Appraisals with little local knowledge
Complaints about lowballed appraisals — from builders, realty agents, consumers and mortgage companies — have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules — known as the Home Valuation Code of Conduct — into effect nationwide. Critics charge the new system is fostering the use of appraisers willing to work for low fees — sometimes 50 percent below previous standards — and who are willing to conduct home appraisals far outside their typical areas of activity.
Under the code, appraisers are now routinely assigned by appraisal management companies rather than being selected by local mortgage companies or loan officers. The management companies pocket as much as 40 percent to 50 percent of the appraisal fee paid by the consumer.
Frustration with the new system made its way to Capitol Hill late last month.
Help is on the way …
Two congressmen — Travis W. Childers, D-Miss., and Gary G. Miller, R-Brea — have introduced legislation calling for an 18-month moratorium on the appraisal code. In a letter to Fannie Mae and Freddie Mac regulator James B. Lockhart, the National Association of Realtors also requested a moratorium and said the code is raising consumer costs, distorting property values and killing sales.
HR 3044, Moratorium on the Home Valuation Code of Conduct
Introduced 06.25.09
To impose an 18-month moratorium on the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.
