MortgageReal Estate

Appraisers are worried about allowing banks to delay appraisals until 120 days after a mortgage closes

Think appraisal deferral could expand beyond bank portfolio loans

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency surprised the mortgage business Tuesday evening when they announced that banks will soon be able to postpone getting an appraisal for 120 days after a mortgage closes.

The regulators said the change, which applies only to loans kept in a bank’s portfolio, is designed to expedite the process of getting funds to businesses and individuals.

Unsurprisingly, appraisers are concerned about the prospect of not being involved in the transaction until four months later. But that’s not their only concern.

As stated above, the appraisal delay only applies to portfolio loans, but several appraisers and appraiser groups told HousingWire Wednesday that they’re worried that the GSEs or the Federal Housing Administration could soon follow in the banking regulators’ footsteps.

“Appraisers play an important role for the housing market, especially during such an uncertain period where the market has changed dramatically over the past month,” Appraiser Ryan Lundquist told HousingWire.

“We are all making adjustments in life and business in light of the pandemic, but it’s important to let appraisers walk in their role as a system of checks and balances for the housing market,” Lundquist continued. “One of my concerns here is not so much this rule in itself, but whether this will serve to inspire the GSEs and decision-makers to back off using appraisers during this critical moment in the market. My sense is appraisers are ready and willing to work, so a ruling like this seems to be another example of a decision made without consultation from actual appraisers.”

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