By Brian Coester
Coester Appraisal Group
How to Promote Smooth Appraisal Transfers
When better deals come along, avoiding valuation roadblocks is critical
into portability roadblocks. to avoid
such problems, brokers should monitor
the transfer request from start to finish.
Also, as of press time, HVcc was set to
end by Oct. 20. that, however, doesn’t
mean its guidelines won’t persist. See
sidebar for more information.
According to HVcc guidelines, if a
broker submits a loan to one lender,
which orders an appraisal, but then
decides to submit the same loan to another lender that offers better terms,
the appraisal obtained by the original lender can be used by the second
lender, assuming they both comply
with the requirements of HVcc.
In theory, the original lender would
ask the mortgage broker to fill out
a transfer form and then send that
form to the appraisal-management
company (AMc), which would release
the appraisal report to the second
lender. this linear transfer represents the ideal. Unfortunately, many
things can go awry.
For example, the original lender could
refuse to release an appraisal report to
another lender. Or the second lender
could refuse to accept it.
In cases in which the original lender
won’t authorize the release, many brokers attempt to go directly to the AMc,
mistakenly thinking their request will be
honored. Although the AMc is responsible for releasing the appraisal to the
second lender, it can’t do so unless the
original lender authorizes the release.
HVcc guidelines state that a transferred appraisal must have the original
lender’s approval and name listed on
it. to be clear, HVcc rules don’t require
lenders to release appraisals. Nor
do they require lenders to accept the
original appraisal from another lender
— whether or not it’s in the original
the Federal Housing Administration’s (FHA’s) guidelines, meanwhile,
are more definitive. they stipulate that
a new lender must accept the original
appraisal in the old lender’s name. If
an FHA borrower switches lenders, the
first lender must transfer the case to
the second lender.
With one set of guidelines allowing
transfers and another requiring acceptance, things can get confusing. based
on market trends, it seems there’s an
equal chance that lenders will release
and accept appraisals.
Know lenders’ policies
Mortgage brokers can improve the likelihood that appraisal transfers will occur smoothly in a few ways. First, find
out the policy for appraisal transfers for
each lender with which you work and
favor lenders with a history of allowing
It’s imperative to learn the internal
policies of each lender with which you
do business. this can help protect bor-
rowers from potential snafus or addi-
tional appraisal costs, which can be
One of the main reasons for that
stems from lenders’ internal policies.
brokers would be wise to know about
those policies if they intend to avoid
glitches that can muck up their deals.
they also should familiarize them-
selves with other ways to promote
smooth and swift appraisal transfers.
HVCC and transfers
Although the rules for appraisal portability look straightfor ward, they can be
confusing. the Home Valuation code
of conduct (HVcc) allows for appraisal
transfers. It doesn’t, however, require
lenders to accept or release appraisals.
this can present a big issue when brokers find clients a better deal and run
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the Dodd-Frank Wall Street reform and consumer Protection Act calls for the
Federal reserve board to implement interim appraisal-independence standards
by Oct. 20. those rules will end the Home Valuation code of conduct and will
maintain appraiser independence.
the Federal reserve, the comptroller of the currency, the Federal Deposit Insur-
ance corp., the National credit Union Administration board, the Federal Housing
Finance Agency and the bureau of consumer Financial Protection will implement
final appraisal regulations jointly.
the new standards will address appraisal portability. they also will allow mort-
gage originators to ask appraisers to:
• Consider;more;property;information, including additional comparable
• Provide;details;or;explanations;for;the;value;conclusion; and
coercive action will continue to be prohibited.
critical when moving deals for the sake
of better rates or terms — or both.
After initiating an appraisal transfer,
stay involved in each stage of the process to make sure it proceeds smoothly
and quickly. Stay in touch with both lenders and with the AMc. Ask questions, get
answers and keep borrowers in the loop.
For loans being sold to Fannie Mae
or Freddie Mac, get an HVcc certificate
from the AMc. this will provide the new
lender with proof of appraisal-specific
HVcc compliance. this also can help
convince new lenders to accept appraisal transfers.
In addition, brokers should know that
transferred appraisals must be in the
form of a first-generation copy of the
original appraisal and not a second-generation PDF copy. After a transfer
is approved, the AMc must send the
appraisal directly to the new lender.
It should never be in the hands of the
broker, which would be an inarguable
violation of HVcc rules.
Although mortgage brokers are
barred from most parts of the appraisal
process, they can play a critical role in
preventing problems with appraisal
transfers. by staying abreast of appraisal rules and lenders’ reputations
— and by communicating early and often with all parties involved — brokers
can more easily move a client’s loan
upon finding a better deal. •
Brian Coester is cEO of coester Appraisal
Group, an appraisal-management company
that specializes in providing appraisals that
comply with collateral Data Delivery, Home
Valuation code of conduct and Federal
Housing Administration appraisal guidelines.
coester Appraisal Group has access to every
licensed appraiser in the country, handles
appraisals nationwide and offers a 100-percent
guarantee that appraisals are done correctly.
coester has been with coester Appraisal Group
for eight years. reach him at (888) 485-1999 or