Reverse Mortgage Appraiser Changes

The Home Valuation Code of Conduct that went into effect on May 21, 2009 has made changes in the role of lenders and appraisers alike. With the responsibility for ordering appraisals now placed on the lenders, it provides them with the opportunity to contact several appraisers in order to get the best price. As a result some appraisal companies feel they are doing more work but being paid less money. In addition appraisers are traveling farther in order to provide the appraisals thus creating the potential for an analysis that may be outside of the scope of the market because of their unfamiliarity of the area. For instance, an appraiser who lives even as little as 50 miles away may not be familiar with the market value of homes in the area and can turn in an appraisal that is substantially higher or lower than other homes in the area

When the lender hires an appraiser who is quite a distance away from the area there is the potential for error. This may cause the homeowner to ask for a second appraisal in order to assure they receive the most funds for their reverse mortgage. The appraisers are receiving lower fees yet the costs to homeowners have increased $100 in the past year alone with most of these costs being allocated to middlemen. Leaving the lender in charge of hiring an appraiser can be detrimental for both lender and homeowner. While a higher appraisal can be good for the homeowner, it can also cause havoc if he or she decides to sell or dies before the home has a chance to regenerate equity.

There is also some concern that with lenders ordering the appraisals the potential exists for appraisers to value a home so that they can make the deal work for both lender and homeowner. Being forced to work this way opens the door to potential hazards, especially if they return a figure that is higher than the home is really worth in order to create the deal. At the same time they are forced to keep the lenders happy if they want to keep working. Lenders do not have any loyalty toward an individual appraiser thus they will choose the one who charges the least amount of money and will turn in an appraisal that will generate the most business for the lender. This causes some appraisers to feel that the legislation will create the potential for increasing unethical appraisers while putting those who conduct fair appraisals out of business.

Issues related to appraisals are common within both the conventional and reverse mortgage industries. The farther an appraiser travels to conduct an evaluation the more likely it is for a mistake to occur. While the legislation was an attempt to curb the inflation related to the appraisal industry, there are more potential problems involved than those it was intended to solve. Presently some people in Washington are attempting to delay the passage of this legislation until 2011.

A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like more information, please call (866) 683-3690 or visit Senior Reverse Mortgage.

By: Robert Griffin

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