Housing and Real Estate

After the federal takeover of mortgage companies Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) in September of 2008, the Federal Housing Administration (FHA) implemented new regulations that will alter the way appraisals are completed for home sales.

More specifically, the FHA has decided that appraisals must fall outside the jurisdiction of local real estate agents and brokers and instead go to a third party selected by the lender.

The goal is ultimately to remove any possible conflict of interest and ensure fair appraisals that accurately reflect home value. As a result, any new home loans that are insured through Fannie Mae and Freddie Mac will fall under the adjusted regulations.

Random Selection of Appraisers
The primary regulation that has begun reshaping the real estate industry is the change in how appraisers are selected.

In the past, those immediately connected to the sale of a house–including real estate agents and brokers–were able to select an appraiser who would then submit the appraisal to the lender.

With the changes, the lender is now responsible for choosing an appraiser randomly through an appraisal management company.

Many real estate offices have noticed that the result is appraisals that are considerably lower, a plus for the lender (who will not have to lend as much for the loan) but a challenge for the agent who will be receiving a commission that is lower than expected. (more…)