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Consumer proposal met with Realtor opposition

Rule by Consumer Financial Protection Bureau would require lenders to provide free appraisals to buy

Posted: September 6, 2012 2:00 a.m.
Updated: September 6, 2012 2:00 a.m.

A proposed rule by the Consumer Financial Protection Bureau to require mortgage lenders to provide home loan applicants with free copies of written appraisals, would have little effect on securing truer property values, local experts said.

The rule, proposed in August, would ensure that consumers receive information prior to closing about how the property’s value was determined.

The rule would guarantee consumers receive important disclosures on how a lender determines the value of the home, making it easier for loan applicants to make informed decisions, said Richard Cordray, CFPB director, in a press release.

“Every buyer receives their appraisal direct, and if they want their agent to have a copy, we get them,” said Kathy Salisbury with Triple D Realty. “I have not had a buyer yet not get a copy from the lender. “

Consumer access is a good thing, Salisbury said. But, lack of access is not an issue people locally are experiencing. While buyers are charged for the appraisal itself, every buyer should have access to appraisals they pay for, she said.

Sam Heller with Keller Williams agree.

“There is nothing wrong with the current system. I have never known a lender who has not given the buyer a copy of the appraisal report if requested,” Heller said. “This is just more red tape and paperwork.”

When the appraisal guidelines changed after the fall of the market, however, Connor MacIvor with REMAX said Realtors watched as a new type of check and balance was put into place with the underwriting departments at the big banks.

Local Realtors have complained in the past that those changes, which nearly put independent appraisers out of business, resulted in poor home value estimates caused by appraisers who were unfamiliar with the Santa Clarita Valley market; or who felt pressured by lenders to bring in conservative estimates.

This proposal would further change the game, MacIvor said. Greater transparency would provide more in the way of “full disclosure.”

“No longer was the appraiser’s report viewed as being from sacred Scripture,” he said. “This disclosure process should do nothing but strengthen buyer/lender/Realtor relationships within the real estate home buying process.”

Realtors agree, however, there are a number of more pressing changes that need to take place in the real estate market to help consumers — and this proposal is not a key one.

“Government has taken lending and appraisals from one extreme to the complete opposite extreme,” Salisbury said.



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