New changes with regards to appraisals will alleviate problems with banks sabotaging appraisals and lowering the value of the property below the purchase price. In some cases Buyers trying to obtain financing are told their banks are not using the value the appraiser came up with. Lenders now often double-check an appraiser's work by ordering a low-cost electronic valuation. The electronic version uses only readily available public records and no on-site inspection, making it less reliable than a true appraisal.
Banks get scared if the electronic version is lower than the physical appraisal, and they downgrade the true appraisal value to protect themselves even though it may jeopardize the actual sale and closing. Some banks ask the appraiser to explain the price difference, which can also delay closings.
The good news is Fannie Mae instituted a new rule that becomes effective on September 1st. After that date, banks selling their loans to Fannie Mae can no longer simply drop the appraised value to a lower level. In guidance issued June 30, Fannie Mae told its participating lenders that they must contact the appraiser to resolve disagreements. If that fails, banks must order a second appraisal.
In either case, lenders can't simply drop the original value that supports a sales contract, which should help consumers who are looking to receive Fannie Mae loans. Hopefully, once this is instituted, the rest of the industry will follow suit.
From SunSentinel article, July 17, 2010.