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