Appraisers feel pressure to hit the high
numbersBy Kenneth R. HarneyThe Nation's Housing
Have the real estate valuation shenanigans and inflated home appraisals that characterized the boom years disappeared from the marketplace?Are mortgage loan officers and realty agents — even individual home sellers — continuing to influence or attempting to interfere with appraisals despite new federal rules that ban such behavior?
Ask appraisers and many will tell you: It's still business as usual. Attempts at encouraging inflated appraisals continue to be commonplace, though in some cases the techniques have become subtler...........The obvious intent here, according to Frank Gregoire, immediate past chairman of the Florida Real Estate Appraisal Board and an appraiser in the St. Petersburg-Tampa area, "is really to find out: Will this guy play ball? Will he be cooperative when we need him?"
Gregoire says appraisers still routinely receive probing e-mails and phone calls from lenders and brokers designed to elicit the same information: Will an appraiser "pre-comp" a property with a sales contract pending at a specific price? Can a specific valuation number needed for a refinancing — which may be far out of line with current local property values — be reliably reached by the appraiser?
Part of the reason in today's market environment, he said, "is that things are tough, sales volumes are down, and some lenders know that they'll eventually find someone who'll cooperate" — often a newcomer to the appraisal field who badly needs an assignment. "It's not easy for some of them to say no, especially when they see business go to folks who everybody knows are playing the game."
Only when federal and state governments severely punish unethical appraisers and the people who pressure them "will all this start to get under control," Gregoire said. But he sees some signs for optimism: State regulators in Florida and elsewhere are cracking down increasingly on appraisers, even stripping away their licenses. And the new federal legislation authorizes financial penalties to be imposed by the secretary of housing when appraisers are found to have caved to pressure and cooked the books to inflate values.
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