GSIG LLC
On February 15th, 2010, the new Appraiser Independence (ML 2009-28) requirements for Federal Housing Administration (FHA) loans officially took effect. This implementation was originally planned for January 1st, 2010, but was delayed in order to provide the FHA and lenders with extra time to adjust systems to adapt to the changes.
These new guidelines are similar to the Home Valuation Code of Conduct (HVCC), which has been implemented since May 1st, 2009 for Freddie Mac and Fannie Mae loans. Under FHA’s rules, appraisers are required to receive reasonable compensation and cannot be affiliated with lending agencies. In addition, appraisers are required to have higher standards than before. Furthermore, under FHA’s new guidelines, mortgage brokers are prohibited from directly ordering appraisals for FHA loans.
Jeff Schurman, executive director of TAVMA, said the association’s members already have significant amount of FHA-certified appraisers. There are more than 51,000 FHA-approved appraisers nationwide. Based on the vociferous reaction to the HVCC, of which many Appraiser Independence guidelines were mirrored after, Schurman said he expects that mortgage brokers and independent appraisers with strong business ties to brokers and realtors will again protest these changes. He said there would likely be significant pushback and claims from many that the rules will create bottlenecks, shift work to less-experienced appraisers, and delay deals.
More than 60,000 local appraisers currently work with AMCs, which provide 60% of all appraisals in the mortgage industry. Schurman concludes that considering this; it stands to reason that AMCs will have a presence in virtually every market including working on FHA transactions.
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