Connecticut Select Homes | Fairfield County CT Real Estate

Have you recently bought a home or tried to refinance your existing one? You may be aware that there is a new set of rules regarding appraisals that have come in to effect as of May 1. Fannie Mae and Freddie Mac together with the Federal Housing Finance Agency (FHFA) and the New York State Attorney General have imposed a change in the appraisal rules. The intention of the new program which falls under the name “Home Valuation Code of Conduct” is to encourage more accuracy with appraisals and to enhance the independence of the appraisal process by having a separation between the appraisers and loan officers or mortgage brokers. With little or no contact between the two there would be no influence or pressure from the loan officer on the appraisal. Lenders are to use third party “appraisal management companies” that contract with independent appraisers around the country.

One of the major complaints with this new program is that the independent appraiser that is called upon by the management company may not even be in your state or may certainly not be familiar with the particulars of your location (although the appraiser must be licensed or certified by the state in which the property lies). Even more troubling, the appraiser hired may be relatively new to the field and willing to work for a lower rate.

The mortgage lender now requires that the appraisal fee is paid up front, rather than at the time of settlement. Plus, the charges may have add-on fees. These new rules imposed by Fannie and Freddie have many critics, not only with the consumer, but also with the mortgage brokers who have traditionally kept an eye on competitive pricing and have often used local appraisers. They are complaining that prices for appraisals have jumped 20% to 30% for consumers.

Not all loans are subject to the new rules imposed by the Home Valuation Code of Conduct so before you refinance on your existing home or begin your search for a new home speak with a mortgage broker who can advise you on what kind of loan you may be looking at. The loans that are affected by the “Home Valuation Code of Conduct” are conventional, single family loans which are originated on or after May 1, 2009 and are delivered to Fannie Mae or Freddie Mac.

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