I appreciate the chance to be heard on this subject of appraisers and what we can and can’t do in the near future. I believe that the quality of the loan process will suffer greatly if these proposed changes are made. Those who seek to change this interaction between the appraisers and the loan originators do not realize the increased cost and the greater risk that will be placed on the borrowers shoulders.
When I order an appraisal I need my appraiser to know unless a certain value is there, to not proceed with the appraisal. Very frequently, in fact on almost every loan I ask them to run comps first to make sure the value is there. I don’t want to waste my time or the client’s money if the loan can’t be closed. Many times, they have both told me that value requested was not available. That’s what an honest appraiser should do. I believe the vast majority do just that. If the few bad apples aren’t playing by the rules, there are ways to deal with them. What about putting greater responsibility on the lenders who review the appraisals? If an appraiser does poor work or is using fraud to justify a value, the bank should refuse to accept his work. This is done all the time now, but needs to be a streamlined process with rights and responsibilities for both sides. I only use two appraisers that I trust to perform all my appraisals for me.
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When I closed a loan in Florida for example I used someone that doesn’t know how I work and vice versa. The last loan I did in Florida, the appraiser was almost a week late getting me the appraisal, had drastically cut the value to an absurd level in my opinion and then cursed me out and threatened not to send the appraisal even though he had already been paid. A terrible experience from start to finish. Why was it so bad? In my opinion it was that bad because I had no idea what the appraiser was like and how he conducted business. He also did not know what I expected of him. I don’t know of anyone that likes to do business with a person they don’t know.
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This happens occasionally now due to geography. It could happen every single time very soon!! It will be a new person that you must place your trust in for every single transaction. This can be what happens on VA loans when we don’t interact and order the appraisals. You are taking the factor of accountability out of the loan originators hands. The appraiser will not be as likely to put in the time to find the comps that justify the sales price/value. It’s also true that we have no protections against, lazy, unscrupulous or just plain poor appraisers. We will have none and certainly our customers will have no protections either. Once again the rule that is designed to help people will hurt them. They just don’t know it yet. And who do you think they will blame. Some nameless, faceless appraiser or the person (loan officer) who told them everything would work and that the loan they wanted, the loan they needed, the loan they had to have won’t work? We won’t even be able to tell them why if these rules are enforced. We will get into trouble for asking questions and making sure they did their job correctly.
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When I began this business I used a few appraisers before I selected the two I currently have chosen to use. They didn’t do a good job, they made mistakes and when I asked them to correct their mistakes they took days, sometimes weeks to even return a phone call. If this lack of contact is encouraged and even mandated; this will occur over and over from coast to coast. Make no mistake; this will directly affect the borrowers in a negative fashion. Loans will take longer to close, locks will be extended at a cost to the borrower, and many loans that should close simply will not. All because people in power don’t think through the ramifications of their decisions. Shouldn’t that be EVERYONE’S first interest?
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What’s best for the borrower?
more on the new appraisal changes
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Brent Mendelson
