Home appraisals are often the most stressful part of any home sale. You never know if your home is worth what you’re hoping to get for it. You never know if the appraiser is incompetent or even corrupt.
Fannie Mae is trying to make a change. From now on, lenders that sell loans to the GSE won’t be allowed to make changes to the appraisers’ valuations. This practice is known as “appraisal cutting” and is now banned.
The problem was, essentially, that banks were afraid of risk for several reasons and so tried to devalue the properties. Now, if a lender wants to change an appraisal, they have to go back and get the original appraiser to do it.
The lender can no longer revalue the property on a whim. The process will be much more rigid than it has been until now. Lenders can’t simply decide that they won’t take the risk on such a large loan. If the house is worth the money in the appraiser’s opinion, then that’s the end of the story.
So suddenly Fannie Mae is the public protector. They’ve taken on the Superman role, looking out for borrowers and keeping the “evil” banks out of our hair.
Seems like a sharp turn-around for Fannie Mae don’t you think? I’m not sure they don’t have a hidden agenda somewhere, but for now we’ll watch how this law plays out with banks.
Let me know what experiences you come across when doing appraisals. Together we should be able to find any holes in the plan, if they’re there.