We are seeing appraisal issues surface much more frequently lately. These include many more underwriter requests for 2nd appraisals or formal appraisal reviews, as well as low appraisals.
A major reason for this is Fannie Mae’s increased scrutiny of appraisals in areas with a lot of appreciation. Fannie’s automated underwriter (DU) now calls for an appraisal review no matter what whenever significant appreciation is detected.
Appraisers are aware of this and some are appraising more conservatively as a result. Also complicating matters is the fact that many markets soften somewhat in the 4th quarter, and those comps make it harder to support values now.
What can be done? At JVM, we order additional appraisals at our own expense whenever we think an appraisal is done improperly (this is something very few lenders do). In addition, we purge appraisers from our panel if they provide consistently low quality work.
We are also educating and reminding Realtors and borrowers alike that they should expect additional reviews and higher appraisal fees (b/c of the reviews) in the future.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646