Saturday, May 02, 2009
Shuttle launch as seen from my office.
Fannie Mae rules changed again yesterday, probably to the detriment of home buyers. Like most well-intentioned policy changes, this one may cause more damage to an already-injured system. The Home Valuation Code of Conduct became effective May 1 and will force changes to the way appraisals are ordered for Fannie Mae and Freddie Mac loans. Rather than ordering appraisals from local appraisers who know and understand the local market, loan officers are now forced to order their appraisals from Appraisal Management companies who parcel out the appraisals to, in all likelihood, the low bidder. The intention of this new rule was to eliminate collusion between the lender and appraiser but the probable results will be slower loan approval times and appraisals done by out-of-town appraisers who don't understand the peculiarities of local markets. Result: failed loans.
Assumption is the mother of the screw-up.