Appraisals and Valuations
Real estate appraisals can be the bane of a homebuyer’s or seller’s existence if one comes in lower than the agreed-upon purchase price of a home. In recent months, however, they have also emerged as a primary obstacle for mortgage lenders and loan originators as well, because of timing issues.
Mortgage brokers faced the brunt of the time delays, as their partnerships with wholesale lenders required their appraisals to be done through third-party Appraisal Management Companies (AMCs). Brokers have grown increasingly frustrated with AMCs and appraisers over their fees, as well as issues associated with service and communication.
Traditionally, home appraisals have been expected to take anywhere from a few days to a week to complete and have a report back, based on how complex the property is, how busy the appraiser is, and other factors. However, many brokers have complained about their appraisals taking multiple weeks to complete – sometimes forcing clients to miss closing dates. One reason is a shortage of appraisers compared to the red-hot housing market and the number of homes being purchased or refinanced because of historically low rates. Another problem, according to brokers, is the lack of oversight and accountability that appraisers have as independent contractors is a major issue that needs to be addressed through policy.
Heading into 2022, the FHFA will begin accepting more remote valuations on purchase loans, as opposed to having appraisers visit all the properties. This will enable appraisers to complete more loans in a timely manner – helping brokers and lenders, alike, return to their faster turn times.
The GSEs’ equitable housing finance plans expand the use of non-traditional appraisals, including AVMs, desktop and hybrid appraisals.