Mortgage Application Fees May Rise on Appraisal Reform

CNNMoney (03/12/08); Christie, Les
Borrowers can expect to see an increase in mortgage application fees beginning in 2009, when a new agreement that New York State Attorney General Andrew Cuomo reached with Fannie Mae and Freddie Mac takes effect. In an effort to crack down on inflated appraisals, Cuomo hammered out a pact that calls for the government-sponsored enterprises to buy mortgages only from lenders that use independent appraisers and for separate appraisals to be submitted for each lender that a borrower applies to. The cost will be passed on to consumers, and a borrower who chooses to shop around might have to pay as much as $1,000 to $2,000 in appraisal fees for loans submitted--compared to about $400 previously--and might even lose the lower interest rates they had locked in for 30 days because turning in applications individually is time-consuming. Some mortgage brokers also express concern that borrowers will want to work directly with lenders as a result of the agreement.