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NAR calls for suspension of rules governing Fannie, Freddie loans
Interesting...
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NAHB is calling for new guidelines for appraisals of properties in areas with large numbers of distressed properties, that would include giving appraisers the option of expanding the geographic area or time frame for eligible sales to get a more representative take on home sales in the area.
Because appraisers can't inspect the interiors of many properties that are used as comps, they may not be aware of maintenance issues or damage that are common with foreclosed properties, NAHB said. The failure to adjust comparable values of foreclosed and distressed homes often results in the undervaluation of new homes, the group maintains.
In a June 22 letter to the federal regulator that oversees Fannie Mae and Freddie Mac, NAR placed much of the blame for problematic appraisals on the Home Valuation Code of Conduct -- new rules governing appraisals conducted on loans slated for purchase by Fannie and Freddie that went into effect May 1.
"Our members are reporting that (appraisal management companies) are giving appraisers assignments in areas where they lack geographic competency," NAR said. "For a variety of reasons, appraisers may feel compelled to take these assignments."
Inman News columnist Kris Berg, a San Diego-based broker-owner, addressed the issue in a recent column.
The Home Valuation Code of Conduct was a "noble" idea, Berg said. But "it's mostly serving to derail a lot of our traditional sales as underpaid and overworked appraisers apply the new 'Random Valuation Method' to homes in neighborhoods they have never heard of before" -- sacrificing the careers of some established, veteran appraisers in the process, Berg wrote.
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