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Among the many causes of the 2007-2008 real estate crash was the injurious use of fraudulent home appraisals in determining home values for mortgages. The appraisal amount is an indispensable factor for a mortgage lender in determining how much to loan. If a property has been appraised for the wrong amount it can cause quite a problem.
Although home appraisers are supposed to function independently of lenders, during the bubble they were frequently hired directly by lenders. This created a situation where appraisers that created appraisals with values that were favorable to the lender, were given more work by mortgagers. There was an increasing pressure on appraisers to take care of their employers by producing the numbers they wanted to see. Unfortunately, this was detrimental to the buyers. As the market crashed, these properties lost value, not just actual value, but also the over-inflated value given by the appraiser. Mortgage holders had to foreclose on and try to sell many properties that could never be sold for anything near the original loan amount.
To avoid this, there are steps that a borrower can take to get an honest and legitimate appraisal of their home. Although the lenders usually have their own appraisers that they deal with frequently, the cost of the appraisal itself is usually charged to the borrower. As the borrower is paying for the appraisal anyway, there is nothing to prevent the borrower from hiring their own appraiser, as opposed to the one recommended by the lender. In fact, this is a very good move to make and if your lender refuses to accept this – assuming your preferred appraiser is legitimate and in good standing – then it should be taken as a red flag that the lender may have an ulterior motive.
Finding and hiring your own appraiser adds an additional element to the home buying process and is extra work, which is precisely why many borrowers are willing to accept the lender’s recommendations. However, if the entire mortgage is based upon an inaccurate appraisal, this can result in massive losses for the borrower in the future. For this reason it is worth the effort to take the time to find and hire your own appraiser.
Appraisers are easy to find in the yellow pages in any location. However, making sure they are legitimate and in good standing with the state takes a little more work. You can check with the Better Business Bureau and with the state attorney general’s office to make sure they are licensed. These two are also a good resource to find out about any criminal records and lawsuits. And of course, the company will be happy to provide references from all their most satisfied and happy customers.
It means more work for you, but hiring a legitimate firm to do an independent appraisal can save a borrower thousands of dollars and keep credit trouble away. Doing the extra work is well worth the effort.
Wendy Black Polisi is the founder of Credit Repair College and Finance the Dream. To learn more about how to fix credit fast Article Source:http://www.articlesbase.com/mortgage-articles/home-buying-getting-an-honest-appraisal-1308204.html
and getting a credit card after bankruptcy
please visit her on the web.
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