When the new regulations on appraisers went into effect local knowledge was considered a secondary skill. The 3rd party companies hired the cheapest appraisers they could which meant that the appraisers often came from “elsewhere” and had no understanding of the local market.
This caused what would normally be a good deal to die because of a faulty appraisal. It looks like Fannie Mae has seen the writing on the wall and now is going to demand that the appraisers have the required knowledge, not just the lowest price. And they wanting the appraiser to take more pictures of the properties and any defects found.
This is a step in the right direction. Back in the insanity that was the middle of the past decade appraisers were under extreme pressure to hit the number for the mortgage lenders. This led to many bad mortgages and pressure on the appraisers to betray their professional responsibilities. To correct this problem, appraisers were forced to go through a 3rd party and not be directly hired.
Of course, the 3rd party companies wanted to get the most profit out of the deal so they hired the lowest common denominator. Since they did not have to pay for fuel or any other cost, the appraisal brokers hired people who had no local knowledge to perform the appraisals.
Often you would hear of appraisers coming from 100 miles away to determine value on a property in an area they have never seen before. This is a recipe for disaster as the appraiser can not provide true value and has to be very conservative to protect themselves.
It is good to see Fannie Mae address the problem, and now let’s hope Freddie Mac follows quickly.
Fannie Mae just issued new requirements to help clarify single-family home appraisals, since it identified some issues in “post-purchase reviews of mortgage loan files.” Simply put, what Fannie’s June 30 selling guide updates mean is the agency didn’t like the looks of the some of the appraisals on mortgage loans sold to it by lenders.
One concern often voiced by real estate agents is how appraisers are being selected and whether lenders are hiring competent, as opposed to cheap, practitioners. Fannie’s new language says appraisers must have the “requisite knowledge” as well as experience and the right data to competently perform an appraisal. The lender, Fannie said, is ultimately responsible for hiring qualified appraisers.
Appraisal reports must also contain more pictures, including interior photographs of a home’s kitchen, all bathrooms, the main living area, any examples of physical deterioration and examples of recent updates like remodeling or renovation projects. via the Chicago Tribune
Nice to know that people are still hardworking an honest these days. Oh wait……
In Sweden have we over 25 years old rules regarding appraisers job; He must visit the house, a long list what he really must control and check up, take minimum of XX of photos, it must be his home – local area, he are forbidden to working extra or as a real estate agent or in a mortgage companies or bank or similarly. Because of all this rules have the Swedish home prices more or less standing still under this world economic crisis.
I am looking for a referral for a Swedish home appraiser who speaks English. If you have an email for a home appraiser that you can recommend, that would be greatly appreciated. Thank you for your efforts consideration.
It is hard to believe that after all the problems in housing the pendulum swings so far to the other side that it caused problems with appraisers that had no idea about the local market. I had one call me wanting help finding comps and I straight out told them they needed to only accept work in an area that they were familiar with.
I may be able to help a client buy or sell anywhere in my state, but I limit myself to areas I am familiar with. You must put the interests of your client first, no matter if you are a REALTOR, appraiser, whatever.
The client comes first. He is a man who will earn your commission.
Loved the post