In a report by Businessweek, subprime lender NovaStar Financial paid over $5 million two years ago to settle allegations over its supposed inflationary tactics that bolstered home prices during the lending boom. Now, the government is seeking fraud companies that committed the same violation but encourages the public to take its own measures against these crooks. Here are five tips to assure a legitimate, fair assessment on your home’s true value.
Tip #1: Check the license of the appraiser. Independent practitioners may lure you with their lower charges but make sure that they are registered with the state and have no violations in the past.
Tip #2: Mortgage banks don’t always have a better system of determining your house’s worth just because they’ve established a name in the industry. Washington Mutual loan officers committed appraisal fraud in 2007 where they pressured appraisers to submit higher values for their own interest. Obviously, the subordinates were coerced.
Tip #3. Verify the comparative reports of Fannie Mae or Freddie Mac. These companies have recently adopted a rule requiring appraisers to specify the components of their findings in more detail. That should keep you from having doubts whether you’re being duped or not.
Tip #4. When in doubt about your assessment, ask your appraiser to clarify things for you. It would also help to explain to the professional all the remodeling work that you’ve undertaken.
Tip #5. By May 1, follow the guidelines set by the government regarding home appraisals. With the aid of an appraisal management company, you will be provided with a middleman who will send an appraiser to assess your home’s value. That should eliminate the influence of the lender on the appraiser.
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