Higher Appraisal Fees, Including Forclosure for Sale
May 13th, 2009 by 
Joseph Smith
Mortgage brokers and appraisers have been opposing the mandatory new real estate appraisal code launched by Fannie Mae and Freddie Mac. They said that the new appraisal system will increase the mortgage costs paid by buyers of homes, including a buyer of a forclosure for sale.
The appraisers and brokers also claim that the mandatory appraisal system will give most appraisal work to large management companies, which are typically run by the nation’s largest lenders like Wells Fargo and Bank of America.
The Appraisal Institute, comprised by 20,000 appraisers; the National Association of Realtors, comprised by many members who are also appraisers; and the National Association of Mortgage Brokers have criticized the new appraisal code.
The appraisers are particularly critical of the expanded role of management companies in the new appraisal system. The appraisers claim that the management companies pay low professional fees to appraisers and that they add about 30 to 50 percent extra charges to buyers of homes, even to a buyer of a forclosure for sale.
They cite the case of an appraiser who usually gets paid $325 for an appraisal ordered by a mortgage broker or a lender, but who will be paid by only around $175 to $200 by a property management company for the same kind of appraisal work.
Additionally, the buyer of a home, including the buyer of a forclosure for sale, will be charged with about $400 for the appraisal. The buyer is also required to pay the appraisal cost upfront through cash or a credit card. Before the implementation of the code, the appraisal fee is paid during closing.
The appraisers and brokers have also received information that the new code is being applied to FHA mortgage despite the exclusion of FHA from the new appraisal system.
The National Association of Mortgage Brokers started documenting the implementation of higher appraisal charges and other problems associated to the new appraisal code. One documentation involved large lender EverBank, which has already distributed its brochure on new appraisal fees that would be collected from home buyers, including any buyer of a forclosure for sale. EverBank even promotes its electronic appraisal system as an added benefit to buyers of homes, and even to a buyer of a forclosure for sale.
Appraisers and brokers have been warning buyers of homes, including a buyer of a forclosure for sale, about the increased appraisal fees.
