I was just part of the latest 4realz Roundtable hosted by Dustin Luther and featuring Jonathan J. Miller, an appraiser from New York. This discussion is about the upcoming changes with how conforming appraisals will be ordered, which I wrote about earlier this year at Rain City Guide. I was planning to be a fly on the wall…but Dustin wouldn’t have that! Jessie B. from Retro.com was also active on the panel.
This will impact any conforming (Fannie/Freddie) mortgage and I really don’t see ANY benefit to this new procedure that is scheduled to begin on January 1, 2009. If this goes into effect, appraisals will be ordered from an "appraisal management company" instead of from a mortgage broker/loan originator. It’s my understanding that even though this change has come about from NY’s Attorney General Coumo suing Washington Mutual and eAppraisal, banks like WaMU will not be impacted. (Am I the only one who finds this ironic?).
My take on this is that appraisals will take longer and will have less quality if they are ordered via a pool (very similar to VA appraisals).
Listen and learn! Just click the green arrow above.
Rhonda:
This is going to be a DISASTER. I had two deals that I had to order through an appraisal management company and both got crappy appraisals. On the first, the appraiser had the audacity to send an appraisal back… get this… $1650 below purchase price!!! This guy was so arrogant, he honestly thought he could appraise a $275k property to within $1650!!! Of course, he wouldn’t change it to reflect the purchase price and we couldn’t get anyone to help us at Landsafe. I wouldn’t have been so annoyed if he came back and could justify say a $10k difference in price… but $1650?? Do you know how much of an idiot I sounded like explaining to the Realtors and my client that the appraisal came up short $1650?? Good lord. The second deal was so messed up, even the underwriter requested a new appraisal. In short, the first guy appraised at $40k under purchase price ($350k home) even though a similiar unit two doors down sold the week before for $50k more than my client’s property!
My problem is that the quality is going to go down and teh appraisers do not have any incentive to do good work, yet they are going to be messing up our deals.
Russ, I’m just listening to Bernanke’s Q&A following his testimony to the House. Senator Dole brought up her concerns over this appraisal issue voicing how this may cause more expensive appraisals, longer transactions and increase difficulty with obtaining a mortgage. Bernanke responded that this does need to be approved by the FFIC so maybe…just maybe…this will whither up and blow away.