The Foreclosure Report

More Accountability For Appraisers

The Milwaukee Journal has a report on changes in the appraisal process. "America's chief mortgage financiers are rolling out a new weapon in their war on fraud; property appraisal forms that require sales details on all home transactions. 'We expect these forms will result in more accurate and fully supported appraisals,' said Joseph L. Minnich, spokesman for Fannie Mae, the nation's largest mortgage buyer."

"By requiring details about appraisers' market research and the existence of private buyer-seller arrangements called concessions, the lending process 'will at least raise a red flag' about the chances of fraudulent activity, Minnich said."

"Stricter appraisal reporting requirements took effect Nov. 1 for Fannie Mae and Veterans Administration loans and will become mandatory on Jan. 1, 2006, for Freddie Mac and U.S. Department of Housing and Urban Development loans, Minnich said."

"'This is a step in the right direction,' Alan Hummel said. 'This puts the appraiser and (lender) on notice that they're accountable.' Paul Vozar agreed. 'If appraisers are able to do what we're supposed to do, check contract prices, determine the extent of concessions involved, this could really make a difference,' he said. 'If the seller makes a concession of $5,000 on a $75,000 house, it's now a $70,000 house.'"

"The new forms will require that the appraiser ask about behind-the-scenes deals and disclose what they know. 'And if a house is sold twice in a two-month period, with the sale price going from $80,000 to $100,000, you want to know whether improvements were made to increase that value,' added Vozar."

"Regulators can make appraisers ask about private sales terms, but they can't make buyers and sellers answer such questions, said Rick Staff. 'Seller concessions may not be public record. We have a strong confidentiality law in this state,' Staff said. If a home seller decides to keep mum whether the recorded price is the full price, he said, 'our agents have a duty to respect client confidentiality' and not disclose it either."

posted by Ben Jones @ 11:42 AM