New Appraisal Rules Will Hurt Getting A Mortgage

Fannie Mae and Freddie Mac announced they will begin using collateral underwriting ( CU) effective 1/26/15 that will have an impact on a appraisal. Now home appraisers for mortgage refinance or purchase mortgages will be required to justify their comps against up to twenty recent home sales in the area registered in their software. This could slow the real estate market.

Normally, the appraiser locates three similar comps to your home and makes small adjustments for any differences between your home and the comp. They will also supply three more back ups to justify the appraisers value given to the property. But under the new guidelines, up to twenty properties recent sales date will be considered.

Mortgage Guidelines Already To Tough

There is a certain element of the past that keeps getting in the way of a good housing market recovery. The looseness is gone, the fraud has been eliminated and it is generally considered overkill now. Everyone agreed controls needed to be put in place but a slow process needed installed. Baby steps as we call it. Instead, the new regulations have went to the extreme.

Adding this extra requirement to the appraisal process is just another regulation that shows not much thought went into the process. In a newer area, this probably doesn’t hurt much. But take a home that is 20 years old and you will see great differences in the property mix on the neighborhoods. Some homes have aged and others have been remodeled and had additional square feet added to the original design.

Mortgage Lenders Will Be Blamed

When a borrower applies to a lender for a new home loan, they know it is a detailed process. But now the best borrower could fall prey to the new appraisal process. In the end, the Banks and other lenders will get the blame.