Mortgage Updates

As 2009 opens.... interest rates plunge, to enticingly low levels.  Many will be tempted to take advantage of potentially lower payments on their mortgage.  Tempting it is, and perhaps it will work.  But, as I have mentioned before... the declining values we have experienced (and are still seeing on a daily basis) will keep many folks bound to their current loan.

A change that has loomed on the 2008 horizon, and is being implemented in early 2009 is the Home Valuation Code of Conduct (HVCC).  The New York State Attorney General Kumo brought on this change through threat of law suits against Fannie and Freddie.  Siting improprieties and/or collusion between appraisers and financial lenders- leading to the financial mortgage debacle, the HVCC will require total non communication between the loan originator/processor and the appraiser. 

What this means is that neither the loan consultant nor the processor can communicate with the appraiser.  The appraisal needs to be ordered "blind" from the company's approved appraiser list or through a third party appraisal portal/service.  No information is given to the appraiser for a refinance appraisal over and above timing request, property address and customer contact information.  A target value is clearly out of the question.

For appraisers it means a perhaps more diluted book of business since the work order does not come directly from the lender (his customer) and is routed through the "list" of available appraisers on a "round robin" basis.  So instead of getting every available appraisal from this source the appraiser now gets every 10th, 20th or ?? appraisal.  In the case where appraisals are assigned by appraisal management firms, the fee paid to the appraiser is reduced and the fee to the customer is increased to cover the cost of the in-between service. Potentially this will serve to reduce the number of quality appraisers working in the industry as their income is severely hampered.  The consumer consequences are a bit different.

As the consumer, loan applicant,  it is likely that you will see a $25 - $75. increase in appraisal fees.  Additionally, where your loan officer could have called the appraiser and asked for a market trend survey (estimated range of value) that option is gone.  If you have refinanced before, you may have gotten a call from your lender stating that it was questionable IF your value supported your new loan amount.  -That is a thing of the past.  Now if you are considering a refinance, you will need to pony up the $$ for an appraisal.  No doubt about that.

So, for many in California declining markets, learning that it will be difficult to move into that lower interest rate, will now come with a price tag.

Your comments are always appreciated- Ingrid