Have you heard what FHA is up to?
New FHA Commissioner, David Stevens, announced that the agency will be changing their appraisal rules, and also including a 10% reduction in the amount of money senior home owners can receive from the reverse mortgage program.
The new guidelines, which will be instituted January 1, adopt some of Fannie Mae and Freddie Mac's "home valuation code of conduct"(HVCC). They also stipulate that FHA will not accept appraisals ordered by mortgage brokers, lenders, or anyone compensated on a commission tied to the completion of the loan. FHA regulations do differ from Fannie and Freddie, in that FHA wants appraisers to be paid fairly and in full.
Surprisingly, the commissioner states that the appraiser can disclose the amount of their fees, making this information available to the buyers and sellers in the appraisal report. This goes against traditional practice, where it is typically forbidden for appraisers to reveal their compensation.
This is informative for the consumer, as on average they are charged $400, when the appraiser, who works for the management company, is only paid $175-200.
Along with the disclosure of fees, Stevens is thankfully mandating what he refers to as "geographic competency." This requires appraisers have a familiarity with the local markets and access to data relevant to the home's sale.
This "Geographic Competency" is, in my opinion, imperative. Recently, I received an offer on a property and the buyer's mortgage company ordered an appraisal which came in under the contract price. It was revealed that the appraiser was not familiar with the area and resided and worked many hours away.
Does anyone else have a similar tale to tell?
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