Fannie, Freddie act on appraisal concerns

A June survey of NAR members shows 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. 70% of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality.

“Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations, and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun says. “In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition–this is causing real NAR continues its efforts to address ongoing problems with recent changes to appraisal rules.

As a direct result of NAR’s recent meetings with the New York Attorney General’s office, the Federal Housing Finance Agency and both Freddie Mac and Fannie Mae last week issued new guidance to all lenders on the Home Valuation Code of Conduct.

The alert clarifies two very important points that were raised in meetings with officials.

First, it states that lenders should use appraisers who have clear experience in the geographic area. Second, it clarifies that appraisers are not prohibited from talking to real estate agents.

In addition to this guidance, both Fannie Mae and Freddie Mac recently posted extensive Q & As on its respective web sites, based on information that NAR provided when the code was first adopted in May.

NAR has posted links to all of this information at www.Realtor.org/HVCC.

Although NAR feels this is certainly a step in the right direction, more still needs to be done to address problems with the HVCC. The Association will continue to push for a moratorium on the Code.