Are there any laws in place protecting the consumer with regard to the banks swaying the appraisal of a home? If so where are they on the web? Specifically I am wondering if a bank is allowed to utilize their own appraisal company when determining the value of a property that is attempting to be refinanced. Thank you in advance for your help.
Glenn_S said:
Jun 19, 09 at 2:28 amAs of May 1, these are the major points of Home Valuation Code of Conduct adopted by Fannie Mae and Freddie Mac.
1. Prohibits lenders and third parties from influencing or attempting to influence appraisals.
2. Requires lenders to ensure that borrowers get a free copy of appraisal reports at least three business days before closing.
3. Allows lenders to have in-house appraisers, so long as they’re completely independent of sales staff and their compensation does not depend on their estimates or on loan closings.
4. Requires lenders to test a randomly selected 10 percent (or other statistically significant percentage) of appraisals and report any problems to Fannie Mae or Freddie Mac, which may force lenders to buy loans back from them.
5. Requires lenders to report appraisal misconduct to applicable state agencies.
These new rules do not apply to FHA or VA loans. FHA and VA loans that are being handled by mortgage brokers the appraiser is assigned by the FHA and VA and they get what they are stuck with (luck of the draw). Direct lenders usually have their own appraisal staff. Another excellent reason to always use a direct lender.
I would add Zillow and like websites laughably inaccurate 98% of the time. They are not appraisers, but flim-flammers that are interested in only selling internet advertising.
acermill said:
Jun 19, 09 at 12:06 pmEven though the borrower is asked to pay the costs of an appraisal, the lender has full rights to determine which appraiser’s work it will accept. Part of our current mortgage meltdown was sloppy and even fraudulent appraisal work, done at the behest of various mortgage brokers. Since that time, nearly all lenders use appraiser(s) of the lender’s choice.
Mark said:
Jun 19, 09 at 2:17 pmIf you want to determine the "true" fair market value of your home, type your street address in at the site below; you will see an aerial map showing your home, its market value, & the value of all properties surrounding yours, plus tools to see what other houses in your area with the same number of rooms/amenities/square footage, etc have recently sold for.
If an appraiser gives a number significantly different from the value on the map, challenge it, you will probably be able to change their mind.
Dorothy_B said:
Jun 19, 09 at 9:17 pmThe mortgage company usually has 4 or 5 appraisal companies on retainer and they do not choose the same one each time. they are trying to protect themselves by using this practise and you may be able to have the appraisal included in the mortgage because they are picking there own appraiser.
You may also pick your own and ask if the bank will recognize their credentials, this way you will be allowed to keep the appraisal instead of the bank, even though you paid for the appraiser, it was probably at a reduced rate.