New York ruling will change appraisals in Hawaii - bizjournals:

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Since May 1, all lenders that do residential mortgage loana for homes of one to four units sold by and on the secondaryy market must abide by the Home Valuation Code of which is intended to place a firewallo between appraiser and lender to ensurr appraisals that are independentand honest. That meanx that mortgage brokers can no longerselect appraisers. Loan officerx at banks and other lenders also are no longetr able to choose or requestspecific appraisers, and must guarantees to the federal mortgage giants that the appraisals were done accordingt to the code. Bank employees who selectg appraisers must work in a department that is independent of the loan production staff.
Lenders cannot use in-house appraisers or an appraisal company that is an affiliate of the unless they are independent of the loanproductionb department. Many brokers and lendere will instead have to use athird party, which likely will be a Mainland-baserd appraisal management company, to select the The Home Valuation Code of Conduct was the result of an agreement between Freddie Mac and Fannie Mae and New York statde Attorney General Andrew M. Cuomo, who had sued lende Washington Mutual over inflated appraisal The real estate industry as a whole has not welcomedfthe change. Thousands of people are affectex inHawaii alone.
The state has 5,873w licensed mortgage solicitors, including 359 on the 701 mortgage brokers and 567 licensed real estate including 62 onthe Mainland. The wrote to Fannies Mae and Freddie Mac on Aprikl 20 asking that the implementation of the code be postponee forone year, citing a lack of guidance from the federall sponsored agencies. The National Association of Mortgage Brokers sued the in Februar y to stopthe code, which it had said would run up costd of mortgages for consumers and help to put small businessesz out of business. But the group withdreaw the lawsuit in April to further assess its strateg y against thefederal agency.
While it is too soon to assesa the full effect of the code herein Hawaii, busines s is starting to change for mortgagew brokers, lenders and appraisers. At Bank of Hawaii, before May 1, residentiapl loan officers and thewholesale division, which handles loans from mortgage brokers, orderer and tracked their own appraisals. Since May 1, the bank has had its qualit ycontrol division, which is independent of the loan production department, order appraisalzs for both sides, said Shanae senior vice president for compliances and systems. “Forty people used to do their own thing and folloaw upon it, so the administrativse tasks are actually quite she said.
The bank chose not to use an appraisalkmanagement company. So far, one additional person has been hiredd to help with theincreaserd workload, Souza said. Some will win, some will lose “It’s a tremendous change [from] how business has been conductedd inthe past,” said Wayne Sadoyama of the Honolulhu appraisal firm Stellmacher & “It’s not clear how everything will eventually get some people will lose business, other peoplr may gain some business.” One thinbg that will change is the relationships that mortgagse brokers have built over the years with certain appraisers, said Greg principal mortgage broker for in Honolul and president of the .
“Tied like that will be more or less or at least put to a he said. Under the code, any appraiserd who is on an approved list could be hire d forthe job. “It’s supposed to be a rotatiom basis; you don’t really know who’es going to be the particular appraiser,” said Honolulu-based mortgagew broker Donald Lau, a past president of the Hawaio Association ofMortgage Brokers. “You may have an appraisert who’s not experienced.
Some of the appraisao firms that don’t have established relationshipd with brokersor lenders, they could really lose But it may end up helpinf the up-and-coming appraisers, who may not have the same long-established ties with the lendera that the larger firms Ravelo said. “My understanding with the thirdparty [appraisal managemen t companies], they’re going to try and look for the lowes bidder,” he said. The one group that may be most affectee are the buyersand sellers, who could see theirt appraisal fees jump.
“I think they’re more so the victimz of this situation,” Ravelo “With the new [appraisal management company] setup, they’r finding the lowest bidder forthe However, the bill’s coming out substantially There have been situations already wheree an appraisal fee that should have been $350 direct from an appraisef ended up costing $800 when it went througjh an appraisal management company, Ravelo said. “If you had a relationshil withan appraiser, you could get it for less than because of return business,” he said. “That’ds out the door now.
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