Many lenders aren’t prepared to comply with new rules going into effect Friday governing appraisals on loans to be purchased by Fannie Mae and Freddie Mac, according to a company that offers software for managing the appraisal process.

Many lenders aren’t prepared to comply with new rules going into effect Friday governing appraisals on loans to be purchased by Fannie Mae and Freddie Mac, according to a company that offers software for managing the appraisal process.

Lansdale, Pa.-based Global DMS LLC says many lenders assume that if they are using an appraisal management company, they will be in compliance with the Home Valuation Code of Conduct Fannie and Freddie are implementing May 1.

That’s not true, says Global DMS President Vladimir Bien-Aime, nor is it the case that lenders must use appraisal management companies rather than independent appraisers.

But Bien-Aime warns that some lenders aren’t aware they can no longer pay for appraisals "COD," or collect on delivery, meaning they will have to manage prepayments in addition to managing the appraisal process.

Global DMS says the company’s OASIS Software allows lenders to order, locate, and manage appraisals using their own appraisers or Global DMS’ global appraisal network. The company says OASIS ensures compliance with the Home Valuation Code of Conduct, and simplifies the management and review process by reducing double entry, phone contact and faxes, and shipping charges.

The company is offering to waive set-up fees for lenders who want to start using the Web-based appraisal management software, and that Global DMS’ per-order delivery fees may be passed on to the appraiser or appraisal management company. …CONTINUED

Other companies with similar solutions include ServiceLink, which offers an Appraiser Panel Management (APM) product line that allows lenders to upload a panel of appraisers into VisionSM software that is managed and operated by ServiceLink.

ServiceLink says its Appraiser Panel Management product line allows lenders to comply with the Home Valuation Code of Conduct without abandoning relationships with appraisers they have developed over the years (see story).

An outgrowth of New York Attorney General Andrew Cuomo’s investigation into the bundling of mortgages into securities sold to investors, the Home Valuation Code of Conduct is intended to prevent loan originators from pressuring appraisers.

The code of conduct prohibits loan originators from ordering appraisals directly, requiring them to use other in-house staff or to go through an appraisal management company.

Some appraisers have questioned whether the code will be effective, saying lenders own an interest in many appraisal management companies and will still be able to exert influence on appraisals (see story).

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