Appraisal Management Companies Causing Increase In Appraisal Fees

Although they've been around for years, appraisal management companies are profiting from efforts to prevent the kind of appraisal-related fraud that contributed to the real estate bust. In 2007, New York Attorney General Andrew Cuomo filed suit alleging that Washington Mutual had pressured appraisers to inflate home values so WaMu could make bigger loans. The suit led to a Home Valuation Code of Conduct that took effect May 1. With some exceptions, it bars direct contact between appraisers and loan originators, meaning appraisals must now be arranged by a third party — typically, an appraisal management company. Under the new code, the lender contacts a management company, which then hires the appraiser. The borrower pays the appraisal cost, which is divided between company and appraiser. The new code of conduct is increasing costs to consumers because both the appraiser and the management company are getting paid. However, borrowers don't know that because the closing statement shows only the appraiser.

Click here to enter the Tampa Realtors MLS (updated daily)
Register to receive an email every morning of today's new listings
Visit my website or contact me by email