Where does the appraisal fit into the mortgage process-and the mortgage crisis?
An appraisal is an independent valuation of your home. A licensed appraiser calculates the value of your home based on many criteria: location, condition, size, amenities, etc. Lenders use this number to help decide how much money they will loan you to buy the house. (For example, they won’t loan you $400,000 to buy a home appraised at $385,000 because if you default, the bank is left holding the house and cannot recoup its losses.) Appraisals also are used in refinancing. Some believe inflated appraisal values gave lenders a green light to lend more money than a house was worth. Others (including those in the appraisal industry) say appraisers were pressured to give high values so deals would go through, which allowed everyone involved to make money. Is the HVCC a law? No. It is optional. However, it is widely followed because any lender that sells its single-family home mortgages to Freddie Mac or Fannie Mae must abide by the code. Freddie Mac and Fannie Mae are shareholder owned, go
