Rule: Appraiser, lender have no contact

INDIANAPOLIS (WISH) - Getting a house sold in the current recession is often difficult and slow. Adding to the process is a new rule that affects appraisals.

In the past, lenders could hire an appraiser directly to estimate the value of a home. On July 1, a new rule requires no direct contact between the lender and the appraiser.

Angie Hicks of Angie’s List said, "And now they are inserting almost a firewall here so that the bank doesn't have the relationship with the appraiser. There's a 3rd party that picks them.”

The intent is to keep appraisers from inflating the real value of the home.

"There's great intention, but the process is a little flawed," said Mark Kuchik of Access National Mortgage.

Kuchik said the new rule has created a new industry, middlemen, known as Appraisal Management Companies, AMC's as they are known.

"So you've got, you tend to get more inexperienced appraisers. You tend to get appraisers who are not familiar with local markets," said Kuchik.

Kuchik said its adding costs for consumers and killing deals that should go through.

"We have a lot of those kinds of horror stories. Appraisers from Greenwood going to Kokomo, appraisers from Ft. Wayne coming down to Indianapolis," said Nick Tillema, Appraisal Institute's Hoosier Chapter.

Tillema said while consumers can't request a specific appraiser. They can insist on quality work.

"From the very start they need to demand that the lender or the AMC are going to use a professionally qualified appraiser to do the work," said Tillema.

If the appraisal comes back low, consumers can ask to have comparables looked at again. Or, they can ask for another appraisal. But it's likely they'll have to pay for it if they do.

It's important to note, the new rule applies only to loans that will be sold to Fannie May or Freddie Mac. It does not affect FHA loans.

Angie Hicks also wants consumers to know they have the right to receive a copy of any appraisal done on their home.