Now that Fannie Mae and Freddie Mac have taken steps to improve appraisal quality by establishing the revised Home Valuation Code of Conduct (Appraisal Code), the nation’s largest organizations of professional real estate appraisers – the American Society of Appraisers, the Appraisal Institute, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers – suggest lenders set their policies to use the most competent appraisers available.
Now more than ever the country needs to return to the time-tested process of choosing appraisers based on quality, not price, according to the real estate appraisers in a statement in response to the new Appraisal Code.
The organizations are reviewing the revised Appraisal Code to study its impact on the appraisal profession and the mortgage lending industry.
“We welcome the fact that the just-released Home Valuation Code of Conduct will improve the independence of appraisers who value properties collateralizing residential mortgage loans purchased by Fannie Mae and Freddie Mac,” said Jay Fishman, a fellow of the American Society of Appraisers (ASA) and chair of ASA’s Governmental Relations Committee. “We are concerned, however, that the code also permits mortgage lenders to avoid the use of professional appraisals and rely, instead, on valuation products that are all-too-frequently unreliable and distort the true value of residential properties. When valuations lack credibility, homeowners and taxpayers can be put at significant risk. We intend to work with the Fannie Mae, Freddie Mac, their regulator and Congress to improve the HVCC.”
Personal note: Let’s not forget that the regulation of having an appraiser in every mortgage started in the 80’s after the recession. Obviously, this regulation didn’t help to prevent the current market conditions. In the past few years, appraisers were extremely busy with work, did not do their due diligence and gave, in most cases, higher than asking home values. If they didn’t the result was an upset buyer, seller, brokers and mortgage company… If the banks cannot protect their own investments (i.e. mortgages) than no regulation can protect us from another economy crunch down the road. And, yes, the government will probably buy those bad loans again.
Article source: Banker and Tradesman