Sunday, May 3, 2009

New Home Appraisal Rule - Effective May 1st

As of May 1st, the new home appraisal rule, formally known as the Home Valuation Code of Conduct, went into effect.

Home Valuation Code of Conduct Highlights:

  • Consumers cannot order an appraisal directly from the appraiser.
  • Mortgage brokers cannot be involved directly in selecting an appraiser.
  • Lenders must order appraisals through an appraisal-management company or an employee not involved in loan origination.
  • Lenders are allowed to own the appraisal-management company they use.
  • There is an exception for small banks that can't afford to hire a management company or separate staff to arrange appraisals.
  • The rules do not apply to government-insured loans such as FHA or VA loans.
  • They also do not apply to appraisals for loss mitigation, such as foreclosures and short sales.

The objective of the new rule is to reduce home-appraisal fraud, however, there are a lot of mortgage brokers and appraisers that oppose the new rule. Read more

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