New York real-estate agents have been complaining about an influx of out-of-town appraisers who don't understand the intricacies of Manhattan real estate and have repeatedly low-balled prices in their appraisals, according to an article by Craig Karmin in today's edition of The Wall Street Journal.
"Under the new industrywide rules, mortgage brokers, real-estate agents and loan officers are banned from choosing their own appraisers. The result has been an increase in the use of out-of-town appraisers and - brokers and developers say - a greater likelihood of lower-than-expected property estimates that can put agreed-upon sales deals at risk," according to the article.
Ron Moelis, chief executive officer for L + M Development Partners, a firm that specializes in affordable housing, told The Journal that "it's gone from a very smooth process to a bumpy one," adding that "out-of-town appraisers can't get up to speed quickly enough on the city's complex regulatory environment, leading to repeat appraisals and a few deals falling through."
"The new rules went into effect in May 2009," the article noted, "after they were adopted by Fannie Mae and Freddie Mac as part of a settlement with the New York Attorney General Andrew Cuomo's office, which was examining their appraisal process."
According to John Milgrim, a spokesman for the attorney general's office, "Fannie Mae and Freddie Mac have found that the code 'has protected home buyers and has improved the independence of appraisers by reducing opportunities for fraud [and protecting consumers in the mortgage process,''' the article said.
"But many in the real-estate industry dislike the new appraisal rules." the article continued, adding that "House and Senate negotiators on Tuesday appeared likely to roll back at least some of these new appraisal rules, known as the Home Valuation Code of Conduct, as part of a federal financial-overhaul bill. The new appraisal rules are in effect nationally, but real-estate professionals say the impact has been particularly acute in New York, where appraisals can vary widely from block to block and many individual properties are unique. Measuring an apartment's square footage is straightforward, but determining how much value to assign to a partial park view or how much renovations will likely cost can require local knowledge, brokers say."
"Under the new industrywide rules, mortgage brokers, real-estate agents and loan officers are banned from choosing their own appraisers. The result has been an increase in the use of out-of-town appraisers and - brokers and developers say - a greater likelihood of lower-than-expected property estimates that can put agreed-upon sales deals at risk," according to the article.
Ron Moelis, chief executive officer for L + M Development Partners, a firm that specializes in affordable housing, told The Journal that "it's gone from a very smooth process to a bumpy one," adding that "out-of-town appraisers can't get up to speed quickly enough on the city's complex regulatory environment, leading to repeat appraisals and a few deals falling through."
"The new rules went into effect in May 2009," the article noted, "after they were adopted by Fannie Mae and Freddie Mac as part of a settlement with the New York Attorney General Andrew Cuomo's office, which was examining their appraisal process."
According to John Milgrim, a spokesman for the attorney general's office, "Fannie Mae and Freddie Mac have found that the code 'has protected home buyers and has improved the independence of appraisers by reducing opportunities for fraud [and protecting consumers in the mortgage process,''' the article said.
"But many in the real-estate industry dislike the new appraisal rules." the article continued, adding that "House and Senate negotiators on Tuesday appeared likely to roll back at least some of these new appraisal rules, known as the Home Valuation Code of Conduct, as part of a federal financial-overhaul bill. The new appraisal rules are in effect nationally, but real-estate professionals say the impact has been particularly acute in New York, where appraisals can vary widely from block to block and many individual properties are unique. Measuring an apartment's square footage is straightforward, but determining how much value to assign to a partial park view or how much renovations will likely cost can require local knowledge, brokers say."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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