How Does the New Appraisal Law Affect You?

New Home Valuation Code of Conduct (HVCC) regulations went into effect on May 1, 2009 and they are having an impact on all parties involved in a real estate transaction, including refinances.

The intent of the new regulations were to enhance the integrity of the appraisal process, and it begins with the ordering of an appraisal. Lenders can no longer choose an appraiser from their pool of appraisers. The appraisal must now be ordered through a third party appraisal management company (AMC) who will randomly select an appraiser. As a result, borrowers can expect a new "norm":

1. Appraisals now cost more due to the fact that they are handled by a management company. Expect to pay around $425 or more - they used to be $350. You might also experience additional fees that were never charged before such as fees for no-shows, or a higher fee for a more expensive home.



2. Expect to pay for the appraisal when it gets ordered instead of at the closing table. And you might also be required to pre-pay an amount in anticipation of a no-show.



3. If your loan application gets rejected, a new lender could require a new appraisal.



4. Because the appraisal process takes much longer going through a management company, be sure you allow enough time in your contract to allow for the new requirements. Rush files are going to be difficult at best.