Why does it take so long to get an appraisal these days?

Most are finding that the process of getting an appraisal done, has become tedious and expensive. Here’s just an example of why that is. Typically what happens is the appraiser receives their orders from an AMC (Appraisal Management Company) and then set the appointment. They then complete the appraisal per the AMC’s appraisal guidelines and send in the report. When the AMC’s guidelines are not met, the appraisal goes back to the appraiser for corrections based on the AMC’s in-house review.

After the corrections have been made, the appraiser resends the report to the AMC. The appraisal is sent into the lender and if necessary, goes back to the appraiser, via the AMC, to make corrections based on the lender’s guidelines. After the second set of corrections, the appraiser again sends the report back to the AMC.

Delays and complications pile up throughout this process, from appraisal orders sitting in queues before being assigned, to the AMC’s calling appraisers for price quotes or estimated turn times, to back-and-forth review processes.

This is just one example of the complications that lurk in the new appraisal process forced into action by the HVCC (Home Valuation Code of Conduct). It is important to note that this process is not required on FHA or VA mortgages. VA appraisals have always needed to be ordered through the VA website, but that is just so a computer randomly picks the appraiser. The bottlenecks of the HVCC don’t apply.

It is also important to note that since the inception of the HVCC, Fannie Mae has taken a loss, financially, whereas HUD, has been extremely profitable, which leads one to believe that if a borrower has the option of a conventional loan vs. an FHA loan, the HVCC is steering those borrowers to an FHA mortgage, so if you are a realtor or a potential borrower, don’t be surprised if your mortgage broker or banker suggests an FHA mortgage.

Rick Masnyk is manager of the North Smithfield, RI branch of 1st Metropolitan Mortgage and can be reached at 1-888-282-2835 or at rick@getanhonestmortgage.com.