Shift Control of Appraisals to Mortgage Borrowers: Some Further Thoughts

In our current housing finance system, appraisals are issued in the name of the lender to whom a prospective borrower has applied for a loan, and it is not transferable to another lender. In last week's article, I argued that mortgage borrowers who paid for appraisals should own them, and should be able to use them with any lenders to whom they apply.

The switch to a borrower-ownership model would reduce the number of applications that are aborted when the appraised value turns out to be too small to support the transaction. It would reduce the time required to execute purchase transactions. And it would facilitate mortgage shopping by eliminating the need to pay for multiple appraisals. In addition, the price of appraisals would fall for reasons discussed below.

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