Another nail in the coffin for appraisers. Death to consumer protection and mortgage investment security.

In one swoop of the pen, the Federal Deposit Insurance Commission (FDIC) Board of Directors, decided that home mortgages will no longer need to obtain an appraisal for loans under $400,000. With this increased threshold, apx. 72-75% of all home mortgage transactions will be exempt from the Dodd-Frank Act’s rules protecting the integrity of appraisals. The vote raised the existing threshold for mandatory appraisals from $250,000 to $400,000. Think about that. With the average price of a home in the United States at $229,000-$310,000 (depending on who’s numbers you believe), we are talking about the majority of mortgage loans. Who benefits from this change? You guessed it, big banks.

This change will allow banks to use mostly unregulated “evaluations” instead of federally regulated real estate appraisals. All I can think about is “Here’s Your Sign.” Bad things are destined for the American home buyer.

The bottom line is, appraisals protect consumers, mortgage investors, and the economyWithout them, consumers are at the mercy of big banks and people who are most often paid based on the size of the loan. It is an open invitation to fraud and corruption. When all the curtains are lifted, this new change was inspired by greed and profits. Consumers will pay the price and within a few years the results will be devasting. Is the sky falling? Today it may very well be…

 

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