Second appraisal requirements for Home Equity Conversion Mortgages have been a longstanding process that can be especially harmful for borrowers affected by the policy. Additional appraisals layer extra verification on top of the first appraisal, increasing costs and creating uncertainty for loan officers and other parties about whether to proceed. While some organizations may earn more from second appraisals, the process is not viewed as beneficial because it hurts transactions and borrowers. Conventional lending addressed similar issues by using collateral underwriting scores and supplemental valuation tools to resolve appraisal challenges without routinely requiring second appraisals. Reported second appraisal impact for HECMs has been cited historically as 20% to 25%, but internal analysis shows 8.3% in Q1 2026 and 10.4% in Q4 2025.
"Over the years, we've seen a call for second appraisals impact upwards of 20% to 25% of transactions. We're not seeing that today inside our organization. I asked my data people to run an analysis on the first quarter of 2026. The share of HECM loans that we did a second appraisal on was 8.3%. The data for Q4 2025 was moderately higher at 10.4%."
#home-equity-conversion-mortgages-hecm #appraisals #reverse-mortgage-lending #borrower-costs #conventional-underwriting
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