Has there been a single action taken against an appraiser? Have any lost their license?
Frankly, given the near zero threat of any enforcement action, I think there are certainly plenty of starving appraisers out there who will prostitute themselves for a $200 appraisal fee.
As much as it pains me, appraisals need to be taken out of the private sector. Nearly every county in the nation has a digital database and growing history of every structure in their county. The office s next door have past tax bills and zoning and sales history and comps. If a County Appraisal is unappealing, high or low, then there can always be an appeals process where private appraisers or individuals can present additional information.
IMO it would not only be more efficient and honest but cheaper. Scary stuff for a public service.
Hey remember this bored fellow? Turns out he's also a hero and he's going to save the secondary market:
"Demand evaporates when people are afraid," said Michael Bykhovsky, president of FIS Applied Financial Technology.
At the MBA national, his company hopes to tell lenders about sound ways to measure loan-level risk on specific properties. He says the predictive power created by the marriage of AFT analytics with Fidelity's rich fund of data can restore confidence "and should unclog the secondary market."
He said 85% of subprime loans are still good. "I can tell you with a high degree of precision how a loan will behave," he said. "Consumer behavior today is predictable and consistent with past movements in the market. For example, a run-up in credit-card use tells you clearly that there's a likelihood of default."
He said having reliable analytics coupled with AVMs and appraiser-assisted tools enables lenders and investors to "assume you don't know what prices and interest rates will be" and proactively set aside capital to cover predicted defaults.
"The behavior of lending institutions should not be legislated, but calculated," Mr. Bykhovsky told NMN.
"...Pushed to exaggerate home values during Silicon Valley's real estate run-up, appraisers say agents and homeowners are now pressuring them to prop up those values as prices decline..."
Appraisers need to be assigned blindly from a pool. If you arent going to have to holder of the loan assigning the appraiser then it must be done where the person origination the loan cant game the system.
I think the bond holders are learning and are starting to do their own appraisal before buying the loan.
This summer, while looking at a house to purchase, the selling agent showed us a recent appraisal that he said "should give you confidence that this house is fairly priced." It was the biggest piece of elephant dung that I have ever seen. Among the tricks: using the 3 highest per sq ft points of data out of the 15 points of data that existed in the past year, fudging in a "appreciation factor" (this past year?!), etc..
With California an epicenter of the mortgage meltdown and housing slump, Gov. Arnold Schwarzenegger says he will sign three bills that he says will increase protections for Californians who own or plan to purchase homes and to expand affordable housing opportunities.
"It is critical that we continue to take steps to protect Californians against unscrupulous lending practices and to ensure that consumers can make informed decisions," says Mr. Schwarzenegger in a written statement released by his office Wednesday morning.
The bills are:
SB 223 by Sen. Mike Machado, D-Linden, which will make it a crime for licensed appraisers to engage in any appraisal activity that is connected to the purchase, sale, transfer, financing or development of property if their compensation is impacted by the final price generated by the appraisal.
I like when the realtor says, "Make a reasonable offer, you don't want to be too low or you will embarass the seller." The realtor whores have told me this on more than one occasion.
Our appraiser didn't even come out to see the property. His lackey took a picture of our house, from the road, and he "appraised" it at the purchase price.
I imagine you could really rake in the cash with a racket like that. I feel like such a chump sometimes, actually working for a living.
"I imagine you could really rake in the cash with a racket like that."
My son-in-law took all the test in CA to be a certified building inspector which he passed and got the certificate, he then went on some ride arounds with some of the old timers. He said he just couldn't do it, his conscience wouldn't let him.
--
I am shocked and appalled that this went on in Silly.con Valley, my former home. All I can tell you is that it is full of bulls and no place for a bear. High, and inflated, prices come naturally to Silly.conmen. I am sure that Silly.conwomen aren't taking the back seat. It is going to be one hell of a place to live during the coming depression.
"Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion." This, by definition, effectively renders an appraisal useless in a market dominated by sellers under compulsion. In this market homes do not sell for "market value."
Here in california there are 8 people at OREA who investigate Apraisal Fraud.Statewide.Having your fee contin gent upon reaching a certain Value is an extremely serious violation of USPAP,will cause you to have your license revoked and will open you to civil and criminal liability for Fraud.Rob a 7-11 instead,the risk/reward is better right now
Get real, its business as usual and even more so now. Over Valued real estate became the operating business norm throughout the mortgage bubble. Do people expect this practice to have changed now that the RE and mortgages markets are collapsing? Appraiser coercion is as real today as it was then.. Regulatory oversight, there have been none and I expect little will transpire now.
The reason I canceled my subscription to the Mercury News is reporters for the paper don't read other articles in the paper.
The today's front page of the print edition (emphasis mine):
Real Estate Bust: Distressed Properties on Block
$219,000
Opening bid in Saturday's auction for the two-bedroom condominium on Weyburn Lane in San Jose
$400,000 Estimated value for the property. Homes have been going for 20 percent to 30 percent below market price.
Apparently, the Mercury still believes in the bogus appraisals as the determinate of market value. If an asset is consistently selling at a certain price, that's the market value not some imaginary value that sellers wish were so.
Reminds me of a conversation I had with an appraiser once. We were in the finished basement of a three level townhouse when I asked her a question that I already knew the answer.
Is this finished basement included in the square feet of the house?
She said: No, only above grade space counts.
So I asked if the townhouse across the street is 3 levels above grade it has 3x square feet vs. 2x here.
She said yes.
So that means the TH across the street appraises for much more
She said, we compare only like houses.
I then pointed to the finished basement bathroom and asked: below grade, you do not count this bathroom, right?
She said. We have an exemption form, rustled through her clipboard and then said it must be in her truck.
.So much crap.
back in 92 if you had an ivy league degree in civil engineering and weren't exactly the top of your class, the job market was rough. Or so I hear. Some people took any job they could get, like working for their friends uncle as a real estate appraiser, or so i'm told.
the appraisal business is a joke. Most people who are in it have no idea what they are doing and just make stuff up. Right now there are some people going to jail in my fair city for various schemes involving, among other things, way over market appraisals. As far as I know, I've never heard of an appraiser going to jail, just the people who used those appraisals for mortgage fraud. Until they do, expect this to continue.
Since the lender has the most to lose, shouldn't he or she have something to say about who the appraiser is? Like maybe the lender should actually choose the appraiser, before lending the money? Rather than abdicating and then crying "fraud" when the value is inflated.
GP, I am only a layperson and the experts here can correct me if I'm wrong, but I don't think that is what the meaning of "compulsion" is, in the context you cite.
Journeyman You make an excellent point, and in my opinion the answer is no unless the appraisal is used in combination with an analysis of the ratio of debt service plus taxes and insurance to the purchasers gross income.It used to be that a lender would not grant a mortgage if these costs exceeded 25% of a purchasers annual income.This kind of check would have prevented the lending insanity we see today.The same mistake is being made in commercial lending.
BEAR STEARNS SCALING BACK MORTGAGE BUSINESS, CUTTING 301 JOBS
MarketWatch - Stock Market Quotes, Business News, Financial News
More Pai
Has there been a single action taken against an appraiser? Have any lost their license?
Frankly, given the near zero threat of any enforcement action, I think there are certainly plenty of starving appraisers out there who will prostitute themselves for a $200 appraisal fee.
As much as it pains me, appraisals need to be taken out of the private sector. Nearly every county in the nation has a digital database and growing history of every structure in their county. The office s next door have past tax bills and zoning and sales history and comps. If a County Appraisal is unappealing, high or low, then there can always be an appeals process where private appraisers or individuals can present additional information.
IMO it would not only be more efficient and honest but cheaper. Scary stuff for a public service.
Hey remember this bored fellow? Turns out he's also a hero and he's going to save the secondary market:
"Demand evaporates when people are afraid," said Michael Bykhovsky, president of FIS Applied Financial Technology.
At the MBA national, his company hopes to tell lenders about sound ways to measure loan-level risk on specific properties. He says the predictive power created by the marriage of AFT analytics with Fidelity's rich fund of data can restore confidence "and should unclog the secondary market."
He said 85% of subprime loans are still good. "I can tell you with a high degree of precision how a loan will behave," he said. "Consumer behavior today is predictable and consistent with past movements in the market. For example, a run-up in credit-card use tells you clearly that there's a likelihood of default."
He said having reliable analytics coupled with AVMs and appraiser-assisted tools enables lenders and investors to "assume you don't know what prices and interest rates will be" and proactively set aside capital to cover predicted defaults.
"The behavior of lending institutions should not be legislated, but calculated," Mr. Bykhovsky told NMN.
"...Pushed to exaggerate home values during Silicon Valley's real estate run-up, appraisers say agents and homeowners are now pressuring them to prop up those values as prices decline..."
It was OK before but not now?
rt
Our appraiser just came out, took a couple pictures, then appraised the property for the exact purchase price. I thought that was standard practice.
Except for properties where people are buying a burnt out shack for a million dollars the whole profession struck me as pretty useless.
What? Appraisers are being pushed to inflate values? I started in CRE in 1965. This is a dog bites man story.
Appraisers need to be assigned blindly from a pool. If you arent going to have to holder of the loan assigning the appraiser then it must be done where the person origination the loan cant game the system.
I think the bond holders are learning and are starting to do their own appraisal before buying the loan.
I am shocked! Absolutely shocked! How could they let this happen?
Not.
Dear CR
Is there any correlation between Question "Overstate property value" and Question "Fee too low"?
ok...ok...just trying to be funny.
Best regards to all!
This summer, while looking at a house to purchase, the selling agent showed us a recent appraisal that he said "should give you confidence that this house is fairly priced." It was the biggest piece of elephant dung that I have ever seen. Among the tricks: using the 3 highest per sq ft points of data out of the 15 points of data that existed in the past year, fudging in a "appreciation factor" (this past year?!), etc..
With California an epicenter of the mortgage meltdown and housing slump, Gov. Arnold Schwarzenegger says he will sign three bills that he says will increase protections for Californians who own or plan to purchase homes and to expand affordable housing opportunities.
"It is critical that we continue to take steps to protect Californians against unscrupulous lending practices and to ensure that consumers can make informed decisions," says Mr. Schwarzenegger in a written statement released by his office Wednesday morning.
The bills are:
SB 223 by Sen. Mike Machado, D-Linden, which will make it a crime for licensed appraisers to engage in any appraisal activity that is connected to the purchase, sale, transfer, financing or development of property if their compensation is impacted by the final price generated by the appraisal.
Central Valley Business Times
The state has also set up a hotline for homeowners in mortgage trouble. The "HOPE Hotline" (888) 995-HOPE or online at Avoid Foreclosure- Foreclosure Help- Refinance Mortgage- Foreclosure Prevention-Homeownership Preservation Foundation-HPF provides free mortgage counseling 24 hours a day, seven days a week.
I like when the realtor says, "Make a reasonable offer, you don't want to be too low or you will embarass the seller." The realtor whores have told me this on more than one occasion.
Embarrassing the buyer or seller is easy;for a real chalange try embarrassing the agent.
Shoot them all and start from scratch.
Our appraiser didn't even come out to see the property. His lackey took a picture of our house, from the road, and he "appraised" it at the purchase price.
I imagine you could really rake in the cash with a racket like that. I feel like such a chump sometimes, actually working for a living.
Jim,
Just make a low-ball offer. The agent has to present it.
Democrats press for more aid to mortgage borrowers
Marketwatch - October 03, 2007 2:50 PM ET
The last deal I had the appraiser gave me three comps and that is how my house was appraised.
Seemed to be by the market or recent sales price rate.
Is there any other way?
"I imagine you could really rake in the cash with a racket like that."
My son-in-law took all the test in CA to be a certified building inspector which he passed and got the certificate, he then went on some ride arounds with some of the old timers. He said he just couldn't do it, his conscience wouldn't let him.
The whole R/E industry is a scam.
"85% of subprime loans are still good"
So only 15% of the loans will end in FC?
--
I am shocked and appalled that this went on in Silly.con Valley, my former home. All I can tell you is that it is full of bulls and no place for a bear. High, and inflated, prices come naturally to Silly.conmen. I am sure that Silly.conwomen aren't taking the back seat. It is going to be one hell of a place to live during the coming depression.
Jas
"Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion." This, by definition, effectively renders an appraisal useless in a market dominated by sellers under compulsion. In this market homes do not sell for "market value."
Is an appraisal any more useful in a market dominate by buyers suffering from a mania?
Here in california there are 8 people at OREA who investigate Apraisal Fraud.Statewide.Having your fee contin gent upon reaching a certain Value is an extremely serious violation of USPAP,will cause you to have your license revoked and will open you to civil and criminal liability for Fraud.Rob a 7-11 instead,the risk/reward is better right now
Get real, its business as usual and even more so now. Over Valued real estate became the operating business norm throughout the mortgage bubble. Do people expect this practice to have changed now that the RE and mortgages markets are collapsing? Appraiser coercion is as real today as it was then.. Regulatory oversight, there have been none and I expect little will transpire now.
The reason I canceled my subscription to the Mercury News is reporters for the paper don't read other articles in the paper.
The today's front page of the print edition (emphasis mine):
Real Estate Bust: Distressed Properties on Block
$219,000
Opening bid in Saturday's auction for the two-bedroom condominium on Weyburn Lane in San Jose
$400,000
Estimated value for the property. Homes have been going for 20 percent to 30 percent below market price.
Apparently, the Mercury still believes in the bogus appraisals as the determinate of market value. If an asset is consistently selling at a certain price, that's the market value not some imaginary value that sellers wish were so.
Reminds me of a conversation I had with an appraiser once. We were in the finished basement of a three level townhouse when I asked her a question that I already knew the answer.
Is this finished basement included in the square feet of the house?
She said: No, only above grade space counts.
So I asked if the townhouse across the street is 3 levels above grade it has 3x square feet vs. 2x here.
She said yes.
So that means the TH across the street appraises for much more
She said, we compare only like houses.
I then pointed to the finished basement bathroom and asked: below grade, you do not count this bathroom, right?
She said. We have an exemption form, rustled through her clipboard and then said it must be in her truck.
.So much crap.
back in 92 if you had an ivy league degree in civil engineering and weren't exactly the top of your class, the job market was rough. Or so I hear. Some people took any job they could get, like working for their friends uncle as a real estate appraiser, or so i'm told.
the appraisal business is a joke. Most people who are in it have no idea what they are doing and just make stuff up. Right now there are some people going to jail in my fair city for various schemes involving, among other things, way over market appraisals. As far as I know, I've never heard of an appraiser going to jail, just the people who used those appraisals for mortgage fraud. Until they do, expect this to continue.
Since the lender has the most to lose, shouldn't he or she have something to say about who the appraiser is? Like maybe the lender should actually choose the appraiser, before lending the money? Rather than abdicating and then crying "fraud" when the value is inflated.
GP, I am only a layperson and the experts here can correct me if I'm wrong, but I don't think that is what the meaning of "compulsion" is, in the context you cite.
(Or was that a joke I didn't get?
)
Journeyman You make an excellent point, and in my opinion the answer is no unless the appraisal is used in combination with an analysis of the ratio of debt service plus taxes and insurance to the purchasers gross income.It used to be that a lender would not grant a mortgage if these costs exceeded 25% of a purchasers annual income.This kind of check would have prevented the lending insanity we see today.The same mistake is being made in commercial lending.