“Appraisal Group Upset, Really?”
I hate to tell you, but you are sleeping in the bed you have made for yourself. As a group, explain to the AR community how so many Realtors and Mortgage brokers are saying the same thing? Are they all wrong? Not likely.
I’ll share an example. I did a mortgage for a client in South Kingston RI. The purchase price was $230,000. As luck would have it, the appraisal came in at $230,000. All is good.
Two weeks later, another client of mine, wants to refinance his home, also in South Kingston, two streets over from the transaction I did two weeks earlier. Exact same house, exact same neighborhood. Here is the problem, the appraisal came in at $208,000. The appraiser used two of the same comparables and didn’t use the sale that closed almost a month earlier. At the $208,000 appraisal value, my client would have to pay monthly mortgage insurance.
Since we can’t speak to the appraiser, as we would be breaking some rule or another. I took the appraisal from the previous transaction and set it to the lender. The lender couldn’t believe it, but had to go through a particular process as well. They sent the appraisal to the Appraisal Management Company (AMC). The AMC then sent it to the appraiser that did the second appraisal.
The appraiser sent back a memo, he is standing by the appraisal that was done. Are you kidding me? The lender even said, they were embarrassed, but that doesn’t help my client.
I shared all of this with my client, it was decided to go to another lender. All this meant, that my client had to pay for another appraisal. $425 later and a second appraisal came in at $228,000. I could close the loan with the client paying no mortgage insurance.
I don’t know if there is a Realtor or Mortgage broker out there that doesn’t have similar stories. For them to say enough is enough, the criticism is not unfounded. The sooner the HVCC is repealed the quicker this type of problem goes away. The consumer is constantly being victimized.
image: luigi diamanti/freedigitalphotos.net
Enough is enough, the Appraisal Institute said Tuesday, defending the role of appraisers in a statement and two separate guidelines.
The trade group came out swinging on behalf of appraisers and appraisal management companies, arguing their independence and professionalism in a down market that consistently sees analysts, Realtors, and bankers on the offensive.
“The fact is that appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value,” Sara Stephens, president of the Appraisal Institute, said in the statement.
Her message for Realtors, homebuilders, and anyone reading: “Don’t shoot the messenger.”
The statements and guidelines pointed to appraisers as independent observers hard at work for lenders, not buyers or
sellers, reaffirming their sense of judgment, market analysis, and roles in the housing industry.
“Qualified, competent appraisers are capable of using their experience and education to determine when – and how – to use distressed sales as comparables,” she added.
One of the guidelines took pains to clarify that lenders, buyers, and sellers should not assign bad grades to appraisals with values that fail to meet expectations or assume that higher-than-expected values assure “correctness” or quality.
The Appraisal Institute stood up for appraisers at a time when many continue to publicly criticize their roles in scuttled home sales, purchases, and mortgage applications.
In past interviews, Walter Molony, a spokesperson for the National Association of Realtors, attributed declines in existing-home sales – those sales that still need closing – to low-balling appraisals.
He said last fall that existing-home sales could push anywhere from 15 percent to 20 percent higher, if not for the appraisals.
GSEs Fannie Mae and Freddie Mac reopened the debate in early September when the two jointly released new appraisal standards to streamline the process, replacing sometimes discretionary appraisal criteria with alpha-numeric and abbreviations.
For its part, the Consumer Financial Protection Bureau recently published mortgage origination examination procedures that task regulators with making sure that appraisers stay independent of originators.
Stephens cited a “firewall” that exists between the two professional fields in a supporting document.
Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.
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