Seattle Real Estate:

We all know the mortgage and real estate industry is changing. What you may not know, is how recent regulation in the appraisal process of a mortgage loan has changed in recent months, and how it may affect your loan approval. A real estate appraisal is the documentation a bank requires to form an opinion of the value of the home you are purchasing to help determine the level of risk the borrower may be taking on.

Before May of this year, Real Estate Appraisers were contacted and hired through the Mortgage Broker or Loan Officer whom originated the loan. Due to higher than average foreclosures in the mortgage industry, and falling home prices over the past few years in the U.S., Fannie Mae and Freddie Mac have adopted a new code of rules for the appraisal process.

Through this new code, called the Home Valuation Code of Conduct, the appraisal process is now handled through the lender offering the mortgage. Loan Origination and Loan Production staff, are now not allowed to assist in choosing or communicating with the appraiser. This can often hinder the quality of the appraisal as Loan Officers and their assistants receive direct knowledge from borrowers and Real Estate Agents about updates, remodels or issues that may affect the value of the home.

Often times, through the new HVCC program, the quality of the appraisal suffers due to many factors, including the fact that borrowers and Loan Officers are not being able to judge for themselves and demand the highest quality appraiser. In addition to lower standards of appraiser selection, appraisers themselves have less information to form an opinion of the overall true market value of the property.

At close to $500 per appraisal, no borrower should enter into a real estate transaction freely before they have had a thorough understanding of their options available, including financing where the new HVCC program is not required. If you have any questions about the new HVCC program or other financing question, you are welcome to contact me.

Derrin Tallman
Senior Loan Consultant & Guest Blogger
510-LO-33344
Washington Financial Group
P (206) 856-6216
derrint (at) wafinancial.com

This entry was posted on Thursday, July 9th, 2009 at 4:15 pm and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.