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artificially inflating values of properties

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"Q: Is it common for appraisers to boost home values to accommodate a lender?

A: The problem of appraisers artificially inflating values of properties on their reports under pressure from some lenders and brokers seems to be worsening. There is an increasing number of complaints regarding this unethical practice, and at least two lawsuits have been filed -- in California and New York.............................."


http://www.lvrj.com/real_estate/15698187.html
 

Terrel L. Shields

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pressure from some lenders and brokers seems to be worsening.
Is pressure worsening or are more appraisers simply doing it to keep from starving? It's a choice.

The insane thing is that lenders have to know that they are under heightened scrutiny from the regulators. How could they in the face of increased chance of going to jail, wish to tie themselves to the appraisers' performance? Once it is obvious that a lender is choosing appraisers based upon their ability to 'get the deal done' the lender has opened themselves to not only fraud but a conspiracy to commit fraud and are joined at the hip with the appraiser who does it.
 

Tudor

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I agree, it seems like it has gotten worse. For some reason I thought things would get better after all the bad news about lending came out. Those people must not be paying attention to the news.
 

Fred

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It's likely another example of Drucker's old 80-20 principle. Twenty percent of the appraisers are doing eighty percent of the inflating or deflating? (It may not be apparent to those whose primary practice is residential mortgage, but there are client groups that apply downward pressure).

I wonder about the intersection of two antithetical philosophies. On one side we here calls to purge the miscreants from our ranks. On other side is the whole art-not-science, opinion-opinion-opinion, the-markets-are-crazy argument that rises up in every regression analysis thread.
 

Tudor

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It's likely another example of Drucker's old 80-20 principle. Twenty percent of the appraisers are doing eighty percent of the inflating or deflating? (It may not be apparent to those whose primary practice is residential mortgage, but there are client groups that apply downward pressure).

I wonder about the intersection of two antithetical philosophies. On one side we here calls to purge the miscreants from our ranks. On other side is the whole art-not-science, opinion-opinion-opinion, the-markets-are-crazy argument that rises up in every regression analysis thread.


my bold.

Steve,

Many of the appraisal issues have to deal with facts (like reporting incorrect square footage, made up comps., saying remodeled when a house has been gutted, comparing a MH to a Stickbuilt, not reporting a recent listing, etc....) once appraisers like that are weeded out then things should be much much better.
 

Doug Meyer

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Indiana
What is your definition of boosting prices? Do you consider a boost of $2000 on a $100,000 a boost or not? What is the condition of the property, location and other matters also factor in. Some times an underwriter will "mention" that the client is top level credit so do we factor all these into account (that we know of) or not? Tough question, tougher answers.
 

leelansford

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Illinois
It's likely another example of Drucker's old 80-20 principle. Twenty percent of the appraisers are doing eighty percent of the inflating or deflating? (It may not be apparent to those whose primary practice is residential mortgage, but there are client groups that apply downward pressure).

I wonder about the intersection of two antithetical philosophies. On one side we here calls to purge the miscreants from our ranks. On other side is the whole art-not-science, opinion-opinion-opinion, the-markets-are-crazy argument that rises up in every regression analysis thread.

Steven, I suspect that the "20%" estimate is WAY too low.

Not every appraiser, for every assignment, BOOSTS the opinion of MV...but I do suspect that a percentage of appraisers FAR ABOVE "20%" do inflate opinions of value on occasion.

Lee
 

Fred

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Steve,

Many of the appraisal issues have to deal with facts (like reporting incorrect square footage, made up comps., saying remodeled when a house has been gutted, comparing a MH to a Stickbuilt, not reporting a recent listing, etc....) once appraisers like that are weeded out then things should be much much better.
So the path to utopia is paved with revoking appraisal licenses, and the revokers will be those who think square footage is either "correct" or "incorrect?" :)
 

Tudor

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Arizona
So the path to utopia is paved with revoking appraisal licenses, and the revokers will be those who think square footage is either "correct" or "incorrect?" :)

I don't know the exact path to Utopia, but if we don't go after the crooks that commit blatant fraud then I know we will never have a chance of getting there.

What path do you think we should take?
 

USPAP Compliant

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North Carolina
There are documented cases of fraud, forgery, made up data, ignored data etc. all over the state appraisal boards websites.....most often with nothing much done about it.

Those cases are not mistakes or errors they are felony criminal offenses. Those appraisers need to be revoked...they were found guilty. This has nothing to do with differing opinions of little consequence and everything to do with criminal activity found by state appraisal board investigation.

Please read the NC Appraisereports I have listed today in another post.
 
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