Eroding Consumer Protection
The recent announcement from Fannie Mae that they will waive the requirement for residential home appraisals has caused quite a stir in the industry. Fannie Mae’s decision to waive appraisals during this time of soon to come recession and bank liquidity issues is both surprising and concerning, and could have serious implications for both consumers and financial institutions alike. With falling values across many markets combined with rising mortgage rates putting even more pressure on borrowers’ wallets, this decision could potentially put consumers at risk of taking out loans for homes worth significantly less than what was originally estimated by an automated valuation model (AVM). With sales volume tanking, there will be even less data available for these AVMs to utilize – making them increasingly unreliable as an accurate measure of value.
While the Appraisal Institute is notably silent on this issue, the Massachusetts Board of Real Estate Appraisers (MBREA) recently wrote letters to the directors of the FHFA and the CFPB, expressing their concern over how waiving appraisal requirements on residential homes could erode consumer protection, stall attempts to create diversity in the profession, and weaken safety & soundness of financial institutions & secondary markets. We applaud MBREA’s efforts at standing up for what is right!
- Fannie Mae Filed a Complaint Against Me - October 18, 2023
- Appraisers Pressured to Inflate Values Based on Race - August 16, 2023
- Foregoing Contingencies! But What About Fiduciary Duty? - June 27, 2023