While your loan is being reviewed by the underwriter, the home appraisal is ordered. This report is done by the home appraiser, who will do an interior and exterior inspection of the subject property to determine the value of the home to make sure it is adequate collateral for the loan.
If the appraisal is completed before underwriting is done, it will be included with the final loan application that gets submitted to the bank. If the appraisal is not complete before underwriting is finished, the appraisal will be added as a “condition” or missing document for the loan.
The appraisal process has changed drastically since May 1 2009, when Fannie Mae and Freddie Mac adopted the Home Valuation Code of Conduct (HVCC), which they created jointly with the Federal Housing Finance Agency and the New York State Attorney General. The HVCC attempted to address some of the dishonest practices that cropped up in the run up to the housing collapse, but unfortunately the changes have hurt borrowers in other ways and made the lending process less efficient.
Click here to read more about the trouble with the new appraisal process, as well as difficulties homeowners can expect to encounter.