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The new appraisal regulations that went into effect earlier this year were designed to protect consumers from inflated appraised values on homes because lenders would no longer be able to ’push’ appraisers to give them a higher value.  When the market was hot, a lender would ’suggest’ the value the home should appraise for to ensure that the deal would fit the lender’s program. Also, prior to the guidelines changes, many appraisers worked directly for the lenders and were, therefore, more incline to follow the lender’s suggestions.  After the bust, many homeowners discovered their home could not reasonably be valued for the price they paid and were, at times, upside down in their mortgage, meaning they owed more than the home’s value.  While other factors contributed to lower values in many of the nation’s markets, inflated appraisals were a factor for many homeowners. 

The new guidelines, designed to protect the consumer, are now having just the opposite effect.  With the significant drop in interest rates this year and a very tight economy, many homeowners, wanting to refinance to save money, discovered that the new appraisal guidelines are working against them again.  

Appraisals have to be ordered through a third-party, which often results in an appraisal being assigned to whoever can get the appraisal done the fastest.  The changes in the forms and guidelines have also resulted in a significant increase in the cost of the appraisal.  While there are many professional appraisers with a strong sense of integrity, there are still a lot of appraisers that are simply sloppy and fail to be conscientious about their final report.  Again, if the appraiser ‘assigned’ doesn’t know the area, isn’t familiar with the market and doesn’t look for appropriate comparables, the homeowner is the one that suffers the consequences. 

Next, Steps you can take to make sure you get a fair appraisal! 

What are the benefits of the NMLS?  There are many.

First, all state mortgage regulators have access to one uniform set of data for any given mortgage company and the individuals associated with it. Now, there is no way for a “bad apple” in the industry to skip town and attempt to get licensed in a new state without being detected. Second, it streamlines the mortgage licensing process for mortgage companies throughout the country. 

In addition to the standardized “MU” forms required for registration in the NMLS, each state will also have its own specific set of requirements such as fingerprint cards, bonding, financial statement formats, net worth, mortgage industry experience, pre-licensing education, pre-licensing testing, in-state offices, loan officer licensing, continuing education, dual employment restrictions, compensation format requirements, etc. These additional requirements will all have to be satisfied in order to be licensed in any particular state.

The NMLS only provides company users with a list of state-specific documents that must be submitted as part of the mortgage licensure process in any given state. The NMLS does not provide any information relating to state licensing laws. Given this, ALL mortgage companies MUST read and understand state mortgage licensing statutes and administrative rules PRIOR to starting the mortgage licensing process in any state. Not doing so will either lead to very expensive mistakes or substantial delays in licensing.  Remember, state regulators still make the licensing decision!  Keep in mind, the NMLS is not a regulatory body! It is only a central repository of licensing information. All licensing decisions will continue to be made by individual state mortgage regulatory agencies.  For more information about the NMLS, pre-licensing and continuing education courses, visit www.mortgagetrainingconcepts.com.    

The National Mortgage Licensing System and Registry or NMLS, was created to maintain a centralized mortgage industry database that can be accessed by mortgage regulatory agencies around the country. In order to accomplish this task, every state which has agreed to join the NMLS has foregone state-specific application forms in favor of a uniform, national set of application forms. These national application forms, entitled MU1, MU2, MU3 and MU4, involve information related to the mortgage companies, their principals, branch offices and loan originators. The original paper forms that bore these names have been replaced by online application forms. New mortgage companies will file original license applications using the online NMLS registration process, and all existing, licensed mortgage companies will eventually need to transition to the online registration process to upload their information. The transition process for existing licensees will typically be handled during the license renewal process.