Dealing with Appraisals and Valuations – 2 Part Series

The past few years have seen significant developments in real estate appraisals and evaluation rules and regulations. Revised Interagency Guidelines, valuation credibility, AVM final regulations, rules under Reg Z, additional requirements finalized due to Dodd-Frank, including changed thresholds and some proposed additional exceptions from the requirements.

We also have new recommendations to follow regarding Reconsiderations of Value (ROVs). Finally, we now have the final rule covering Automated Valuation Models (AVMs). We’ve also heard a lot on bias in appraisals and valuations, and this promises to be a hot topic for some time to come.

Because breakdowns in appraisal practices have been partly blamed for the mortgage crisis more than fifteen years ago, regulators raised their expectations, meaning lenders’ appraisal and evaluation programs must include more elements than ever before. Some themes now emphasized by the agencies are independence of the appraiser, evaluator, reviews, and qualifications.

There are also restrictions against using AVMs, broker price opinions (BPOs), and tax valuations that have upset many in the industry. And how to deal with bias or other problems with an appraisal or valuation?

Must applicants be provided with the ability to contest the appraisal (hint: yes, through the ROV proves). How should this be handled? Are there additional requirements for FHA lenders, or those that sell loans to Fannie or Freddie?

Do you know the requirements? We’ll provide in-depth answers to all these questions and discuss all the details of the appraisal and valuation process, from both the lender and appraiser side of the game (including USPAP requirements), to provide a thorough understanding of what is required and what you need.