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How the new appraisal law will affect homeowners!!
As if we didn't have enough bad news over the past 8 month, but here is more potentially damaging information. Attorney General Cuomo just drafted a new "code of ethics bill for appraisers that essentiall will cause even more havoc in the real estate market.
In the new bill, homeowners, investors, or potential buyers will have to pay higher costs to get an appraisal done on a home or property, also, novice appraisers will be enticed to work for cheap fees instead of normal charges, and most importantly, the new code will give enormous amounts of leverage to appraisal companies that work for financial instutions, because these companies are regulated by the banks themselves. They are essentially going to do as the bank tells them to do, or they will not have a job.
The NAR (National Association of realtors, have threatened to pursue a legislative block on the new code unless the attorney general agrees to an 18 month moratorium. This moratorium will help the market because it will allow appraisers to give a fair assessment of the properties value, based on market conditions. The last thing we need right now is less activity in the housing market because of low unfair home valuatiions by in-house bank appraisers.
Lawrence yun, the chief economists for the NAR, has said in so many words that the new appraisal law has in essence caused lower homes sales. This is because financial institutions are hiring appraisers who valuate properties based on the selling prices of distressed or discounted homes in the vicinity. The reality is that all homes are NOT in foreclosure or in a distressed situation, and it is not fair for someone who has added value to the community via up grades or additions to be severely penalized by in-house appraisers and financial institutions.
This type of behaviour in the real estate market will drive down prices to the point that many homeowners will end up in foreclosure because of lack of equity on paper. This will cause many banks to lose even more money because many homeowners will be forced to ask the bank for a short sale.
This is one of the worst pieces of legislation that we could have recieved at this time in our nations history, and we as investors, homeowners and potential buyers need to do all we can to voice our discontent for such a law.
We need to come out of this recession, not be forced to stay in it! This law should be postponed until a future date not right now. This will not cause anything to stimulate, and will only cause people to be pessimistic about buying or selling in today's tough market.
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