Property Appraisal Changes You Should Know About
Freddie Mac and Fannie Mae have agreed to only buy mortgages for properties that have had appraisals by firms independent from lenders.
This is a huge change for the mortgage industry!
This came about because of an agreement between the two largest mortgage brokers and the New York Attorney General. This will largely benefit independent appraisal companies. Lenders may now have to divest themselves of in-house appraisal services.
After investigating billions of dollars of home loans it was found that lenders often put pressure on appraisers to inflate values of homes. It doesn't take a brain surgeon to see how that may have contributed to the unprecedented amount of foreclosures over the last few years. Appraisers often were pressured to come with an amount that would justify the amount being considered for mortgages.
This agreements ends the practice of using lenders own appraisers and also ends the practice of lenders owning appraisal companies. It will be interesting to watch them as they divest themselves of these functions.
Interestingly, Countrywide Financial Corp. is one of the lenders who owned that type of company. We all know their current financial situation.
It goes without saying that this change will cause massive ripples through out the industry. Independent appraisal firms are poised to reap huge financial benefits as they step up to replace the lenders in house service. Expect to see new firms springing up to handle this huge volume of work.
How these changes will affect new home buyers remains to be seen. It might be reflected in higher costs to the borrower.
Ray Caran has owned and operated a multitude of businesses over the years. He has been buying and selling real estate for over 20 years. For more tips go to: Property Money Making Secrets.
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