Appraisers coerced to raise valuations

There are 4 comments on the Feb 11, 2008, The Honolulu Advertiser story titled Appraisers coerced to raise valuations. In it, The Honolulu Advertiser reports that:

This is an excerpt from an appraisal order received by a local appraiser. Personal information was blacked out by the appraiser to preserve confidentiality.

Join the discussion below, or Read more at The Honolulu Advertiser.

First Prev
of 14
Next Last
Curmudgeon

AOL

#276 Aug 21, 2008
The entire "Regulation of Appraisers Seems to be a Flop" -- Ah, yes, unfortunately the article thus titled is in the Star Bulletin August 17, 2008 edition, Page D6 (Business)-- Oops -- this is the Advertiser -- Oh well - BTW One must wonder how far the FBI has come in the investigation of the lending industry in Hawaii?
Kila

Koloa, HI

#277 Oct 3, 2008
Olje wrote:
Kila --- read and weep -- this is an excerpt from the GAO Report -- This problem/article was old news -- The State of Hawaii instituted protection of consumers in HRS 466-k and then promptly ignored to provision thereof -- Here is a section from the GAO Report:
Participants also voiced concerns about the fact that Title XI does not cover all financial institutions and that mortgage brokers are not subject to federal regulation. When Title XI was enacted, federally regulated lending institutions (banks, thrifts, and credit unions) made most mortgage loans. Today, other financial institutions, such as mortgage bankers and finance companies, account for a substantial share of the mortgage marketplace. Many of these financial institutions that are not federally regulated, as well as an increasing portion of regulated financial institutions, use mortgage brokers to originate loans, so that these brokers
now originate about 50 percent of all mortgage loans. These entities and individuals may have state licenses, but they are not monitored by federal or state entities through, for example, examinations or audits.10 Appraisers have anecdotally reported that these originators pressure them the most toappraise properties at or near the purchase price to assure that the
mortgage transaction will occur. Some industry participants have said that the $250,000 real estate appraisal threshold established by the federal financial institution regulators undercuts efforts to protect consumers. These groups believe that oversight of real estate appraisals should be geared toward the
interests of consumers, who should be able to expect an unbiased, objective third-party opinion of the value of real property offered as
security for a loan. However, Title XI was enacted in response to the impact of appraisal problems on federally insured depository institutions,and federal financial institution regulators have identified few problems or
risks to depository institutions associated with loans valued below the $250,000 threshold.
Still don't know what you are talking about. You initially stated that there are 800 appraisers in Hawaii and about 200 of them are the cream of the crop.

I asked if you thought all 200 of the "cream" knew what they were doing (as in are they capable, competent and honest).

Your reply was that they know what they are doing, but they may not be exactly doing what you would think is the best for you, or they could not stay in business (or soemthing like that).

Then I said something to the effect of I think your chances are better if you are selecting one of those 200, but I would be willing to bet that it is no guaranty (meaning you are perhaps only a little less likely to hire a clown, incompetent or moron).

So then you went on to say, it's the other way around. Graft is apparently rampant the small eager ones would be the best bet to serve your interests. And something about the fat cats lapping cream.

Then you went to you last post(above)where apparently I should be reading and weeping and goes on to cite stats about mortgage originations from mortgage brokers, 10 appraisers stating that they've been pressured and something about the $250,000 real estate appraisal threshold undercuting efforts to protect consumers. The excerpt then goes on to state that certain groups believe that oversight of real estate appraisals should be geared toward the
interests of consumers, who should be able to expect an unbiased, objective third-party opinion of the value of real property offered as security for a loan and that there are few problems or risks associated with loans valued below the $250,000 threshold.

So my question is...what are you talking about and why should I be weeping? My only question to you was whether or not you thought your cream of the crop was automatically better than one of the other 600 appraisers out there.

Since: May 08

Location hidden

#278 Oct 4, 2008
ipj737 wrote:
Appraisals are ordered by the BUYER'S lender. So why would it have to be the appraiser INCREASING valuations to get a deal to go through? Could an appraiser DECREASE valuations (i.e. below the contract price) in order to get a BETTER deal for the buyer? Appraisals that don't come out at the contract price often result in leverage for the buyer. Let's say you're a buyer and enter escrow on a home for $500,000. Appraisal comes out at $480,000. Is this good OR bad for the buyer? Hmmm. Will the seller reduce the price to meet the appraised value or would they cancel escrow and try to sell at a price that's higher than market? What does all this mean? It means appraisals can be influenced both UP or DOWN. It just depends on who is doing the influencing.
Good posting. Here in New York, I can tell you first hand that a recent appraiser came in $50k less than the purchase price on a recent deal. That was after I fought like crazy proving my point with dozens of comps in hand that his first thought of putting $150k less was totally absurd.
Now the buyer wants a reduction of $50k as you state in your posting which is only normal, however the seller refuses to come down and I do not blame her.
I have done over 9,000 appraisals to date and this inexperienced appraiser, who only became an appraiser one year ago & was worried what his boss would say if he appraised this at selling price. At least thats what he told me.
Since this house is unique in size and property size wise, the comps went from selling price and even $100k above it.
So you must take a stand and don't expect every homeowner to have to go down in price or they will lose the deal.
This inept appraiser didn't accurately appraise the home in the first place. So keep an Open Mind that just because he / she is an appraiser doesn't mean their opinion is always right and in stone.
Kila

Koloa, HI

#279 Oct 4, 2008
JIMMY T wrote:
<quoted text> Good posting. Here in New York, I can tell you first hand that a recent appraiser came in $50k less than the purchase price on a recent deal. That was after I fought like crazy proving my point with dozens of comps in hand that his first thought of putting $150k less was totally absurd.
Now the buyer wants a reduction of $50k as you state in your posting which is only normal, however the seller refuses to come down and I do not blame her.
I have done over 9,000 appraisals to date and this inexperienced appraiser, who only became an appraiser one year ago & was worried what his boss would say if he appraised this at selling price. At least thats what he told me.
Since this house is unique in size and property size wise, the comps went from selling price and even $100k above it.
So you must take a stand and don't expect every homeowner to have to go down in price or they will lose the deal.
This inept appraiser didn't accurately appraise the home in the first place. So keep an Open Mind that just because he / she is an appraiser doesn't mean their opinion is always right and in stone.
Good post. All appraisers, as with any other profession (doctors, attorneys, accountants, auto mechanics) are not created equal. It may be worth paying more to hire an experienced appraiser or a reputable firm that won't hand the job to the lowest rung on the ladder. But how often do parties to a transaction have that option.

Tell me when this thread is updated:

Subscribe Now Add to my Tracker
First Prev
of 14
Next Last

Add your comments below

Characters left: 4000

Please note by submitting this form you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator. Send us your feedback.

Richfield Discussions

Title Updated Last By Comments
News Gang activity increasing in Akron (Jun '07) 2 hr bootzhoe 149
News Welcome Stan Piatt 6 hr listener 2
News Akron man pleads guilty to sixth robbery since ... 7 hr Judge Parker 1
Anyone looking to buy a home in North Hill? 19 hr Up yours 3
News 17-year-old boy fatally shot in Akron, suspect ... 23 hr Nate 5
News Felony charge filed against Akron police sergea... Apr 22 toxic nut 1
Zelma Allen murder case, 1972 (Jun '13) Apr 21 Roy 2
More from around the web

Richfield People Search

Addresses and phone numbers for FREE

Personal Finance

Mortgages [ See current mortgage rates ]