On Friday, Freddie Mac released a bulletin to its lenders and servicers detailing revised practices for property appraisals. This was in response to new appraisal rules adopted by Fannie Mae and Freddie Mac entitled the Home Valuation Code of Conduct, that went into effect May 1 of this year. As a result of the HVCC, real estate agents started reporting that many property appraisals were coming in below the contract sales price. This was due to lenders relying more on appraisal management firms that employed appraisers with little experience in their local markets. Some appraisers didn't make the proper adjustments when using distressed properties as comparable sales for nondistressed properties.
(more...)
