Regulations affecting appraisers largely useless

Wall street was making too much money and the fed's knew all the problems and looked the other way. When it came to wall street screw the rules and regulations and importantly screw the regular person.

Wall street made out like a fat rat and now everyone is crying foul play. It started with the fed reserve then congress then the wall street buddies who were stashing money in overseas banks left and right, namely UBS.

Sorry but the real reason on why this mess happened and is going on is because wall street was making a boat load of money. Our own gov didnt want to do the right thing and do what the law called for. I have posted before and I really do think this way

We The People

Does that sound familer, it should its on our constitution. But things has changed, it now should read

We The Wall Street

Plain and simple thats the bottom line. Its a proven fact that our gov will not protect the regular people but will do what ever it takes for wall street and this is to the tune 1+ TRILLION dollars of tax payer money used in bailing out these crooks and looters on wall street. Hell right now firms on wall street are taking 18 BILLION dollars of tax payer money out of the discount window each and every day. Thats right folks, 18 BILLION a day.

When licensing was first proposed in the late 80's the cost burden for regulating appraisers was borne by the appraisers in their respective states. We were forced to pay for lobbyists so that the licensing law would not be entirely dicated by realtors and lenders, we paid to set up the state regulatory commission for the state and then we pay annually for the continuation of this folly. Who would want to be a part of this type of set-up?
At about the same time appraisal management companies came into the picture as a means of separating the appraiser from the realtor and loan officer. In reality they became another way to separate an appraiser from a full fee. Appraisal management companies are funded by appraisal fees that do not go to the appraiser. Countrywide derived 12% of their profit from their amc. Most large lenders have an umbilical relationship with an in-house amc and are very reluctant to separate themselves from this profit center. Appraisal fees that an appraiser receives are basically unchanged since amc took over the process. What is the caliber of people that will be attracted to an industry that has a stagnant fee scale?
One can ramble on and on about the problems facing the lending industry, appraisers included, but it seems to do little good. There is noboy interested in protecting the consumer (too small to bail) and all efforts go to perpetuating the lender (too big to fail). Much will be said about the current crisis and it will be analyzed to death, as was the S&L crisis of the mid 80's.
More poor, self serving legislation will be passed, the major problems kicked under the table and life will go on til the next mess.

As a retired federal regulator I can tell you apprasiers are up a tree. But the tree can be easily chopped down. The FFIEC only needs to make it a crime for any official of a federally insured Bank, S&L or Credit Union to disclose the amount of any loan uder consideration in conection with the requested apprasial. They have the power to prohibit the participation of any person from having any position in a federally insured institution. The various state real estate brokerage licensing agencies can put into effect similar sanctions against real estate agents, revoking their licenses if they transmit the purchase price of any sale. Third is offer"whistle blower protection" to any apprasier that turns in a broker or banker violation those prohibitions.

In California a state chartered commercial bank is required to order an appraisal from a list of appraisers that have been approved by the bank's appraisal board. The appraiser must be on the approved list and appraisals are not accepted for loan underwriting from secondary sources outside the bank. Once an appraisal is ordered and received by the bank from an authorized appraiser the appraisal must be reviewed by the bank by an internal qualified real estate officer to make sure that the appraisal follows regulatory procedures and policies. This procedure is also followed by commercial banks that fall under federal charters as well.
There is a major difference between savings banks ( Savings & Loans ) like Countrywide and commercial banks like Wells Fargo, BOA and Bank of the West when it concerns appraisals. Savings banks, mortgage companies and the savings and loan indusrty had no restrictive appraisal policies that were regulated by the FDIC or the California banking regulatory agencies.

The problem in the residential appraisal industry is who most often orders the appraisal - it is most often ordered by the mortgage loan officer and/r broker, a person who has a vested interest in the loan being completed. If the appraisal does not "hit the number", there is a 98% chance that the loan will not be funded and a 100% chance that the loan officer will never, ever, ever, call that appraiser again to do an appraisal. Though some appraisers are a little slower than others, after sitting around for a couple of weeks without work, they figure out the game. Therefore, the only way that the problem can ever be fixed it to take the appraisal ordering process away from the one that has a vested interest in seeing that the loan goes thru, i.e., the loan officer. Though labeled loan officers, most are little more than used car salesmen with a different title.

Additionally, finance company should have skin in the game, i.e., they should have to post bonds for their loans, so that if waves of the loans that they brokered go bad, they will have a financial cost for poor loan standards and for their desire to shop for appraisals - i.e., I can give you the job, if you can give me this number. As it was between 2004 - 2006, mortgage lenders got paid to push money out the door, regardless of the quality of the loans.

Have been a real estate appraiser for many years. My lenders do not advise me as to the homeowners' estimation of value, nor do they advise me of the value needed to "make the loan work". If the value is not to the liking of the homeowner, they can file a dispute. Most often, I never change my values. I call it like I see it the first time. If I have missed some inportant data, I have not problem adjusting the value. It is, however, most often the homeowner who wants to inflate the value. They are the ones needing a loan and don't care how it done as long as they get their value. They will continue in their pursuit of a loan until they or the lender finds an appraiser willing to prostitute themselves. Good inhouse Q/A is a must for all appraisal organizations and lending institutions. What is also a major need is to educate loan offers and realtors (who's biggest goal in life is to have the mercedes earned from homeowners' commissions) as to the concept of how an appraisal works and the three methods of value used to establish a value. An appraisal is not a comparable market analysis. As far as I am concerned, loan officers should be licensed as they are the first person involved in loan application and are yet to be held accountable for arm-twisting desperate owners into loans they can't afford.

I'm a realtor selling 32 years and counting. I also had an appraisal license for a good portion of that time, or at least when it was required. I gave it up recently.

The fundimental flaw in any appraisal is the seperation of confidential information. Every single appraiser starts off with the amount of money required to "make the deal". This is given to him in the form of a Purchase Offer right from the bank or lender.

Is it any wonder that the appraisal comes out right on the money?? It is laughable...

Withhold this information as confidential, and send the appraiser out with nothing other than his knowledge and comparibles, and you get a much closer figure as to the real worth of something.

Until this changes, you can blame everyone and anyone, but you will NEVER get accurate results by handing out the number you need to put on the appraisal before you leave the office.

After owning my home for 10 years with a sustantial down payment, I am now almost upside down here in Michigan. I never took a second or a home equity, it's the same and only mortgage. I am considering voting with my feet. I have very little equity (realestate commission would take care of that) and I want my freedom from "the american way". I may walk away, soon. No guilt here... I feel betrayed by a congress that refused to do anything when they could years ago.

Let's get this straight (BTW, I am not an appraiser) - Buyer agrees to pay X for a house (as do other buyers in the area for similar houses). Mortgage company agrees to finance 80% to 100% of the value. Property values are rapidly escalating (doubling in Florida over 3 years) so there are no comparables at the current market - they are always a step behind.

The appraiser, seeing the appreciating trend, the price of other houses under contract and the listings on the industry servers, such as MLS, appraise a house high.

Buyer gets his house, mortgage company issues the loan and they are both happy. Then the bubble bursts and its the appraisers fault that buyer got into a house valued 5-7 times his annual salary and can't make the payments or refinance from the teasers the mortgage company gave. Mortgage company, loaning 100% and never contemplating negative equity scenarios, blame the appraiser for their own lack of due diligence and greed.

An appraisal on a house runs $300 - $1200. Compare that to the interest the Mortgage company makes on the loan, or the 6% commission the RE agents make (average house $300,000+ do the math), or the commission the mortgage broker makes on the sale.

Do you really think the appraiser is the one responsible for bubble. Can't individuals take responsibility for over extending their credit or lenders acknowledge that interest only loans were never designed for residential long term buyers.

Makes no sense to me.

It never ceases to amaze me how people try to get the fast buck. When it doesn't happen, they need someone to blame. it's never their fault. Always someone else's. During the housing bubble homebuyers became speculators. The dream of getting the fast but easy buck. Flip this house. Just like the reality show. But, guess what, these dreams are fleeting just like the fast buck. Everybody says "let's make the deal work". When it doesn't, Who do blame? Everyone but me. This is a Global Phenomena occurring throughout history. As soon as peoples greed takes the place of common sense,
the door opens for scam artists, charlatans, shortcuts, and circumventing safeguards. All one can do is ride it out.

Oh please, more consequences for the appraiser. The system if broken. If an appraiser doesn't hit the number that the agent or broker is asking for, period, not up for discussion, they find one who will. I was an appraiser for a few years, and though I never lied I certainly felt pressure to find what my clients were looking for. And I knew plenty of appraisers who did lie and I lost some brokers and agents because I wouldn't hit the number they were looking for. I got out of the business because I could see no easy way to make a living. To be a fair appraiser and do your job, your income shouldn't be dependent upon giving a "right" answer, but rather on a truthful one. The period of time, where at least in the west, the property values doubled within 6-12 months, was due to a broken system. You could just feel when the big time investors (many crooks) came into a city and they flipped houses, put pressure on appraisers, and false inflation occurred in the market. You just can not have someone who is supposed to be impartial have their very livelihood dependent upon what answer they give.

It is pathetic that whatever people do in today's world it has to be "regulated" and that the rules have to be "enforced". It is a shame that we live in a society where greed has grown to such magnitude as to eclipse the worth of human lives. This article is just another instance of what people have become today. It has nothing to do with mortgage rates or appraisers or banks. Many people are just plain stupid and a lot of the other people have no regard for the existence of any other creature in this world but themselves that is what the freakin problem is people.

It is amazing the people in this mess knew what was going on-the states knew--the Realtor--and the Feds knew. This would also be the chairmanships of both houses-of both parties in the US Congress. But it was OK as everyone was making money and no one was hurt over it. Now the taxpayer is holding the bag. The only way this will ever stop is to go after the people in every state who lied and helped the deals to go forward. This is the Loan and bank officers-the appraiser--the Realtor--and the people that got the loan that knew it was wrong.
Or as the AVERAGE REALTOR says "Until this changes, you can blame everyone and anyone, but you will NEVER get accurate results by handing out the number you need to put on the appraisal before you leave the office".
A simple solition to the mess that all of the above that have caused this mess have put the honest hardworking people thru that did not play the games. A lot of people said no to these deals. They were the honest ones. The liers will have their judgement day in the end.

Its the appraisers fault, these appraisers new that these figures were falsely being valuated.
The fed's are at fault for letting these appraisers run around and do whatever they wanted in unregulated business they were in cahoots all mortgage lenders who were able to package these bogus loans and sell them to wall street and then were here to bail them all out what a bunch of A$$holes. Geed is good, just ask Gordon Gecko.

Although many things about this article are right on the money, namely how broken the enforcement system really is, but blaming appraisers for people losing their homes and being a factor in the housing bubble bursting is nonsense. Appraisers, for the most part, do not significantly overvalue homes to the point at which the borrower cannot afford the loan. Often this overvaluation is a very small percentage leading to a very small increase in the borrower's payment. People are losing their homes because they got into horrible, speculative loans driven by their own greed and naivete and their payment is doubling on them when the loan terms reset. They are not losing their homes because the appraiser overvalued their home $4,000 and their payment is $30 higher than it should be. Also appraisers do not forecast the future when the market is on the upswing and come in higher because of that. Appraisals are historical documents that rely on information from the past. Therefore when the market is going up, appraisals done for mortgages often state vales UNDER what the real market value is because the sales data might be months old however the market has increased since then. This was truly the case when housing prices were skyrocketing a few years ago. Buyers were lining up to pay more and more money for each house that went on the market and very often the appraisals came in lower than the sales price and many borrowers had to pay cash to make up the difference.

The Real Estate Industry is comprised of too many 'uneducated' and 'unprofessional' individuals that are compensated way too much for the little they do. Who else makes a $30,000 to $40,000 commission on a sale (some made within less than 30 days), when all you do is drive people around hoping 'they' find something 'they' like. The whole industry; home builders, R.E. Agents/Brokers, Appraisers, Loan Officers, etc., are driven to shake you down. Home Buyers and Sellers should all start using online services and stay away from the crooks in the industry.

Once again; MSNBC has failed to see the problem. THE ONLY CAUSE OF THE CURRENT MELTDOWN IS LENDERS! Lending organizations keep better numbers than Insurance companies. They knew from the beginning what the result would be of the Sub Prime loans THEY were making AND WHEN the bubble would pop. It was they who structured a market that enabled them to sell loans that were poorly developed. AND the government rewarded them for their criminality with bail outs.

Appraisers are a necessary "Check and Control" . Appraisers bring reality to the Real Estate transaction. NEVER has the appraiser been protected in order to safeguard the public. Instead; New federal legislation will mandate "Appraisal management Companies (AMC's) which were the very people who were pressuring the appraisers in the fist place ( An example: Washington Mutual and eAppraiseit) . The new law has nothing in it to regulate the AMC's. So, the appraiser is scapegoat again. Nonsence!

ONE good suggestions for positive change in the lending business is: All loan originators ( the people who take the loan application) must be licensed and regulated. Make them accountable for unsound loans they set up.

I agree with the concept Average Realtor put forth. Additionally, the banks have to allow the appraisers to appraise not advocate. It is common practice by the banks/loan agents, etc. to contact the appraiser, let them know the value they need and if they are honest and advise that they can't come in at the value indicated - they lose a client. If this happens too often, the appraiser gets a reputation and is eventually forced out of business because nobody will use him/her because they are uncooperative. That's the reality of the situation. The appraiser received a $350 fee while the loan agent and realtor receive commissions in the thousands of dollars. In spite of that, the blame is put on the appraisers. I think there is enough blame to go around for everybody, especially those who made the most on these deals. That being said - Do the regulations work - absolutely not. Until the whole mortgage structure is cleaned up, it will continue to be a problem. Put loan officers on a salary and don't base their compensation solely on production. Part of the compensation should include the quality of the loan. This was the problems with the S&L's in the 80's and is part of today's problem. There used to be universally recognized underwriting standards for loans. Put them back in place. Before deregulation, banks were governed by them and you didn't have the problems you have now. Finally, let the appraisers appraise. Take the commissioned realtor or loan agent out of the equation.

We are victims to this with a refiance to dispose of our Credit cards when my wife lost her job. the Appraisal was "right on the Money" to what we needed. We got our annual County Property Appraisal (taxes) and it was 50K less. When I challenged the appraiser, he told me it was "outside driveby view" and not assessing the inside. As first time homeowners we accepted this. Now we are so screwed becasue we are currently upside down by 75K with 4 young kids. Does anyone have real help that they can offer? Yes our loan has been resold to new lenders. Please advise e o d 4 p a w s @ y a h o o d o t c om THANK YOU

I hate that my profession is now considered with the same disdain as lawyers and used car salesmen. It is clear to those of us in the industry, especially in smaller markets, which appraisers/brokers conduct business unethically and the problem is the lack of repercussions. This frustrates those of us who take pride in our business conduct. Our appraisal office completed a field review on a report which was clearly fraud and reported it to the state. Three years later the appraiser continues to work in this community after a small fine. The system is clearly broke, however HVCC isn't the solution.

Mark commented that the separation between mortgage brokers and appraisers is the only solution. I strongly disagree with that comment. Our office has maintained relationships with clients/brokers for years and have rarely been pressured for fees, turn times, or values. If so, they don't make it on our client list and in fact we have told some not to contact us again. Typically these are out of town lenders and one shot deals anyway. We have cultivated valuable local/regional relationships that are based on professional respect. With AMCS they are shopping for the quickest turn around and cheapest fee. Last week LandSafe, one of the largest AMC's, sent an e-mail stating that starting in September orders will be automated and appraisers will be selected by turn times and agreement w/ the new fee schedule, which is 20% lower than our standard fees. Ridiculous. The AMC'S are just as beholden to their client as anybody else, this only creates a middle man. The only solution is to require states to aggressively regulate both mortgage brokers and appraisers. Many of us would welcome this as it would get rid of the unfair/unwanted competition and bring respect and integrity back to our fields.

+we the people is right on target regulation withoutthe politico can look as resources has been the game since the reagen era of deregulation

Here we go again. Helpless Americans. Cant take care of themselves. Yet we trust them to have families, vote, drive. Gee. Who would imagine they couldnt make these payments after rates went up. Maybe we should take all these rights away from everyone and then control every thing they do.

I love the way that things are stated and the "class" of people is established. "Allowing people with spotty credit to purchase homes". What kind of statement is that? Only if the three "Gods of credit" approve of you can you own a home. We have three private businesses whom have access everything in our lives from who we buy from, our medical information, driving record and arrest record. These are not some Government agencies with authority to investigate, arrest and jail criminals, they are "for profit" businesses with little or no accountability. They decide what your class in life is and what you can or cannot own. Anyone ever heard of the Constitution or Right to Privacy. Credit Bureaus are the modern equivalent of the KGB. They operate in secrecy, just try getting their credit score formula, they have access to every bit of information that there is on your life and life style. While Congress makes a big show about regulating them, they still operate above the law according to their own rules. There are no laws establishing a government agency to monitor peoples credit and personal life, and the bureaus do as they please. You tell me if it makes sense that people that make less money and have a hard time just getting through life every day, should have to pay more for a product or higher interest payments and rates than someone that was born with a silver spoon in their mouth and never has to worry about where their next meal is coming from. Lets see, if you have a lot of money and assets, you pay less and if you struggle to make ends meet, you should pay more. All through the helping hands of the credit bureaus. Owning a home? "How dare you middle to lower income desire to live in a safe area in a home that is relatively new home in an area occupied by we wealthy". OK you lost your job and cannot meet your monthly mortgage payment for a couple of months, how dare you not have thousands in savings for such emergencies. Let lower your credit score and let you pay MORE for everything on top of that. We'll just keep you in the hole, that should keep you in your place. Than lets add to the punishment, you get to pay higher auto insurance premiums since your credit score went down. What else can we do to screw you? Oh yeah, lets make sure that you cannot get a better paying job with that lower credit score. You have been classified, your CLASS has been decided, your poor and we intend to keep you there. The American Dream at work through the credit bureaus and financial institutions. Personally, I hope that the price of housing keeps dropping and the financial community, wall street and their credit bureaus all go broke. Then we will start off on an even playing field where the working guy and gal can get a fair shake.
It's time for a change and it ain't that phony Barrak Obomnation.

Oh well. Just another useless Government Agency we, as Tax-Payers, are funding.