It’s a new hot button issue: Who chooses an appraiser for your listing?

With the recent break-downs in the mortgage industry, regulations are tightening all over the place. Last December Fannie Mae and Freddie Mac announced an adoption of a revised version of an earlier settlement. The original plan from last spring agreed to a set of strict guidelines that regulated appraisals on all mortgages.

The original procedures were heavily criticized by banks, mortgage companies and others, which led to the revised version. But this new plan is already being met with controversy and may end up as an issue in Congress.

First of all, mortgage brokers are banned from selecting appraisers. Realtors are also specifically forbidden from choosing appraisers.

Why is this a potential problem? Well, many appraisers have built up relationships with brokers, lenders and Realtors and they rely on them for sources of assignments. Without assignments, there’s no work!

People in the housing industry are worried that these tight regulations will lead to the mortgage business shifting away from smaller companies and independent appraisers in favor of big appraisal management companies. Opponents of this fear this will put quality of appraisals last.

It’s difficult in a tough mortgage environment — we need regulations, but we don’t want to get any further away from quality. We can expect this to remain a big issue, and several groups are assembling to protest the latest agreement.

Related...

• August 24, 2009 -- New Appraisal Rules are Complicated
• June 15, 2009 -- New Appraisal and Lending Regulations