One of the most frustrating areas of dealing with a refinance is often the appraisal. It can ruin your refinancing attempts and in the past, lenders have taken advantage of improper appraisals to justify offering more expensive loans. Luckily, with the Dodd–Frank Wall Street Reform and Consumer Protection Act, financial reform is here.
Regulating something like appraisals isn’t easy. Every city is different and so is every appraiser. There are several things that these new laws will do for homeowners and homebuyers alike:
- Trash the old Code of Conduct (HVCC) for appraisers that often caused more problems than it solved.
- Standardize those who manage appraisers through new regulatory procedures.
- Help to create a stronger base of independent appraisers.
These changes should help to make sure that your home is valued properly when you go to refinance. The largest lenders (Fannie, Freddie, and the FHA) have already incorporated these practices into their appraisal systems. This is pretty impressive for a law that has only been signed for five weeks.
The biggest change that consumers will notice is that the appraiser’s fee and the fee of the management company will be put on separate lines of your closing costs list. These new regulations should really help consumers to know what they are getting when it comes to the appraisal. Of course, when it comes time for the appraiser to look at your home, be sure to ask how long they have been doing the job and how many homes they’ve appraised in the area. Those are vital pieces of information when it comes to getting an accurate appraisal.
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