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Will Property Values Decrease More With New Appraisal Rules

As of May 1st, 2009, the Obama administration has put into effect new rules governing real estate appraisals, and you need to know about them. These new rules apply to all loans sold to Fannie Mae and Freddie Mac, in other words, all conventional loans.

All appraisals must be ordered only by the lender, from the approved list of “Appraisal Management Companies”.

Borrowers must pay for the appraisal by credit card at the time the application is filed.

Brokers and loan officers are not permitted to pay for the appraisal. Previously, this was a fairly common practice.

Brokers and loan officers are not permitted to have any contact with the appraiser (All communications are facilitated through the lender or Appraisal Management Company.

There is a good likelihood that these new rules, like all government interventions will do more harm than good. The net effect may well be even lower real estate values than are already being dealt with. What these new rules clearly are designed to accomplish is a reduction of inflated values, so the banks are protected when they make a mortgage. I predict that with everyone now walking on eggs because of these rules, real estate values will be under appraised, further causing damage to the market. This represents yet another example of the shutting down of free enterprise with the government overreaching.

So, what is the bottom line? As always, you need to take care of your own financial affairs. If you have debt, now is the time to dump it. If you need help doing that, visit us at AMERICAN DEBT ENDERS

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Written By:
Steven Ciantro
Member National Association of Certified Credit Counselors American Debt Enders