Specialists in the home appraisal industry testify about the impact that new Dodd-Frank regulations are having on the single-family mortgage market. Appraisers are reporting that stricter requirements are artificially lowering prices and slowing down home sales.
Today's hearing, chaired by Rep. Judy Biggert (R-IL), focuses on new regulations replacing the Home Valuation Code of Conduct, introduced by Fannie Mae and Freddie Mac in 2008.
Under the former appraisal rules, lenders and sales agents were allowed to choose the appraisers who established the value of a home. Now, they must go through a third-party company, often unfamiliar with the local home market, and compare the appraisal with five or six similar sales, often resulting in lower than expected values. In the end, homeowners may be forced to cancel sales or renegotiate the sales price.
The hearing will also consider the federal role in regulating appraisals and the concerns of practicing real estate appraisers.