How long does it take to close on a home from time of contract to close of escrow? 2 months . . . .4 months. . . . .6 months? Even though there are some new and positive guidelines for Fannie Mae and Freddie Mac, these new requirements will most likely lengthen this time frame. I also see more confusion in the real estate market and finance industry. Let’s try and put some light on these new changes.
One of the new requirements is banks, mortgage companies or lenders are required to receive a copy of a real estate purchase contract and all addendums associated with the contract prior to completing an appraisal report. Why this wasn’t a guideline from the beginning is beyond me. Any amendments to the purchase contract prior to the appraisal must be submitted to the appraisal company immediately.
Appraisals that only value a portion of a parcel are forbidden. The comparative market analysis by the appraiser has to include the entire parcel of the subject property or parcel of land. The key word here is “entire”.
REO and foreclosed properties MUST be included as comparable properties. Previous guidelines allowed the appraiser to exclude these numbers.
Third party appraisal companies who are at “arms-length” from a transaction must verify and approve any appraisal completed by someone that might have a financial interest in the subject property. It seems apparent this should have always been a guideline?
If repairs are needed that affect soundness, structural integrity or livability, the property must be appraised subject to the completion of those items. This is where we got the FHA 203K loan.
A supervising or review appraiser may sign an appraisal that was completed by an employee but if they do, they must complete their own inspection of the property. They cannot rely solely on the word of the employee.
The main purpose of some of these new guidelines that are revised in the Home Valuation Code of Conduct, was to eliminate or stop any “influence” that may have been considered when determining the market value of a home. Although there are some valid and good changes, the parties to a transaction still need to be concerned if this will prolong transaction even more in the real estate market.
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