When the government enacted some new rules about who is entitled to hire an appraiser to complete a market analysis on a property, there were many ramifications that were not initially considered. Now Fannie Mae and Freddie Mac have some mandatory guidelines, which again will have some positive and negative impact on the real estate housing market.
One of the new requirements is banks, mortgage companies or lenders are required to receive a copy of a real estate purchase contract and all addendums associated with the contract prior to completing an appraisal report. Why this wasn't a guideline from the beginning is beyond me. Any amendments to the purchase contract prior to the appraisal must be submitted to the appraisal company immediately.
Appraisals that only value a portion of a parcel are forbidden. The comparative market analysis by the appraiser has to include the entire parcel of the subject property or parcel of land. The key word here is "entire".
REO and foreclosed properties MUST be included as comparable properties. Previous guidelines allowed the appraiser to exclude these numbers.
You would think "common sense" would be considered in any new rules or guidelines. Here is another new guideline that is mandatory. If the appraiser has any financial interest in the transaction, the appraisal has to be verified by a third party who is "arms-length" from the transaction.
Any structural defects or abnormal repairs found with a property must be corrected before an appraisal company finalizes the market value of a home or parcel. FHA created the 203K loan to address these concerns.
Supervisory authorities can no longer sign off on completed appraisals without reviewing the subject property themselves. The supervising appraiser has to personally review the property before agreeing to sign off on an appraisal completed by one of their employees.
Since this downturn in the real estate market, the Home Valuation Code was amended to cease "favoritism" or the "influence" of market values. Protecting the consumer was also taken into consideration. These are positive changes but I still foresee this putting a damper on the timeline that it takes to close a transaction.
One of the new requirements is banks, mortgage companies or lenders are required to receive a copy of a real estate purchase contract and all addendums associated with the contract prior to completing an appraisal report. Why this wasn't a guideline from the beginning is beyond me. Any amendments to the purchase contract prior to the appraisal must be submitted to the appraisal company immediately.
Appraisals that only value a portion of a parcel are forbidden. The comparative market analysis by the appraiser has to include the entire parcel of the subject property or parcel of land. The key word here is "entire".
REO and foreclosed properties MUST be included as comparable properties. Previous guidelines allowed the appraiser to exclude these numbers.
You would think "common sense" would be considered in any new rules or guidelines. Here is another new guideline that is mandatory. If the appraiser has any financial interest in the transaction, the appraisal has to be verified by a third party who is "arms-length" from the transaction.
Any structural defects or abnormal repairs found with a property must be corrected before an appraisal company finalizes the market value of a home or parcel. FHA created the 203K loan to address these concerns.
Supervisory authorities can no longer sign off on completed appraisals without reviewing the subject property themselves. The supervising appraiser has to personally review the property before agreeing to sign off on an appraisal completed by one of their employees.
Since this downturn in the real estate market, the Home Valuation Code was amended to cease "favoritism" or the "influence" of market values. Protecting the consumer was also taken into consideration. These are positive changes but I still foresee this putting a damper on the timeline that it takes to close a transaction.
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