Is The Real Estate Appraisal Profession In Trouble?

In his blog, Whitecaps, blogger Bill McCrory of Coeur d'Alene, Idaho writes of appraisal fraud in real estate in which he includes links to a series of Realty Times articles that describe ways that appraisers are both:

• pressured by lenders, loan officers, mortgage brokers and real estate agents to "not come up short" on their property valuations, and
• stifled in their attempts to do something about ongoing frauds.

Links are also included to:

• a 69 page report by the Federal Financial Institutions Examining Council that listed appraisal fraud "at the top of a list of third party mortgage fraud schemes that included such intriguing names as builder bailout, chunking, double selling, equity skimming, false down payment, fictitious mortgage loan, land flip, phantom sale, and straw borrower" and
• a 12 page article that explains how widespread appraisal fraud puts homeowners at risk.

For more, including the aforementioned links, see:

Appraisal Fraud in Real Estate
("You cannot participate in the real estate business without committing felonies.")

In related Information...

1) See an online Appraiser's Petition containing the names of approximately 9,500 appraisers petitioning the Appraisal Subcomittee of the Federal Financial Institutions Examination Council ("FFIEC") for assistance in dealing with the pressure put upon them by lenders and others in the real estate industry to satisfactorily "hit the mark" on their property appraisals.

The mission of the FFIEC Appraisal Subcomittee "[i]s to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics." (see Mission of the ASC)

2) See Senate panel backs bill to crack down on appraisal fraud, an Associated Press article reporting about Senate Bill 85 currently pending in the Colorado state legislature that, if passed, would seek to prosecute anyone who pressures an appraiser to inflate property values.

The measure would prohibit mortgage brokers from pressuring or compensating an appraiser for an inflated appraisal. Violators would be fined $1,000 for their first offense and between $1,000 and $2,000 for later offenses. Appraisers, real estate agents and investors who participate in an appraisal scheme could also be prosecuted or sued and subject to triple damages. Mortgage brokers who have been sued and prevented from working in other states for unfair trade practices would lose their right to practice in Colorado as well.

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