It is coming. Loan officers will not be able to choose their appraisers anymore. This could mean big problems for you

That’s right, effective May 1st you will have to order your appraisals through a nationwide appraiser service.

Some lenders have already started using this service. What does that mean to you? If you live in a track community this probably doesn’t mean much. If you live in a custom community it means a lot. Let me explain how these nationwide appraisal services need to make money. They can’t charge you anymore money than they normally would so who do they squeeze? They squeeze the appraiser. An appraiser, who used to get paid $500 for an appraisal, will now get paid $200. Why would he or she want to do something this complicated for such a little amount of money? They won’t or they will do the least amount of work to get the appraisal done.

On top of that, we, as the loan office, cannot have a conversation with the appraiser at all. The reason for this is to prevent collusion between the loan officer and the appraiser. I can understand where they are coming from but my main issue and problem is the quality of appraisers who are coming into your home. The appraisers that we use at Samuel Scott are all professional and most of you know them because we have been using the same ones for years, they are like family. They dress professionally and know the areas that they appraise in. The nationwide companies may use an appraiser from Chula Vista to appraise Rancho Santa Fe. In Los Angeles you may get an appraiser from Thousand Oaks appraising Brentwood or the Palisades. This is going to be a nightmare.

Initially, people trust me when I tell you this, I know some appraisers who are getting out of the business because they know they can’t survive in this environment. My solution right out of the gun is if you have a custom home and need to refinance in the next couple of years, I would be getting in gear now.

Do not wait, do not pass go. Get Mark or myself on the phone. Let’s get the process moving forward and put something in long term to protect you. Eventually, in a few years I am sure this will get worked out but initially, it is going to be a nightmare. At Samuel Scott, we are putting together our own appraisal service which will help us when this program is rolled out. It will still be random on what appraiser gets the appraisal but at least it will be our quality appraisers who will be in the program.

The next question you are going to say is,” Todd, I heard there is not a lot of Jumbo money out there right now. How are you going to get my loan refinanced?” My comment back to you is “we have a few lenders who have come back in to the market which I believe will be for a short time at some fairly good rates in the short term environment, meaning the 3,5,7 or 10 year term. This new should not stop you from picking up the phone and calling Mark or I at 858-259-6070. I look forward to hearing from you. Have a great week.