Insurance Against Faulty Appraisal Valuations
Low appraisals have been blamed for continuing to hamper the real estate market. So Kirchmeyer & Associates is debuting an appraisal warranty insurance program to its appraisal management services to protect lenders and investors against faulty appraisals.
The insurance will protect lenders and investors against default losses, including repurchase expenses, as well as “provides assurance to the investment community that the valuation will not ultimately impair the performance of the loan,” according to a release by the company.
Here’s how it’ll work: In cases where a “loan defaults, forecloses, or a loan repurchase demand occurs and a valuation inaccuracy is found, the insurer will pay the claim subject to the terms and conditions of the insurance policy,” according to the company.
The program will be operated in partnership with Group9 Insurance Solutions.
“Rebuilding the mortgage industry’s confidence is paramount in today’s market, and having a plan in place enables the industry to thrive,” James Kirchmeyer, Kirchmeyer president, said in a statement.
While mortgage insurance traditionally covers losses on default or foreclosure, it does not tend to cover appraisals. Lenders have increasingly cited flawed appraisals as hampering the recovery.
Source: “Kirchmeyer Adds Appraisal Insurance Against Faulty Valuations,” HousingWire (Nov. 28, 2011) and Kirchmeyer & Associates