New Appraisal Regulations

Appraisers are often seen as anonymous figures in the home buying process, and up until a few years ago, they really were.   Even though people do not really know about the appraisal process, just about everyone who finances their homes has to rely on an appraiser to establish a value on their home.   This week, Rich and Steve spoke with Mike Miale from Statewide Real Estate Appraisal LLC. to share his insight into the appraisal process. Lately appraisals have been getting a lot of bad press for the problems arising from recent attempts at reform. The appraisal industry was largely unregulated until about twenty years ago after it was determined that flawed appraisals played a large role in the Savings and Loan Crisis. Recent attempts at further reform in the form of the Home Valuation Code of Conduct seem to have created more problems than help, with Appraisal Management Companies not hiring Competent appraisers with proper knowledge of the areas they are working in. And we now have further reform in   the Dodd Frank Consumer Protection Act. The new rule specifies that appraisers working for appraisal management companies, or AMCs, must be paid "reasonable and customary" compensation for the geographic area they're working in. Appraisers need to decline an order if they don't believe they are qualified to complete it, any coercion or bribery is prohibited, and appraisers and appraisal management companies can't have a financial or any kind of interest in the property or the credit transaction. Creditors can't extend credit if they know of violations before the deal is finished, and any misconduct in the appraisal process has to be reported to the authorities. This Week's Real Estate Insight At the height of the housing bubble, 90 % of appraisers  reported   being pressured to increase the property's value, Hopefully, consumers  will   see an improvement in the quality of appraisals for their mortgage loans as a result of the new requirements without the problems associated with HVCC.