The appraisal process changed May 1, 2009, when the Home Valuation Code of Conductwas adopted to "enhance the independence and integrity of the appraisal process". It basically sets up a separate Appraisal Management Company (AMC) to manage the appraisal process and prohibits the loan officer from being involved in the selection of the appraiser or communicating with the appraiser. FHA/VA mortgages are exempt.
While the intent of converting to AMC control to prevent undue influence on the appraiser is admirable, so far the new system is resulting in a big mess!
Kris Berg did a great post on the subject at Inman News...Appraising the new appraisal problem. It is both humorous and insightful. Don't miss the comments that follow from throughout the country, perhaps even more telling of the impact of this new policy.
In the past, on the rare occasion that a problem would arise with an appraisal I would get a call from the lender before the final appraisal was even submitted. I would send documentation supporting the sale price...the lender would send it on to the appraiser...sometimes I would get another call asking for more clarification...and we would usually have it resolved within 24 hours.
Appraisal questions most often come up with more unique properties and in more unique neighborhoods...where appraiser knowledge and experience are key. I am currently representing the seller of a unique historic property in a unique location and am experiencing a crash initiation into the new system!
The assigned appraiser was unfamiliar with the area and the value came in low...a surprise to everyone involved in the transaction. In the words of a real estate agent from Washington, "Appraisers are appraising homes in areas they've never even been to before! It's like asking a heart surgeon to do brain surgery, just because he/she is a doctor."
Both agents involved sent in documentation supporting the sale price. We were told there was a 72-hour waiting period for a response...longer than the 24-hours of the past, but still do-able...after all, it's a new system. Well...3 weeks later we are still waiting, with no end in sight!!
It seems that nearly everyone I talk to in the industry is experiencing some sort of problem with the appraisal process. Kris Berg quoted a Wells Fargo loan officer as stating, "This was supposed to improve the quality of appraisals. What it has really done is tank the quality of the product and the levels of service. It's a mess."
To put it into perspective...it used to be that loan officers had relationships with appraisers...professionals they trusted to give good service and do quality work in a timely manner. Those professionals are now part of a big 'pool' of appraisers who are assigned at random, some experienced and with good customer service...and some not...and accountable to whom?
It would be similar to having all Realtors in one big pool...instead of you the client choosing the Realtor you wanted to work with based on previous relationships, experience and customer service you would be randomly assigned someone...no choice, it's the luck of the draw!
Sharlene,
It is a real mess, no question. Enough people are speaking out on this that hopefully it will get sorted out over the next year or so (fingers crossed). In the meantime, pray for us. :)
Posted by: Kris Berg | June 06, 2009 at 10:51 AM
In the meantime, how many innocent casualties will be have?! My frustrated clients even contacted our lone Senator about it, as well as our local newspaper and television stations!
Posted by: Sharlene Hensrud | June 06, 2009 at 11:13 AM