Bridget's Blog

head_left_image

$525 for an appraisal? That darn lender!

$525 for an appraisal?  That darn lender!

In a featured post by Gabrielle Kamahele Rhind  Question It! "Who Got the appraisal fee and why?" Gabrielle questioned the fee for the cost for an appraisal on a lender's estimate.  While I commend Gabrielle for looking out for her client, I was very surprised at some of the comments left on her post making it seem like the loan officer was benefitting from this fee.

The government changes the regulations with regard to how appraisals are handled and as seems to be the typical response, the loan officers seem to be the scapegoat.  Your loan officer didn't do this, your government did.  The implementation of the Home Valuation Code of Conduct (HVCC) meant to provide better and more "honest" appraisals has done the following:

 

  1. Created Appraisal Management Companies (AMC'S) owned by the banks which has greatly increased the charge to the consumer while decreasing the the fee to the appraiser by 50% or more.
  2. Caused good, ethical appraisers to lose a the relationships they have built over the years since loan officers can no longer work with appraisers directly, referrals are apparently ripe for unscupulous behavior. 
  3. Caused major delays in issue resolution since all contact must go through a middle man.  Loan officers MUST order appraisals through the AMC's of the bank and are to have no contact with the appraiser throughout the process.
  4. Caused many appraisers to change jobs (I wonder how many of them are now realtors!). Those that have stayed have seen their incomes drop dramatically while the information required and the time involved in completing an appraisal, as well as continuing education requirements have increased.   
  5. The required appraisal management companies owned by the lenders charge an exorbitant portion as an "admin" charge of the appraisal fee charged to buyers and homeowners.  The appraisers often recieve 50% or less of the fee charged to the buyer.  Some banks have increased the cost of the appraisal so they can pay the appraisers more for their work, consumers lose!
  6. A dramatic decrease in the quality of the appraisal.  Often out of area appraisers who don't know the areas they are appraising provide comps that are no where near comparable (e.g. In one instance  a waterfront colonial completely re-built from the ground up less than 3 years prior was compared to 2 foreclosures, a company owned property and according to the MLS a property listed as  "Tear down and build your dream home"). 
  7. Increased the number of "final inspections" (at an additional cost of $75-$125 per visit) required for FHA and VA appraisals. Although I don't have any statistics on this, I have personnally noticed a large increase.

In conclusion, HVCC has caused at least a 50% increase to cost to the consumer in the cost of every appraisal, pushing good, experienced appraisers out of the business, lowering the quality of the appraisal and "dirtying" the process.  

Many appraisers have been cut out because of HVCC.  The April 1st rules regulating loan officer incomes are cutting out mortgage brokers and increasing the fees to the consumers because of Dodd-Frank. The next question is when (not if) our government, in their infinite wisdom, changes the rules for realtor's incomes, where will you be?  Will you be left standing with your mouth open in surprise.  Get ready, it's coming!

$525 for an appraisal?  That darn lender!

Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  Corridor Mortgage Group.   410-960-2061 EHO   bmcgee@corridormtg.com or marylandmortgagemama@gmail.com

 

If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

Comment balloon 4 commentsBridget "Mortgage Mama" McGee • April 16 2011 01:16PM

Comments

You are correct.  The increased costs of appraisal is directly tied to HVCC.  There is no way to add an extra layer of employees to act as the go between for the loan officer/processor and the appraiser.  I used to use the same appraiser almost exclusively.  HVCC came along and she is now no longer in the business after 20+ years.

The new LO compensation rule will also have a negative impact on the consumers.

Posted by Rodney Mason, FHA 203(k) & HomeStyle Renovation-AL,FL,GA, SC, TN (On Q Financial) over 7 years ago

Bridg.....you hit the spot on this one!  Amazing....the more that the government gets involved, the greater the cost becomes to the consumer.  All good points here.  I've posted on this quite a bit.  You are dead on with everything here!

Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) over 7 years ago

Bridget, I read Gabrielle's feature post and made this comment: It is always good to look out for the buyer and make sure the HUD 1 is correct. In reading some of the comments, I sure hope the discussion is done prior to settlement and not at the table.

One of the perks  working with a lender of your caliber, you are always watching out for the client. You have proven it over and over.

Margaret

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) over 7 years ago

HVCC, AMCs and the lenders have made it tough on appraisers and consumers. I had one this week that came in at $625.00. It was an SFR of 2000sf on a normal sized lot. What a crime!

Posted by Jeff Markell, Reverse / Conventional Mortgage Pro | NMLS 224196 (Geneva Financial, LLC) over 7 years ago

Participate