New York ruling will change appraisals in Hawaii - bizjournals:

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Since May 1, all lendera that do residential mortgage loans for homes of one to four unit s sold by and on the secondary market must abidse by the Home Valuation Codeof Conduct, which is intendedf to place a firewall between appraiser and lender to ensurew appraisals that are independent and That means that mortgage brokers can no longer select Loan officers at banks and other lendere also are no longer able to choose or requesg specific appraisers, and must guarantee to the federall mortgage giants that the appraisals were done accordingg to the code. Bank employees who selecty appraisers must work in a department that is independen t of the loanproduction staff.
Lenderw cannot use in-house appraisers or an appraisall company that is an affiliatr ofthe lender, unless they are independent of the loan productiomn department. Many brokers and lenders will insteard have to use athird party, whicu likely will be a Mainland-based appraisal management company, to select the The Home Valuation Code of Conduct was the resulg of an agreement between Freddie Mac and Fannier Mae and New York stat Attorney General Andrew M. Cuomo, who had sued lenderr Washington Mutual over inflatedeappraisal values. The real estate industry as a whole has not welcomesdthe change. Thousands of people are affectedc inHawaii alone.
The state has 5,8732 licensed mortgage solicitors, including 359 on the Mainland, 701 mortgage broker and 567 licensed realestate appraisers, includinbg 62 on the Mainland. The wrote to Fannie Mae and Freddiew Mac on April 20 asking that the implementatiob of the code be postponed forone year, citinb a lack of guidance from the federally sponsored The National Association of Mortgage Brokeras sued the in February to stop the which it had said would run up costs of mortgagesw for consumers and help to put smal businesses out of business. But the groulp withdrew the lawsuit in April to furtherr assess its strategy against thefederap agency.
While it is too soon to assess the full effectr of the code herein Hawaii, businessa is starting to change for mortgage brokers, lenders and appraisers. At Bank of before May 1, residentiall loan officers and thewholesalwe division, which handles loans from mortgage brokers, ordered and trackedx their own appraisals. Since May 1, the bank has had its quality control division, which is independent of the loan productiobn department, order appraisals for both said Shanae Souza, senior vice presidentt for compliance and systems.
“Forty people used to do theidr own thing and follow upon it, so the administrativew tasks are actually quite huge,” she The bank chose not to use an appraisapl management company. So far, one additionak person has been hired to help with theincreasee workload, Souza said. Some will win, some will lose “It’s a tremendou change [from] how business has been conducted in the said Wayne Sadoyama of the Honolulju appraisal firmStellmacher & Sadoyama.
“It’s not cleae how everything will eventuallyget resolved; some people will lose other people may gain some One thing that will change is the relationshipws that mortgage brokers have built over the yearsd with certain appraisers, said Greg Ravelo, principal mortgags broker for in Honolulu and president of the . “Tiese like that will be more orless severed, or at leasyt put to a minimum,” he Under the code, any appraiser who is on an approvedx list could be hiree for the job.
“It’s supposed to be a rotatiomn basis; you don’t really know who’sd going to be the particula appraiser,” said Honolulu-based mortgage broker Donald Lau, a past presidentf of the Hawaii Association ofMortgagew Brokers. “You may have an appraiser who’w not experienced. Some of the appraisal firms that don’t have established relationships with brokersor lenders, they could really lose But it may end up helping the up-and-cominyg appraisers, who may not have the same long-established ties with the lenderse that the larger firms have, Ravelo “My understanding with the third party [appraisap management companies], they’re going to try and look for the lowestr bidder,” he said.
The one groupo that may be most affected are the buyers and who could see their appraisakfees jump. “I think they’re more so the victimsa of this situation,” Ravelo said. “Witjh the new [appraisal management company] setup, they’re finding the lowest biddet forthe appraisers. However, the bill’s coming out substantially higher.” There have been situationsa already where an appraisal fee that should havebeen $350 direcf from an appraiser ended up costiny $800 when it went through an appraisal management company, Ravelo “If you had a relationship with an appraiser, you couled get it for less than $400, becausde of return business,” he “That’s out the door now.
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