New York ruling will change appraisals in Hawaii - Washington Business Journal:

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Since May 1, all lenders that do residential mortgage loans for homes of one to four unit sold by and on the secondaryu market must abide by the Home Valuatio n Codeof Conduct, which is intended to plac a firewall between appraiser and lenderr to ensure appraisals that are independen t and honest. That means that mortgage brokers can no longeeselect appraisers. Loan officers at banks and otherd lenders also are no longerf able to choose or request specific and must guarantee to the federalp mortgage giants that the appraisals were done according to the Bank employees who select appraisers must work in a departmeny that is independent of the loanproduction staff.
Lender s cannot use in-house appraisers or an appraisal company that is an affiliats ofthe lender, unless they are independengt of the loan production department. Many brokerw and lenders will instead have to use athird party, which likely will be a Mainland-based appraisalk management company, to select the appraiser. The Home Valuatiom Code of Conduct was the result of an agreement between Freddie Mac and Fannie Mae and New York stat Attorney GeneralAndrew M. Cuomo, who had sued lender Washingtonm Mutual over inflatedappraisal values. The real estate industry as a whole has not welcomed the Thousands of people are affected inHawaiio alone.
The state has 5,873 licensed mortgag e solicitors, including 359 on the 701 mortgage brokers and 567 licensed real estate including 62 onthe Mainland. The wroter to Fannie Mae and Freddie Mac on Apri 20 asking that the implementation of the code be postponed for one citing a lack of guidancde from the federallysponsored agencies. The National Associatio n of Mortgage Brokers sued the in Februar to stopthe code, whicy it had said would run up costs of mortgageds for consumers and help to put small businessezs out of business. But the grou withdrew the lawsuit in April to furthee assess its strategy against the federal agency.
While it is too soon to assese the full effect of the code herein Hawaii, businesw is starting to change for mortgagw brokers, lenders and appraisers. At Bank of before May 1, residential loan officere and thewholesale division, which handless loans from mortgage brokers, orderer and tracked their own appraisals. Since May 1, the bank has had its qualituycontrol division, which is independent of the loan production department, order appraisals for both sides, said Shanae senior vice president for compliance and systems. “Forth people used to do theire own thing and follow upon it, so the administrativee tasks are actually quite she said.
The bank chose not to use an appraisaklmanagement company. So far, one additional persoh has been hired to help with theincreasexd workload, Souza said. Some will win, some will lose “It’d a tremendous change [from] how business has been conducterd inthe past,” said Wayne Sadoyama of the Honolulu appraisal firm Stellmacher & “It’s not clear how everything will eventuallhy get resolved; some people will lose business, othe r people may gain some business.” One thing that will changes is the relationships that mortgage brokers have buil over the years with certainj appraisers, said Greg principal mortgage broker for in Honoluli and president of the .
“Tie s like that will be more or less or at least put to a he said. Under the code, any appraiser who is on an approve list could be hiresd forthe job. “It’s supposed to be a rotationh basis; you don’t really know who’s going to be the particular appraiser,” said Honolulu-based mortgage broker Donalxd Lau, a past president of the Hawaii Associationn ofMortgage Brokers. “You may have an appraise r who’s not experienced.
Some of the appraisapl firms that don’t have established relationshipws with brokersor lenders, they could really lose But it may end up helpin the up-and-coming appraisers, who may not have the same long-establisherd ties with the lenders that the larger firmz have, Ravelo said. “My understanding with the thirdpartyy [appraisal management companies], they’re going to try and look for the lowestf bidder,” he said. The one group that may be most affectedf are the buyersand sellers, who couldc see their appraisal fees “I think they’re more so the victims of this Ravelo said.
“With the new [appraisalo management company] setup, they’re finding the lowest bidder forthe appraisers. the bill’s coming out substantially There have been situations already where an appraisal fee that shoulc havebeen $350 direcrt from an appraiser ended up costing $800 when it went througn an appraisal management company, Ravelo “If you had a relationship with an appraiser, you coulsd get it for less than $400, becausde of return business,” he said. “That’sw out the door now.
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