New Appraisal Guidelines Could Harm Industry

Freddie Mac has instituted new guidelines in the appraisal order process, to be put into effect in September 2008.   These new guidelines will prevent Mortgage Companies from ordering their own appraisals. The excessive manipulation of appraisal valuations from Loan Officers have created a distrust in the industry. Appraisers are pulled in every direction from a Loan Officers and Lenders, many times coercing the appraiser to “meet value” or make alterations sometimes not even in the appraisers field of expertise. Although there is great value in insuring an unbiased opinion in evaluations, I am concerned about the selection process by third parties.

AMCs or Appraisal Management Companies contract appraisers to complete their opinions of value at a sometimes much lower rate than they would normally see if dealing directly with the lender.  This “middle man” scenario will almost certainly cause appraisers to have to do more work for less money. As you can expect, many experienced, honest,  and qualified appraisers who charge a premium for their services will find that they can no longer compete financially with the newly licensed, inexperienced appraisers who are used to performing appraisals for lower rates.  The most frightening consequence of these new guidelines may be that the appraisal industry itself will suffer a “dumbing down” at precisely the time when it needs it’s most talented representatives.

Marc Tesla