Are the new home appraisal rules good for consumers?

Though I live in Canada and the mortgage lending practices are more secure here, I can shed some light on some of the issues you have mentioned.
The appraiser should ALWAYS tell you the fee up front. I run an office for an appraisal firm, and we deal with both Management companies & private clients. Dealing with a management company has it's ups and downs, they try and dictate prices, and set sometimes unreasonable turnaround times. BUT they also always pay you, unlike private clients, whose cheques are known to bounce. But back to my first comment, whenever I call a client that expected to pay at the door, I always state very clearly the cost (including taxes) that is to be paid.
Now the reason for paying at the door, and not after the client recieves the report is another issue. See once the client or the lender knows the value of the home, they are able to proceed with getting there money from the lender(bank), and we have no way of actually getting paid. And often if the home value is less that what they figure it is worth, you will never get paid, even though the work has been done.

With Appraisal Management Companies they act as the middle man, and the ones we work for do not allow us to have any contact with the lender. This prevents any sort of "pursuasion" that the lender may have.

This is a good thing, tho many of you may not see it yet. It prevents many swindly things that lender may do, and it holds the right parties accountable. And hopefully in the long run one will never hear horror stories of mortgages being packaged and resold mulitple times. I know it's kept us north of the border safe(er). Hope some of this sheds some light, and clears up some things.

Considering the potential loss that could come from buying an overpriced property, I think that money spent on an appraisal is worth it, similar to the value derived from a solid home inspection. You can get a sense of the value by looking at public records, such as tax values and recent sales -- that would give a good prelim value. And a consumer or investor can still buy a property for a price that is higher than the appraised value, it's just that now lenders have a better information to make a lending decision (and could more easily recoup losses if the borrower defaults).

Among the dozens of charges and fees I just paid to buy a house (title search, title insurance, county environmental fee, city fees [it was a foreclosure], etc.), the appraisal fee was a drop in the bucket. And dealing with yet one more bureaucracy was hardly a show-stopper considering I was already dealing with my real-estate agent, the seller's agent, the lender, the closing company, and, in my case, local authorities who needed to clear code inspections and vacant-building listings. Really, what's one more?

Besides, I see an independent appraisal as another kind of inspection. No one should buy a house without an independent physical inspection to determine if the house will stand up without endangering its occupants. So why not hire someone who will determine if the *value* of the house will stand up without endangering the pocketbooks of its occupants?

I agree that there's a huge benefit to have some separation between the bank and the appraiser.
However, if you're working with time constraints under the current rules, you have no way of working with an appraiser to get a report prepared more quickly - you're always working through a bureaucratic third party.
It's also much more difficult to make sure you're getting a good appraiser who actually understands the local area, as you're never able to figure out who they are. It's important to get an accurate idea of the value, but a blanket of comparables within a half mile radius won't help if you're looking at an area where small individual neighborhoods have a huge affect on property values.

I'm a banker, and we used to be able to personally choose appraisers when processing a loan request. We had to choose from our bank's "approved appraiser" list, but it was pretty open. This puts appraisers in a tough spot because if their client is the bank/banker - so they want to please and keep business coming their way by making values come back as high as possible. This can be done perfectly legally and without the banker's knowledge - but appraisers were incented to choose only the highest comps and overlook foreclosures, etc or else risk making the banker lose the deal and not getting future business.

Now we have to go through another independent dept of our bank to request an appraisal. They come back and give us three bids from "anonymous" appraisers and we blindly select one. I'm in the DFW metroplex, and I've ended up with appraisers who focus in an area 50 miles away doing homes for me.

We've had problems with appraisals coming back for far under what the market will support (i.e. you might have a home with multiple offers all over $500K but the appraisal comes back at $350K because of one foreclosure 6 blocks away - which happens to be in a totally different neighborhood/school zone/etc).

You can contest it but banks are reluctant to order multiple appraisals because to the OCC it might look like we're shopping around until we get a value we like. Appraisers are reluctant to change comps for the same reason.

Another issue that brokers now have to contend with is the appraisal that is ordered by the banks, are only good at the banks they are ordered with. So if you want to switch banks to get your borrower better financing terms, you have to order and pay for another appraisal.

I think the rule is silly. It seems they want to regulate the majority to straighten up a very small minority. We purchased in April 07 (in Pennsylvania). We attempted to refi this spring, and the deal died with the appraisal. We only wanted a lower rate, and why would I take a lower rate if we needed Mortgage insurance to get it?
Supposedly our house lost 25k in 2 years, in an area where the losses are not even hotting a 10% average. Did I mention we have 2200 square feet, and the closest comp was 1700, and they were not all sold comps? Yeah, so those houses were selling for an average of $145 per square foot, but mine is valued at $95? The appraiser left out a half bath, the new windows and other upgrades, which is hard to believe, because I gave him a copy of what was reported in 2007.
Our poor broker couldn't get a break and has apparently had 10-15 deals dies this same death.

Kathleen.. I wrote about that in my original article in the third paragraph.

If an appraiser hired by an appraisal management firm makes a comment that a minor repair is needed, then that likely means that the consumer seeking a refinancing would have to pay another fee for the follow-up inspection. This is where the underwriting process and the dangling of the notion that one is closer to getting refinanced works against the consumer. It is also the point in time when all involved turn the consumer upside down and shake out any lose change. So, in the end, even the poor appraiser still gets the chunk of money deprived him/her by the appraisal firm the first time around. But now the consumer's out-of pocket expenses spirals upward, while the process is prolonged.

The idea behind the new rules are great. Over-valued appraisals and collusion was a major problem. However, the rules need to be tweaked, and soon, because of the serious unintended consequences they are having to individuals and potentially the economy in general. There are numerous cases of deals falling through because of low appraisals. Not situations where an appraisal comes lower than the agreed upon selling price simply because that's the way the market is. But cases where the appraiser knows little to nothing about the locale, and frankly doesn't have to do a good job because he/she is not accountable in any way. They get their (now reduced, and thus even less incentive to do a good job) pay, accuracy be damned. Numerous appraisals are being made based upon median prices and price per square foot values for "comparables" that are in no realistic meaning of the word comparable in any way. "Comps" for a pristine, remodeled, beautiful home in a quiet cul-de-sac are frequently now run-down, bank-owned houses that need serious renovations and are on a busy roadway...but they happen to both be within a 1/2 to 1 mile and have similar sizes/configurations. Therefore someone trying to buy the pristine house for an amount that is appropriate even in this reduced market, STILL can't as the appraisal comes out way below the agreed-upon price since the selling price of the wrecked home is being used as a comp!

So keep the premise, but do something NOW to fix the unintended problems before the nation's economy is further distressed by holding down legitimately priced real estate sales.

The problem with the process is that there is no accountability for the appraiser. WE recently had a re-fi, and while we didn't need a large appraisal..... the fact was that the appraisal was plain wrong. Wrong information, previous sale info was listed with the wrong date and a price diff of over $20k lower. The appraiser comp'ed our 1.5 acre property with small .20 acre zero lot homes. He did not adjust for this. the appraisal was scheduled within 2 hours of contacting me and completed the next morning. Oh, and the appraiser also used foreclosed properties to comp with. We attempted for 3 weeks to contact this guy and he never called us back. I tried going through the appraisal mgmt firm and they were no help. This appraiser got the money and didn't even halfway do the job. If this was a sale or purchase, we most definately would have had to pay for a second appraisal. There is no accountability for the appraiser. He could be a newbie with no experience and you have no way to know if he is competent or not.