I wrote a blog post on this subject in September. To get a better understanding of its foundation, see my previous post:
Essentially, the Home Valuation Code of Conduct prohibits brokers, realtors or loan agents from ordering appraisals through independent appraisers; instead, we will have to order through individual lenders’ specified departments, who will in turn order the appraisal with an Appraisal Management Company (AMC).
Here’s what we’re looking at so far:
- Beginning May 1, 2009, all lenders will have to adopt this Code for any loans that are sold to Fannie Mae (which pretty much encompasses any loan within the new loan limits: up to $625,500.00).
- Only two lenders have actually implemented this rule, effective January 5th. They both have four different approved AMCs, all with different price-points and turn-times. Unfortunately, none of these AMCs overlap.
- The AMCs have different turn-times and price-points that are based on your home’s appraised value. Currently, (“subject to change” of course):
- For homes up to $500k in value: $340 – $390 range
- For homes $500k-$1MM in value: $385 – $440
- For homes $1MM-$2MM in value: $440 – $540
- (Generally, because of my good relationship with my appraisers, they charge $350; so these staggered prices will lead to higher closing costs)
- Turn-times range from 5-7 business days
- (Lock and escrow periods will have to increase, meaning higher interest rates; I tend to get my appraisals within a 3-4 day turnaround time)
A main highlighted feature of the Home Valuation Code of Conduct:
- Technically, it states that the AMC can “update” the appraisal for another lender.
- This is my biggest concern, but if the appraisal can be written out to another lender’s name, this is good news. If I lock you with Lender A and then the market improves and I can get you a better rate at Lender B, I will lock you and move your file. It sounds like we’ll be able to easily make this change. But I have little doubt that AMCs will start charging simply to change the name of the lender for whom the report is written for. Also, if Lender A and Lender B use different AMCs, I’m sure there will be a charge for an appraisal review, which tend to run around $200.
I’m sure I’ll have much more to write about in regards to the Code as I learn more, so I’ll keep you posted.
I’m happy for AMCs. I’m just hoping that they’ll hurry up and take over our jobs as appraisers so we can move on to more profitable careers. They ask for 1/2 of our fees and that’s no problem. I’m perfectly willing to give up the entire fee if they’ll just do the appraisal work so I don’t need to. I haven’t had one yet to take me up on that offer.