Mortgage lending has seen big changes | TahoeDailyTribune.com

Mortgage lending has seen big changes

Don Kanare & Sabrina Belleci
Special to the Tribune
Don Kanare and Sabrina Belleci, ReMax Realty

The world of mortgage lending has changed dramatically in the post-recession era and that is quite evident with the way that property appraisals are handled these days.

Prior to the recession and the implosion of the banking industry, buyers could usually ask their lender to have a specific appraiser perform the appraisal of their property.

One of the primary reasons for handling matters in this way was so that buyers could be assured they would have a local appraiser who was familiar with their real estate market performing the analysis of the property they were trying to purchase.

However, there were some significant problems during the real estate boom, not the least of which was appraisers and lenders being in cahoots and artificially valuing properties higher than they were worth.

While this made it easy for transactions to sail through the underwriting process it contributed to the real estate bubble and eventually the collapse of prices across the country. Appraisers were simply pushing through reports at or above the contract purchase price even if the property had changed hands for a significantly lower value just a few months earlier.

There was a belief that the rising tide of real estate values would continue endlessly into the future and that there would be no harm caused by these inflated property appraisals.

In the post-recession world of real estate sales and mortgage financing, new regulations were put into place to prevent a recurrence of this phenomenon. As a result, lenders no longer have any input as to who will be performing the appraisal on a particular property.

In an effort to ensure that all appraisals are performed without any type of undue influence by lenders, buyers, sellers or agents there are new safeguards and procedures that must be followed as a part of the loan underwriting process.

Unfortunately, Incline Village and Crystal Bay are lumped in with the rest of Washoe County plus the Truckee/Tahoe area. As a result, it is possible that the appraiser who is assigned to a property in our community will be from out of the area — as far as Sacramento.

While we still have a small cadre of appraisers who live and work on the Nevada side of North Lake Tahoe, there is no guarantee that one of these highly qualified individuals will be assigned to appraise the property you are trying to purchase or sell.

About the only time that someone can select an appraiser to appraise a property is if the property is not involved in a sale or transfer to another person or entity.

For example, you are in the process of writing a new will and you want to establish the value of your assets. So, you and your heirs agree on whom to hire as an appraiser and you simply contact that person directly. If you and your heirs disagree over the appraisal report that was provided you can always hire another appraiser and get a second or even a third opinion.

Buyers who are purchasing a property all-cash will sometimes waive the appraisal if they believe that they are paying at or below fair market price. Sellers love to see all-cash offers with the appraisal waived because they know it is one less contingency that will need to be satisfied.

However, anyone getting a loan will need to go through the appraisal process with fingers crossed and hope that they get a local appraiser who will be able to perform a fair and accurate analysis of the property.

Don Kanare is the founder and Sabrina Belleci is the owner and broker of RE/MAX North Lake in Incline Village. You can follow their blog at http://www.InsideIncline.com.