Article Source: LiveVal Magazine
Faulty appraisals are still a problem for lenders and realty agents who are struggling to put together deals in the first place. Lenders are now requiring a handful or more comparables when three used to be sufficient. This makes it even more difficult to complete the valuation process, and this new system holds back the “ebb and flow” of the process.
There isn’t always a direct match in appraisals, so common sense needs to be used in situations that are a little more difficult. Transparency won’t help when it is impossible to achieve. Lenders agree with the realtors, but they also support their decisions as far as valuation regulations go. At NAR’s midyear legislative meetings, many of these points were brought up and contended as well as supported. Ron Phipps, NAR president, framed the Realtors’ problem concisely and said that they are “a raw nerve for us.” David Stevens, president of the MBA explained the lenders’ side and also noted that it is against appraisal standards for someone to value a property in an area in which he or she is not familiar. Martin Eakes, co-CEO of the Center for Responsible Lending, suggested that banks, servicers, and investors be barred from having ownership interest in appraisals or AMCs; he noted this as a conflict of interest. One problem remains: the market. Though underwriters have tightened their practices and are improving their work, potential buyers are getting nervous and intimidated by the current market, meaning improvements are going to be slow.