Palos Verdes Home Sales :: Fannie Mae Causing Problems

This could be a real problem for Palos Verdes Home Sales and South Bay real estate transactoins, as this new process will (at best) delay closings for weeks at a time and inevitably kill many transactions.

Nationally syndicated and award winning real estate writer Kenneth Harney is reporting for the LA Times, that Fannie Mae is revamping the way it reviews appraisals.

Essentially Fannie Mae will begin (Jan 27th) re-reviewing every residential appraisal before loan docs can be drawn.

This despite the fact, “Dodd Frank” requires independent 3rd party licensed appraisers to perform appraisals in accordance with Fannie guidelines to begin with.

Editor’s Note: Standard operating procedure for EVERY investor is ALL residential appraisals are always reviewed by a staff “review appraiser”, who is licensed in accordance with national standards.

So the net effect of the new process is Fannie is creating a 3rd step in the appraisal process.

PALOS VERDES HOME SALES EFFECTED BY FANNIE MAE REGS

Appraisers and critics claim the 3rd step:

1) Will lead to slower and costlier appraisals (adding up to $200 per appraisal)

2) Will favor lower value comps, forcing sellers and buyers into needless disputes when appraisals come in below the agreed contract price which won’t happen until the 11th hour before the COE

3) Fannie Mae won’t give appraisers access to the “black box” databases it uses to value homes.

4) The black box will use as many as 20 “alternative comps” not used by the appraiser.

The typical appraisal currently consists of 3-5 comps.

Fannie Mae says appraisers’ concerns are overblown and that if problems arise it “will make adjustments”.

No word from Freddie on this issue.