March, 2009

Keeping Home Appraisals at Bay

Monday, March 16th, 2009

Appraisals Real EstateAppraisers are, most often than not, pressured by loan and mortgage officers to hype up home values. High appraisals guarantee that the house is worth more than the loan, which directly decreases the risk the bank faces.

As a result, home buyers are forced to pay more while the mortgage products they turned in to finance their homes eventually explodes, causing more financial turmoil.

In order to reduce the pressure and influence those loan originators impose on appraisers to overestimate homes, the Federal Housing Finance Agency (FHFA) created the Home Valuation Code of Conduct that will be implemented in May. These set of guidelines forbid any form of coercion, extortion, intimidation, bribery and collusion with appraisers into producing an overestimated and inaccurate appraisal of houses.

The new rules imposes that the complaints from consumers, appraisers, and the people involved will be looked over by the Independent Valuation Protection Institute set up by the FHFA. If a loan originator gets way too many complaints, he or she will be banned from selling the loans.