Many factors would change home value, making appraisals necessary. Appraisals are required even in the wake of uncertainty created by Coronavirus. Besides, a vulnerable age, among other factors, may expose seniors to scammers. They need notaries to witness the closing of the deal. Yet, social distancing due to Coronavirus has made these services remote-controlled.
Remote Appraisals
It is becoming hard to carry out appraisals because of the Coronavirus scare. Yet, this remains an essential step in a reverse mortgage application process. While keeping safety measures, appraisers are still helping lenders and borrowers to reach closure. Here are some of the alternatives to physical inspection that they are using:
- Online Appraisal- appraisers conduct their research on the internet. Research on all the homes in the applicant's neighborhood gives them a head start. They apply their experience and knowledge to estimate a value.
- Virtual inspection- involves the use of visual communication instead of visiting the home. If I were to do this, I would use Skype, for instance, to show the remote appraiser all corners of my house. Prospective borrowers are doing this, and the appraisers are responding to their questions. After that, they can come up with their estimation. This is almost like making a physical tour of the house.
Why An Appraisal Is Necessary
The appraisal process is a rule by the HUD, where appraisers have to do it twice in homes with over $2 million value. Appraisal helps to determine the loan amount in reverse mortgage based on the age of the occupant, amount owed and the value of the home.
They establish the physical state, which is very important in determining the value. If there are repair needs, they give advice on how to sort out the issues before getting the loan. Part of loan proceeds may go to covering the repair costs.
We May Not Have So Much Say on Appraisals
You can appeal based on three similar home sales of recent times in case you disagree with the value attached to your home. The commissioned appraiser can use those comparisons in reviewing the below-par appraisal. They may also explain why they cannot use them to do comparison.
Where you have prior experience with the appraiser assigned to me, and you did not approve of them, there is an option to reject them and request a new appraiser. In this scenario, however, it is good to take care not to form a habit of dismissing professional appraisers. Should this become a habit, it could erode the lender-borrower confidence.
Despite that, we have no control over who the appraiser is, and whether they appraise at home, or remotely. After all, the lender looks for the appraiser, not the other way round.
Remote Notaries
Notaries have approval as professional witnesses to sign official documents of critical value. Notaries have a legal mandate to do so by the law, both federal and state law. They come as a third party, at the closing of the transactions. Here are some remote notarization methods that are in use now:
- E-Notarization- several states have already legalized electronic signatures. This system enables the lender, borrower, and notary to sign in a secure network from wherever they are.
- Video-Conferencing- the lender, the borrower, and the notary can connect through real-time, in-camera. The first two parties sign and then send the documents to the notary for validation. This method closes an application virtually.
- Since these are extraordinary times, some closures take place while each party is inside their car- this could be in an open field anywhere. They all sign it turns and conclude the payments, without having to come too close to each other.
Remote appraisals and notaries are here to stay as long as Coronavirus is a scare. Safety comes first, even though we may not stop our essential daily activities. It seems we may have to adapt to the new style and live with it even in the aftermath. Even so, the decision to use remote appraisals or not, is the lenders. FHA loans, for example, do not allow for remote evaluations.
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