Fannie Mae and Freddie Mac Change the Appraisal Process

Freddie Mac and Fannie Mae will implement a revised Home Valuation Code of Conduct beginning May 1, 2009. In an attempt to increase the reliability of appraisals, the revised code builds on existing seller-servicer guidelines and will apply to lenders that sell single-family mortgage loans to Fannie Mae and Freddie Mac.

One major difference in the code is that lenders will be required to order appraisals from one central clearing house, which will in turn select an appraiser. The down side of such a process is that lenders will have little to no communication with the appraiser, which means there won't be an opportunity to have a discussion or touch base with appraisers before they go out to appraise the house. The new code is intended to help assure that borrowers, home buyers and secondary mortgage market investors receive fair and independent property valuations.

In some areas, lenders have already implemented these changes, and in the next few weeks and months, more will have to begin the process. The big thing to remember is that gone are the days of talking to an appraiser about the value. It is not unlike VA choosing the appraiser for you. I expect many home buyers to be reviewing internet places like Zillow to check on values.

As an agent, get used to looking closer at what similar homes have sold for with about the last 3 months as many areas begin to track downward. Recent appraisals I have seen are showing Pierce County (for example) condos tracking downward by about 1/2% per month currently. A drop of 6% is at least smaller than many parts of the country. A savvy seller will want to pick a "sell my home first" value that is slightly lower than the competition and get away from the idea of "my house being better than theirs".

With homes for sale on the market for 6 - 9 months, obviously, the sale price of that listing is NOT the price to compare to.

Best wishes for a prosperous NEW YEAR!

Additional Resources:
Federal Housing Finance Agency's: News Release
Federal Housing Finance Agency's: Home Valuation Code of Conduct
Free Individual Web Sites for your Listings: AgentSignIn.com
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