The vast majority of lenders will only remove an appraiser from their approved list for performing a number of appraisals found to be excessive in the review process. Most lenders do not send appraisal reports to the state licensing authority. Bad appraisers and their brokers just move on to new lenders. It is really up to the reviewer to turn the bad appraisals over to their state licensing authority and many reviewers do not want to take the time to get involved.
The state licensing board will be the first to tell you that they exist to protect the public and that appraisals turned in by other appraisers are only acts of competitive jealousy. I have turned in fraudulant reports but I have never questioned or discussed inflated values. I have high-lighted blatant USPAP violations, living areas over-stated by nearly 50%, appraisals on medical offices utilizing the URAR, and the origination appraiser's response to an underwriter where the appraiser writes "I don't care what similar properties sell for, I am citing market value!" and the offending appraisers are still operating with little if any discipline actions taken.
Does the lack of action on any of the above disturb any of ya'll? No? How about this... You ever find yourself sitting at a loan officer's desk and be asked "What are you (the other appraisers in town) going to do about this?" The loan officer pulled out several appraisals where one appraiser cited a property selling for (example) $100,000 and adjusted accordingly. The next apppraisal the same appraiser cited the sale at $110,000. The next appraisal at $115,000. The next appraisal at $112,000. If the sale's Gross/Net/Line Item adjustments approached busting out of FNMA guidelines the appraiser just adjusted the sale price to make the deal work and to make the report look good. Did the lender turn the appraisals in, or provide me with copies where I could turn them in? I'll give you one guess. As negative as my opinion is on AVM's maybe this is one avenue of fraudulant appraisal reporting which will be kept in check.
Folks, I'm not talking about honest or careless mistakes. I'm talking about intentional fraud. Until the big wind breaks nothing is going to change. When dealing with the secondary market, lenders merely pass all appraisals through the system to the investor and take their cut of the origination. When dealing with in-house lending, production is all that matters. Both the investors and banks have x% allocated for deals gone bad. Anything else is nothing more than unneccessary delays in closing a loan. The more I read Joe Sloan's tongue-in-cheek posts about the honest appraisers being 'losers' the more I believe that he is a prophet.
rijman, your posting in this forum suggests you are truely trying to help us grunts in the field and your posts are informative and appreciated. But, as a review appraiser, are you really concerned about the integrity of the profession and demonstrate such by turning in fraudulant appraisals? Or do you (as you stated) not want to take the time to get involved? Also, what is your honest opinion of why the lenders and investors are so reluctant to make formal complaints against repeat offenders?
