It’s out of control, wouldn’t you agree? The HVCC and Dodd-Frank rules seem ineffective in protecting the victim…the borrower. Instead, the result is a much more difficult loan process, paranoid appraisers, and borrowers who pay more for the appraisal and often times have to pay more than once. But that’s just my opinion.
I’m sure many of you agree. One such reader is my friend and OC broker Jeff Lazerson who writes for USA Today. In his latest published article entitled “Appraisal Hypocrisy Hits Home,” he claims its far worse for borrowers in terms of appraisal costs and resulting valuations. He says if you ask any veteran loan originator the number 1 reason transactions fall apart is low-ball appraisals, not what most people think which is tighter credit standards. As he puts it, “the emphasis is now on volume, not quality.” We’ve all seen this…an appraiser who is under-paid and now paranoid for getting scrutinized will low-ball the value when we can easily identify the overly conservative approach in his appraisal and counter it with different comps or an entirely new appraisal. What a waste of time and money since lenders have virtually no power to influence corrections.
Equally frustrating to me is the inability of many lenders to transfer an appraisal or accept the same. I don’t understand this. After all, the borrower is paying for the appraisal…it’s theirs…they own it. Yet many lenders will not accept a perfectly valid appraisal even if was performed just days previous by a respectable AMC. This is particularly true of Jumbo investors whose wholesale broker clients must require the borrower to pay for another appraisal…and on a jumbo loan it’s typically more expensive and guidelines require two original appraisals for loan amounts >$1m. In these circumstances I feel horrible for the borrower…it makes no sense!
I’d love to hear your feedback on this issue. Check out Jeff’s article on USA Today: USA Today “Appraisal Hypocrisy Hits Home” by Jeff Lazerson.