A new rule specific to Appraisals has been added to the Equal Credit Opportunity Act.
Overseen by the Consumer Financial Protection Bureau,the change could afford home buyers crucial information on an important element of the mortgage process, the appraisal. Starting this week, lenders will be required to promptly provide mortgage applicants with a free copy of the appraisal and all materials used to make the appraisal determination.
Under the current system lenders are under no obligation to provide reports unless the are requested by the borrower. Broker's Price Opinions and automated computer valuations, in the past denied to consumers, are now included and must be provided to the borrower when the appraisal is completed or three days before closing, whichever is earliest. The new rule applies to first liens only and includes reverse mortgages and construction loans.
So what does this mean to the home buyer? Well, it can potentially mean a lot. Say you're in the middle of the purchasing process and the appraisal comes in under the agreed purchase price. With this new rule in place you and your real estate agent have the ability to evaluate the appraisal and all of the materials and reports that went in to arriving at that price.
What are the qualifications of the appraiser?
Does he live in the area or did he have to travel to perform the appraisal?
Did he take in to account renovations,additions and improvements?
Is the property square footage recorded correctly?
Were the comparable properties actually comparable to your property?
Many factors go into the valuation of a property. With this new rule, consumers now have the opportunity to challenge appraisals that they feel have been made in error.