Last week when I was working with a client who is buying a new home in Danville and I experienced a new way of ordering appraisals through Wells Fargo. They are now going to a system in which they are partnered with a national company who is partnered with different appraisal management companies (AMC).  In order to get started on tis new loan I was required to get registered with any one of 4 different companies in order to get do business with them.  I then had to go to the main company and place my appraisal request and select which appraisal management company I wanted to do the appraisal.  The appraisal fee was higher than going to a direct appraiser.  $450 vs $375 normally. I did not have any way of contacting the appraiser or talking to them.  The AMC selected the appraiser and I was notified via email that they received my order and when it would be completed.  It did get done in 6 days, which is quick since they had told me the process could take as long as 10 days.

This new process will, unfortunately, hurt the appraisers that we have had long term relationships with.   The cost to the buyer is going to be higher as well.  We are still allowed to use our own appraisers anytme but we would then need a 2nd review from the AMC which costs $265.  This means the buyer will end up paying for TWO appraisals if we do not use this new system.

This is just another one of the ways the loan industry is undergoing reform and I wanted all of you to be aware of this because:

1)  This is going to be a process that most lenders will be going to by 5/1/2009.

2)  This could negatively impact the length of time it takes to close a loan because of the typical 10 day process to get the appraisal done.

3)  Fees are going to be higher for the buyers

I suppose the biggest reason why the lenders are going to this type of process is to eliminate fraudulent activities.  If they partner up with reputable AMC’s and the loan officers have no way of talking to the appraisers, then the likelihood of over inflation of value, straw buyers and sellers will decrease dramatically.

Hope you find this information helpful and when you go to get your financing for a new home here in the Tri Valley this year, you’ll be prepared for the higher fees and potential for a longer time required to close.  Make sure your Realtor is also aware of the new process so that it is accounted for in the purchase contract.  You want no surprises in the transaction which could cost you penalty fees, especially if your loan is for a bank owned home in the East Bay.  If you do not close on the date specified in the purchase contract your Realtor writes for you I have seen penalty fees as high as $150 per DAY imposed by the bank when the escrow on their bank owned property doesn’t close on time!

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