By John Dudley
They’re making a list and they’re checking it twice. Fannie Mae recently announced that it has started collecting the names of shady appraisers. The government run agency won’t shut them down, but they will warn banks and lenders to be careful and will subject their appraisals to extra scrutiny before buying them.
Preventing Another Crisis
Even since the subprime mortgage crisis that caused the recession, Fannie Mae has been looking for ways to reduce the number of defective loans that it buys and bundles into securities. Accurate appraisals help to ensure that borrowers can pay back their loans without defaulting.
What Trustworthy Appraisers Do Right
Shoddy appraisers will often inflate the value of a home, misrepresent important details of the property, and use poor comparisons to form an inaccurate appraisal.
A good, trustworthy appraiser will faithfully record all characteristics, positive or negative, and provide accurate valuations by utilizing appropriate comparisons to similar properties.
The Damages Bad Appraisers Can Cause
In one case, an appraiser overestimated a home’s value by over $60,000, resulting in an extraordinary loan-to-value ratio of 110%! Not only is this dangerous for the the lenders, it can also be disastrous for the borrowers, causing them serious credit problems by enabling them to take out loans that they can’t realistically back up.
Currently, only four appraisers are on the list, but that number is sure to grow as Fannie Mae continues to scour its records.
To speak to a trusted and experience appraiser about any questions, comments, or needs you might have, feel free to contact me at any time—I’m more than happy to help.
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