there were many ramifications that were not initially considered. Now Fannie Mae and Freddie Mac have some mandatory guidelines, which again will have some positive and negative impact on the real estate housing market.

Lenders must now provide appraisers a copy of the sales contract and all associated addendums. If a change is made to the purchase contract, the appraiser must be notified and updated paperwork made available.

Portions of a parcel may no longer be appraised. The current guideline states the appraised value must be for the entire parcel.

Appraisers in the past were omitting comparable sales of foreclosed homes, REO properties and short sales. The new Fannie Mae and Freddie Mac guidelines require these types of properties MUST be included in the market value of the property. This could definitely have a negative impact on our housing market.

You would think “common sense” would be considered in any new rules or guidelines. Here is another new guideline that is mandatory. If the appraiser has any financial interest in the transaction, the appraisal has to be verified by a third party who is “arms-length” from the transaction.

Any major repairs have to be considered in the appraisal. Now what a brilliant idea! The appraisal cannot be completed until these repairs are finished. Anyone ever heard of the FHA 203K loan?

Supervisory authorities can no longer sign off on completed appraisals without reviewing the subject property themselves. The supervising appraiser has to personally review the property before agreeing to sign off on an appraisal completed by one of their employees.

The revised Home Valuation Code of Conduct applies many changes within the industry and was meant to stop improper influencing of values as well as protect the consumer. These changes although somewhat positive will most likely add additional delays to the transaction.