The Home Valuation Code Of Conduct is a belief system put into place that says real estate appraisers should to be intimidated, coerced, bribed, etc, into coming up with a valuation on a property. Fannie Mae and Freddie Mac have joined in with the Attorney General of New York to propose a bill that will not go to the Senate or House Committees, in that the future of the appraisal business will be regulated by Fannie Mae and Freddie Mac if they will be the ones that will sponsor the financing of the mortgage. There are many factors put into place that make this bill very unpopular with mortgage brokers, real estate agents, appraisers, and most of all, the end consumer.
Personally I do not believe in this bill at all, and will discuss why throughout each explanation of each factor. First and foremost, why this bill is terrible, is because the future of the independent real estate appraiser come January 1st, 2009, will become obsolete, if this bill will pass. It will require all appraisers to join Appraisal Management Companies, where they are forced to pay 40% or more of their income, ending the existence of their lender relationships they have spend years fostering and preserving.
As mortgage brokers, we will be disabled from choosing the appraiser we want, and will not be allowed any contact with he appraiser, with only the lender allowed to do that. If I wanted to use my appraiser because of his accuracy, research tools, professionalism,and speed, I would not be able to provide that value added service to my client. So if your lender chooses an appraiser with that is slow or backed up, you are stuck. You can seeing where the shifting of power is coming into place, with the small business being stepped on. Reminds me of Wal-Mart.
Since the appraisal will not be in the mortgage brokers name, you cannot have it reassigned. If your client needs to change a lender, or if the client does not fit into the guidelines at any time during the process, you will need to get a completely new appraisal, thus increasing your clients costs, delaying the loan closing, and making all parties involved extremely frustrated.
Fannie Mae and Freddie Mac have lost billions of dollars in the last few years, so it is no wonder they are enjoining this bill, since it will only help them manipulate the market, and have more control. If it is a logistics issue, have more continuing education for brokers, licensing requirements and testing into place, making us more professional as trusted advisors. Don't yank us out of the business with a secret bill that will slowly make its way on a national basis, if it is passed in New York.
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