Travis Chiders urges new appraisal rules
It’s by far the hottest controversy in real estate this summer, and it could directly affect the value of your house — probably negatively — by tens of thousands of dollars.
The issue concerns low-balled valuations and the new rules guiding appraisers in price-depressed and rebounding markets. Consider these snapshots of what’s going on:
– In San Diego, Steve Doyle, division president for Brookfield Homes, is trying to close out the final 20 houses of a 120-unit single-family subdivision. Prices range from $340,000 to $350,000. But recently there’s been a major hitch: Appraisers assigned by banks are coming in with valuations $60,000 or more less than Doyle’s selling prices. The appraisers, who Doyle says are unfamiliar with local market trends, inexperienced or both, are using distressed sales — foreclosures and short sales of existing houses — as their “comparables.” Some of the distressed properties are in poor condition, and all of them offer fewer amenities, according to Doyle.
– In Wilmington, N.C., a loan applicant with a house in excellent condition, and an umblemished payment record, sought to refinance into a 4? 3/4 percent mortgage. She had purchased the property four years ago for $160,000 and made about $20,000 worth of improvements in the interim. Her loan application, according to Paul Skeens, president of Colonial Mortgage Group of Waldorf, Md., was “a slam dunk. Nothing to it.” The house was worth $180,000 to $200,000, accordingto a local realty estimate.
But when an appraiser with little local knowledge was sent in by a bank to value the house, he chose two short-sale properties that had both closed in the mid-$140,000 range, and one inheritance sale at about $155,000. The last property was “in horrible condition,” Skeens said. “I’d call it dog meat.” The deal-paralyzing appraised value that came in for the cream-puff refi: $149,000.
Bottom line: Be aware of the issue. It affects your equity, even if you’re not currently buying or selling. And watch whether Congress fixes the problem.
Two congressmen — U.S. Reps. Travis Childers, D-Miss., and Gary Miller, R-Calif. — have introduced legislation calling for an 18-month moratorium on the appraisal code. In identical letters to James Lockhart, the top regulator of Fannie Mae and Freddie Mac, and Cuomo, the National Association of Realtors also requested a moratorium and complained that the code is raising consumers’ costs, distorting property values and killing sales.
Asked for comment, Lockhart said through a spokesperson that his agency is “monitoring” the situation, and considers “the views of market participants important.”
www.connpost.com
7/3/9
Magnolia Tribune
