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 September 07, 2009

New Appraisal Rules Draw Criticism
The home appraisal has long been an important part of the mortgage lending process. New rules regarding home appraisals have caused many delays and even cancellations of many home sales. Problems that have worsened surrounding the appraisal process include increased errors, delays, higher costs to would-be buyers, reduced home price evaluations, and poorer quality of customer service.
New rules put into place as of May 1 of this year bar mortgage brokers, real estate agents and lenders from any direct communication with home appraisers. The use of a middleman for any communication need is now required.

New rules regarding the communication process were instituted because of increased pressure which had been being placed on appraisers by lenders, agents and brokers to quickly verify the value of a property to get a home sold or face possibly being blackballed in their field from future business. Throughout the recent housing boom prior to the onset of the current slump, appraisal values slowly increased. Some analysts believe these increases contributed to the problems we are faced with today.

Would-be buyers enter into an escrow which includes a home appraisal which typically costs them $400 or more. The appraisal is an important determining factor to help the lender approve the amount of the loan being applied for in order to purchase the home in escrow. If the appraisal on the home comes in lower than the agreed selling price generally lenders will not fund the difference, causing the buyer to come up with an increased down payment or cancel the contract.

With new rules regarding communication in place, having to use a middleman can greatly delay the resolution of any errors discovered in the appraisal process.

When entering into an escrow, it is important to get references from your lender and/or agent as to the level of service they have received from their appraiser prior to agreeing to using their sevices.