Monday, November 21, 2005

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."

3 Comments:

At 7:14 PM, Blogger Chip said...

Awfully late, but better than never.

 
At 5:40 AM, Blogger Jim A said...

Well, the states could certainly require that any "seller's assistance" (cough)fraud(/cough) be recorded, but they have a vested interest in recording the highest possible sales price to maximize tax receipts. Actually, after this whole bubble collapses and foreclosures make the cover of Time magazine, I predict that most states will change the law so that ACCURATE prices are recorded on the deed.

 
At 9:16 AM, Blogger Chip said...

jim a -- good point. The revenuers are not very interested in punishing those who helped fill the city and county coffers, so they'll be tempted to get tough after all the money's been made. That would be absolutely typical.

 

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