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Seeking honest home values

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moh malekpour

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Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
Tougher state rules for appraisers take effect today, but inflated appraisals will remain a problem, an expert says.
Starting today, the educational requirements for California home appraisers will be tougher, but a veteran property evaluator who teaches how to spot fraud says the rules won't alter how many appraisers do their jobs.

The new rules require 67% more hours of training before appraisers are certified at various levels, and define more precisely the curriculum to be used. The regulations are taking effect about two months after California enacted a law making it illegal to pressure an appraiser to inflate a valuation.

But master appraiser Steven R. Smith of Redlands says the changes won't fix what he described as the main problem: high-volume appraisal companies' relying too heavily on computers and trainees rather than legwork and interviews.

At a recent mortgage-fraud seminar in Orange County attended by scores of appraisers seeking to meet the new requirements, Smith said it was common for appraisers to seek comparative prices, or "comps," that match clients' price objectives rather than perform the objective analysis that they are required to do.

If sales in an immediate area don't support the desired price, appraisers look elsewhere, perhaps to a higher-end neighborhood not much farther away, he said.

"We have an army of appraisers that don't know they're wrong," Smith said in an interview. "If you are trained to search for comps based on price, that's what you will do."

That won't change much until appraisers are allowed to take the time necessary for a proper evaluation -- typically a day or two -- rather than rush through two or three appraisals a day as companies often require them to do, he said.

During the housing boom, inflated appraisals could remain undiscovered as rising home prices quickly caught up with puffed-up valuations. But flawed appraisals encouraged recklessness and in some cases fraud, experts say, exacerbating foreclosures and lenders' losses once prices began falling.
 

Randolph Kinney

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Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Gee, I wonder who supplies the target value needed in the appraisal? :new_2gunsfiring_v1:
 

Mike Garrett RAA

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Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Beginning today, mortgage brokers in Colorado must be licensed, compete required training courses, and have a bond. Will it improve the profession? Maybe. Just look what licensing and mandatory education did for the appraisal profession.
 

Randolph Kinney

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Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
The target wouldn't matter if the appraiser did their job correctly.
We both know the appraiser would do their job more correctly if they did not have a target value forced on them by who? Who insists that appraisers "hit" a predetermined value or they won't get any more work?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Will it improve the profession? Maybe.
It will mean you will get paid because you can file a grievience against the broker with the regulators...It works pretty well in AR - they threaten to take the money out of the bond then suspend their license until the bond is replenished...but please note. You need to make sure that the MB that calls you IS licensed. We probably were getting 1 in 5 requests from on line companies who did not comply with state law and were not registered with the state securities commission.
The target wouldn't matter if the appraiser did their job correctly
too many felt that "correctly" means making the value and that is something which was not discouraged by the lenders certainly. The state has some culpability. They knew there was a problem but hey, everything was great, sales were great, property taxes were skyrocketing, life is good. Don't rock the boat. Play the game. Make your fee and don't worry. You can look a little closer down the road when things slow down. Don't be the one who slows us down now....
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
As long as there is any link whatsoever between the loan production end of residential lending and the valuation provider, there will be problems between the two and among the mortgage industry as a whole.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
"At a recent mortgage-fraud seminar in Orange County attended by scores of appraisers seeking to meet the new requirements, Smith said it was common for appraisers to seek comparative prices, or "comps," that match clients' price objectives rather than perform the objective analysis that they are required to do. "



Until USPAP, and State Appraisal Laws, are revised by replacing mandatory Contract Review and currently permitted Price, Estimates of Value, or Loan Amount on an appraisal order with language which makes providing ANY advance value, estimated value, or loan amount a Felony, the inherent asbsurdity of the system which undermines the entire appraisal industry will continue.


Current SOW allowances (including receipt of an appraisal order) which permit stated, suggested, or implied direction of values on an appraisal order directly conflict with existing prohibition against Client Advocacy.

The USPAP writers knew it, the End Users demanded it, the Regulators continue to overlook it.

Independent, Unbiased, Objective ? Not when the order contains the Bull$eye.

Market Value is what the Market indicates whether OR NOT a contract exists. Appraise the Real Property NOT THE CONTRACT.


 
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Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Mike: We've had licensing of mortgage brokers for years. Just resulted in additional income for the state. I don't know of a single mortgage broker that ever lost their license. As bad as the TALCB was about going after bad appraisers (under funded, under staffed, etc), they at least tried. State mortgage regulators didn't even try.
 

Ariba

Senior Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Colorado
Mike: We've had licensing of mortgage brokers for years. Just resulted in additional income for the state. I don't know of a single mortgage broker that ever lost their license. As bad as the TALCB was about going after bad appraisers (under funded, under staffed, etc), they at least tried. State mortgage regulators didn't even try.

Yes, but Texas doesn't have Ms. Erin Toll. :banana:
 
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