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Time to reappraise system that's all too open to abuse

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Pamela Crowley (Florida)

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Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Fort Worth, TX Star Telegram

Time to reappraise system that's all too open to abuse
By Mitchell Schnurman
Star-Telegram Staff Writer

http://www.star-telegram.com/business/story/449898.html
Real estate appraisers get paid $400, tops, for their role in a transaction that generates tens of thousands of dollars in fees. And they're supposed to hold the line and say no?

Little wonder that things got so out of whack in residential real estate.

In the past few months, as elected officials and regulators examine the meltdown in housing, more are focusing on appraisals. These independent assessments of a home's value are required for every mortgage, and they set the parameters on a loan.

Lawsuits have been filed recently against major lenders, alleging that they pressured appraisers to trump up home values so borrowers could get bigger loans. And appraisers are accusing lenders, home builders, mortgage brokers and real estate agents -- the major parties who rake in most of the fee income -- of threatening to blacklist them if they don't play ball.
Brokers don't just gravitate to appraisers who happen to provide higher numbers; they often seek them out.

Techniques used to be fairly subtle: a broker would say that an appraisal had to hit a set value and if that wasn't going to happen, the appraiser shouldn't do the work. More recently, some brokers have sent out mass e-mails, asking which appraisers would OK the price.

"I have an e-mail that went to 200 appraisers," said Pamela Crowley, who has been in real estate since 1970 and has been an appraiser since 1995.

She runs a Web site, mortgagefraudwatchlist.org, which collects reports from appraisers about suspicious activity. She often sends the information to regulators. She says that appraisers face even more pressure today than in the go-go times of a few years ago.

"A lot of people are upside down on their loans, and they can't refinance without a higher appraisal," said Crowley, who is based in Florida.

She even tells stories of appraisals being altered, with higher values inserted, after the appraiser has turned in the report. Such allegations help explain why investors remain so skittish about the housing problem -- it's hard to tell just how far the market may fall.

'Dialing for dollars'

Appraisers aren't supposed to bend to such demands, and many surely resist. But their livelihood hinges on landing business, and brokers are known to cast about -- a process that appraisers call "dialing for dollars."
More than 10,000 appraisers have signed an online petition, urging the federal government to step in and stop the abuses that they say are corrupting the system.

"A lot of people have money riding on this, and if a deal falls through, there's hell to pay," said Harry Davis, who's in Austin and has been an appraiser for more than 30 years.

He says that real estate agents are the root of the problem. Brenan points to mortgage brokers, because their numbers grew rapidly and they became a primary source of business. Others say that lenders hold the most responsibility. Big finance companies are key players, too, because loans are bundled into investments sold around the world, with the blessing of credit-rating agencies.

The bottom line is that all these parties get paid -- and paid well -- only if the loan closes. If it goes bad a few years later, well, that's someone else's problem.
Just say no?

More than 10,000 appraisers have signed an online petition, asking regulators to stop the pressure being put on them by lenders, mortgage brokers, real estate agents and others. Among their complaints:

If they refuse to inflate values, they won't get hired.

If they refuse to guarantee a predetermined value, they won't get hired.

If they refuse to ignore deficiencies in the property, they won't get hired.

Payment is refused if their appraisal isn't high enough.

Honest appraisers are being blacklisted.

Source: Appraiserspetition.com


Article published Sunday, 02/03/2008.

Monday, 02/04/2008:

The Texas Mortgage Fraud Unit of the Texas Department of Insurance registered at www.MortgageFraudWatchList.org and now has access to the suspicious activity reports database there!!!!!

All Texas appraisers need to file those suspicious activity reports - including those comp check demands, there!!!!!
 

Laura Goldware

Sophomore Member
Joined
Jun 6, 2004
Professional Status
Certified Residential Appraiser
State
Florida
Appraiser's Abused the System/Pam Quoted

Miss Pam you are quoted



http://www.star-telegram.com/105?ref=patrick.net

Real estate appraisers get paid $400, tops, for their role in a transaction that generates tens of thousands of dollars in fees. And they're supposed to hold the line and say no?

These independent assessments of a home's value are required for every mortgage, and they set the parameters on a loan.
 

Laura Goldware

Sophomore Member
Joined
Jun 6, 2004
Professional Status
Certified Residential Appraiser
State
Florida
You beat me to it!

You might want to combine threads.

:)

Laura
 

Caligirl

Senior Member
Joined
Jan 27, 2006
Professional Status
Certified General Appraiser
State
California
Pam, if the Feds would like things to change they will grant whistle-blower status to appraisers.
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
I think it should be noted that a vast majority of appraisers receive maybe half or less of that $400.00 fee.

Thank you Pam.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Congratulations to the Texas Star Telegrams' Editor-in-Chief and Publisher for not buckling to Advertising Dollars$$$ and allowing Mr. Schnurman to state the Truth.


Kudos Ms. Crowley!

Finally, a media reporter who tells it like it is. !


Here's hoping the story gets picked up by ALL the major wire services.
 

Workbox

Elite Member
Joined
Mar 2, 2005
Professional Status
Certified Residential Appraiser
State
Colorado
Delete........
 

Workbox

Elite Member
Joined
Mar 2, 2005
Professional Status
Certified Residential Appraiser
State
Colorado
Wow that was fast I did no think you would make it out so soon. Anymore to come?
I hope it makes it to the Houston Chronicle
 

William K

Senior Member
Joined
Sep 21, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
Fort Worth, TX Star Telegram

Time to reappraise system that's all too open to abuse
By Mitchell Schnurman
Star-Telegram Staff Writer

http://www.star-telegram.com/business/story/449898.html



Article published Sunday, 02/03/2008.

Monday, 02/04/2008:

The Texas Mortgage Fraud Unit of the Texas Department of Insurance registered at www.MortgageFraudWatchList.org and now has access to the suspicious activity reports database there!!!!!

All Texas appraisers need to file those suspicious activity reports - including those comp check demands, there!!!!!

Pam ,
Are their other State agencies that have registered and if so do you publish who they are? I just wonder if you have a list of STATE AGENICIES that have registered it might be worth it to publish so appraisers , media and lenders know they are being watched by some local authorities.
 
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