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Tight restrictions extending to home appraisals

December 17, 2010 - Some buyers have found they even after they've met the tight credit and income restrictions required to secure a mortgage, appraisal challenges are threatening to derail their moving plans.

Lenders are ramping up their appraisal requests and having less faith in the ones they do receive, creating an environment where buyers lose the low rates they expected to lock in, reported Reuters. Appraisers themselves say the process overwhelms them with too many requests in a limited amount of time without appropriate pay. Lenders say they're stepping up their requests to protect themselves from loss and fall in line with new federal guidelines that some say puts more work on relatively inexperienced appraisers, which in turn results in additional checks and re-checks from lenders.

It can be a costly cycle. The report citied National Association of Realtors data which showed 10 percent of real estate agents have had a transaction canceled because of appraisals that came back too low. Thirteen percent said home purchases have been delayed, forcing families to alter their relocation or put it off altogether. The NAR's Walt Molony told the source that the climate was "overly restrictive."

A report from the Wall Street Journal added that homebuying could prove more challenging next year, when government officials propose measures that would reduce some buyer perks, such as the mortgage interest deduction and the presence of government-backed mortgage companies Fannie Mae and Freddie Mac.
 

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