Realtors cry foul over low-ball appraisals

I truly believe things have gone insane. I currently own my home and have a home equity loan on it that I have had several years. I live in Texas, which never experienced the real estate bubble that the rest of the USA has experience, yet home prices have gone down, while tax appriasals have gone up.

My home is appraised by the tax district at 162,000. I was upset with that value as it was too high at the time of assesment. However, I have recently remodeled my home, making it absouletly worth that value.

So I went to get a new home equity loan, to pay off the old one which was orginally for $70,000 but has since been paid down to $57,000. So I requested an equity loan of only $80,000 to pay off my existing loan, and to cover the cost of adding solar to my home. I was assured, no problem.

Now the appraisers have lowballed my home by just using some formula and sales from the internet within a 1 mile radius, so that I can only get a 72,400 loan, so they appraised my house at $144,800. Which is absolutely insane, becuase with the solar panels now installed on the roof I have added over $45,500 in upgrades since my $162,000 tax appriasal this spring.

This is insanity, even if I only recovered 50 cents on the dollar for upgrades, my house has to worth 20 grand more than the appraised value. Sure 20 grand or more is nothing in overinflated markets, but that never exited here. I am sure that if I wanted to sell my home it could now sell for $175,000 easily or more. so why are apprisers low balling their numbers.

Appraisers aren't doing their homework, they don't know the difference in value from one adjoing neighborhood to another. All the sales they are using are foreclosures, and homes sold in lower priced areas that turn over rapidly, while my neighborhood has very few sales.

Also if they would have looked at what I purchased the home for 15 years ago, then what it was appriased for when I took out the orginal $70,000 home equity loan, why would they appraise it so low when prices haven't declined significantly in Texas, but have actually gone up in value since my last equity loan was taken out.

So now I can accept the loan offer which is lower than I expected or wait another month and pay out pocket for my own appraiser. The insanity of it is that I could have taken out a home mortgage loan for more than I ever wanted or needed to borrow in the first place.

If appriaser are lowballing loans in Texas and other states that never had problems, we are in serious trouble. This will prevent people from selling homes or buying them. They are destroying our market because of all the crazy appraisels they did in the past in other states like California and Nevada.

late to the discussion, but one data point to demonstrate the conservatism of the refi appraisals… we refinanced two months ago. we thought the appraisal was ridiculously low, and were lucky to have enough equity to still qualify. As luck would have it, we found our dream home within our means if we could sell for what WE thought our home was worth. We listed our home for 20% MORE than the appraised value two months prior. On the market 1 week… 7 offers, 6 of them at or over the asking price. Two offers 25% over the prior appraisal.

Some of these comments are incredibly naive. In particular Ian from Key west is a complete idiot. Not everyone is using their house like and ATM. Some of us used our own 2009 dollars to improve our houses only to have the bank come back and tell us those improvement are worth 7 cents on the dollar. Show me where you can buy anything close to my house for the 50% off the Bank seems to think is reasonable. They were idiots when they were highballers and now they are idiot lowballers.

I have been through three appraisals in the past month. The first came in under the sales price, which was fine, except for the fact that the square footage for the house and lot were both WRONG. When the appraisal was re-done with correct figures, it came in over the sales price. The underwriter at the bank was furious, refused both appraisals, and then ordered a third one. It took weeks to get it back, and guess what, it came in $23,000 below the sales price. And within 24 hours the appraisal was in, the underwriter approved, the loan committee approved, and all paperwork was ready. Anyone else think that the underwriter told the appraiser what to value the house at? We are lucky we aren't in a full-blown depression with all the questionable and unethical behavior of the experts. These people make me sick!

I'm from Knoxville TN. My home was appraised for $675,000.00 in Dec. 2008. We were going to get a home equity line this month (Sept 2009) and an appraiser from Florida valued my home at $330,000. Nine months later my home has decreased in value by 50%??? I find this not only ridiculous, but it is irresponsible and will hurt not only our home but every home in Knoxville.

On top of what I said below call your banks let them know you dont appreciate them not marketing the homes in the subdivison and just taking pennies on the dollar for homes in your neighborhood. Banks dont try and repair these homes and resell them they could easily get another 20k 50k 100k in certain circumstances…dump, dump, dump all these houses is their philosophy and as an owner of a house you would never have this philosophy and it is killing the market everywhere…

As a Certified FHA residential appraiser I feel the pain of the owner every day. I had a guy yesterday and raise hell at me because he thought his house was worth more I brought it in at $480,000 his neighbor sold for $465,000 and his other neighbor was listed at $519,000 however banks force appraisers to take off 5% to 10% off of the list price because they say most listings sell below their list price. I spoke with him and told him I have no problem looking at different comps if he could bring me some within one mile and 90 days from date of sale. This stipulation is what banks are making the appraiser do at this time and I do not always agree with that when I have more comps that have sold within same subdivision with 4 to 6 months….Banks are forcing appraisers to use 2 comps within 90 days and the other within 6 months if in a stable market however if in a declining market then banks are making appraisers use all comps within 90 days. There are no options on what they want and much of the anger and blame should be pointed in their direction. However in subdivisions where there are more foreclosure sales and listings than legitimate listings and sales then the appraisers assumes most sane people will go buy the listed house in foreclosure that are apples to apples when it is 50k cheaper than the house next door. If you would buy the legitimate sale over the foreclosure that was apples to apples quite frankly you are an idiot. If you were going to buy a car and the salesman said you can buy this 2009 Volvo Sedan for $25,000 or you can buy this 2009 Volvo Sedan for $35,000 and you ask the dealer what is the difference between the two and the dealer says nothing…What fool in America is going to pay $35,000 when they can get it for $25,000. I feel your pain as an appraiser I care about people and hate to see them lose money so here are a few ways to help you out. Wait to sell your home if possible after you get some good sales come from your subdivision. Wait for the foreclosures to dry up and when they do legitimate sales will take their place. contact the Realtor you bought your home from and ask for their help in finding comps within 90 days similar to the subjects site in bedroom count, bath count, characteristics count (Basement versus basement) bring these back to the appraisers and the honest appraisers will look at them and reevaluate the home if you do your homework and do it good.

I am supposed to close my house in September 23rd which is next week. Two days ago I got a news from my realtor that my house was appraised $19,000 less than the price that the buyer was willing to pay. I reviewed the appraisal and found out that the appraiser compared the houses that are not comparable to my house. He came up with the value of my houses based upon the distance(within a mile), without considering the builder of the houses, style, size, and upgrades. The subdivision that my house is located did not have a house which was sold for past six months. Few of my neighbors pulled their houses from the market because they do not want to loose too much money. I am trying to sell my house due to my husband's job. The appraisal is a nightmare for me at this point. I am trying to sell my house with least loss that I can take, but the appraiser think my house is over priced. It does not make any sense at all. $19,000 is not small amt of money, almost 8 percent of my house price. I feel like I am punished although I have been a good citizen paying my bills and taxes on time. On the other way, the lenders are blessed with new rule to make profits again at the sellers' loss. It seems to me the sellers do not have any right to protect their asset anymore.

I have certainly read most of the comments here and as I home seller I can definitely say that the person being punished here are the buyers who bought during the bubble. I didn't appraise my home when I bought it and I would have GLADLY paid less for it. Why is it that I am supposed to take a hit, not because the value of homes in the area have gone down, but a group of people have decided that home sales were going up.

To make matters worse, if the bank used appraisers that they knew to get the values that the seller wanted, then other appraisers were using those same inflated values to judge new appraisals and the process continued. For those who bought their houses, especially people like me with one total house, it's pretty unfair.

- The bank suffers nothing as long as they didn't extend credit to someone who couldn't afford it (A different subject altogether). Yet, they were part of the process of deciding the value.

- The appraisers suffer nothing because they were just following each other. And now they have this new process that mathematically makes no sense. I have read many an appraisal and the 'magic' they use to make one house match another is ridiculous. It is so open to interpretation and opinion that in itself it is flawed.

- The buyer, who is many instances is not moving to make money but maybe took a new job somewhere, is left to take the entire brunt of wrong that was done.

How is that fair? I can understand property values losing value for things like areas becoming less desirable and what have you, but clearly, the buyers were not trying to inflate the values, so why are they the ones who are getting punished.

So while these new rules may be trying to fix a wrong, they are fixing it by not penalizing the people who created the wrong. And like I said, this has nothing to do with foreclosure issues or people over extended, that is something totally different.

…4 times and couldn't get them to use that house as a comp. These appraisers are purposely using lower short sale and REO comps and incorrect comps to derive an appraisal. I feel like giving up and feel like there's nothing I can do. I'm well qualified to do this Refi with a FICO of 780/790 and never had a late payment. This 80% LTV and lowball appraisals are killing me.

My home was appraised for $95k under what the last house 1 month ago sold for down the street. I feel so cheated. This is the 2nd attempt for a refi after trying it the beginning of this year. And that time a house literally 4 houses down was NOT used as a comp and it sold with in the past 2-3 months. I fought and fought that appraisal 4 time

NOT EVEN CLOSE! I purchased the home five years ago, about a year before the peak. It was just appraised for exactly what I paid for it. This same floor plan, in the same neighborhood, but on a main road, sold for 225,000 just two years ago. This is telling me that we took a 100,000 dip? In two years? The home is located in North Florida, which although hurting, did not see the decline that southern florida did. Now, I either sell it at that price, or decline the offer and try to find a none FHA buyer, or just leave my family there for another year, while I work 8 hours away. Were is the help for the guy who has paid his bills, did not over spend, and has done the smart thing? How is it that a home in short sale is valued lower? It's value should not change because of short sale or foreclosure, it would cost almost 40,000 more to build my exact home again on the same piece of land? Were is the logic in this?

Thanks Dan from Reno, great comment earlier. The real estate industry has decided to make the appraiser the bad guy, when it is the appraiser who is the only person with the training to come up with what a home really is worth. Realtors and those home shows make sellers believe their home is going to be worth much more than it is and that is the problem. Articles like this make it even worse.

This HVCC is a nightmare for those of us trying to buy or sell a home in Florida the conventional way. We just walked away from one house as the appraisal was $57,000 below the price we offered and the seller would not come down. We have now put in an offer on another home and the appraisal just came in $41,000 below. We are now trying to negotiate. These are really nice pool homes in good areas. Both of these homes were priced well below what the seller paid. Due to forclosures/short sales in Florida, we who have followed the rules are suffering through this nightmare of trying to buy or sell a home.Use to be you worried about getting financing, now you worry about the appraisal not coming in too low.

What's this? The appraisers are all patting themselves on the back for appraising all homes way lower now. These are the same appraisers who over inflated the values earlier locking many home owners into upside down loans. Where were these so called values then? You guys are crooks, that's what.

My home is assessed at $736.000 the appraisal came back at $529.000. check ed with their "FLY" over appraisal every home in town was 20 to 27% below assessment. Follow this logic the TOWN IS BROKE. Is this the BANKS back door to say no and HOLD ON TO THE GOV. MONEY. Spoke to 5 diff people got 5 diff ANSWERS. GO FIGURE! disgusted and despondent. BTW this bank is broke but has been bailed out the U.S. payer.

We just has two appraisals done on our home. Our current loan is jumbo with an arm, we are going with a first and second to go below jumbo limits and get a fixed loan. The first appraiser came in at $900,000. The other appraisal done 3 days later came in at 1.2 million. The first appraiser rated a comp that was new construction, did not sell for 2 1/2 years and finally sold at a $800k reduction in price as "superior" construction while he rated ours "good". He came into a neighborhood of custom homes that are all in the million dollar plus range and asked if we had added any "goodies" like granite tops or wood floors. Kinda standard for this type home! His value of our 8 acre lot was the same as his value of a .25 acre lot in a bad school district. All in all, this idiot caused us to have to fork over substantial cash to get the total loan amount under 80% of his "value". Our recourse? Nothing.

I'm facing bankrupcy and other major events, and one of the reasons is the appraisal we got several years ago upon taking out a second mortgage. I think it was highly inflated and the broker was perhaps working all too closely with the apraiser to get a value high enough for me to qualify for the loan. No way we can sell the house now and pay off the 1st and 2nd, and it's not because of depressed values in our market – this ain't Phoenix. It's because the appraisal was flawed, and now we're in a financial dilemma that can't be fixed by selling the house. So I welcome changes the other way – better a conservative estimate that keeps some sales and loans from completing, rather than getting an inflated estimate that causes problems down the road. All these same realtors and brokers were happy to sell and close on the inflated values; now with more control and oversight they're crying. Too bad. I wish these rules had been in place when I needed them.

I have 2 offers to purchase my home. I negotiated and accepted a fair price with the first offer. The house was then appraised at $13,500 less than our agreed price. The buyer instantly wanted me to reduce my price by $13,500. I refused and to lower my price. The second offer was also well above the appraised value. If appraisals represent what the market is willing to pay for a property why do I have multiple offers for more? The contract is now positioned to fail. I will be left with a house people want buy but can’t because the bank feels it is worth less than what they are willing to pay. Also, how does a market recover if the appraised values are in this appraisal limbo?

I'm selling my home and the closing is in 5 days. The buyers are using an FHA loan, and the appraisal was done weeks ago. It appraised for $1000 more than the agreed sell price. I found out today, that the underwriter is going to do a "drive-by" appraisal of my home on his own, because he doesn't like the appraisal done by his own people (the FHA required appraisal). Is this legal??

He could potentially undervalue my home in an attempt to get his "friends" the buyers, a better deal on my house. Or he could lower the appraisal just to make a more secure loan for himself. In hopes that I'll accept a lower price because it's last minute.

Like I said, the appraisal was done weeks ago, so why would he wait until 5 days before closing. This could be the next wave of Mortgage Fraud. Lender's greed once again.

I know I don't have to sell my house for less than agreed, but this has been a three month closing and I've already moved everything out.

Help……

This post is intended for Dan of Reno, NV regarding part of one of your previous posts:

"For example, an appraiser should NOT make an across-the-board negative (-$25,000) adjustments to all comparables for a superior view. Or, the appraiser should NOT make a positive (+$50,000) across-the-board adjustments to all the comparables because they are have inferior quality of construction. All adjustments should (must) be proven by market response or no adjustment should be applied. I’m not defending the appraiser that wrote the report on your place. I am simply illustrating the fact that everything in the report should (must) be proven by market response and condition. Although the term “Opinion” of value conjures the illusion (and some appraisers succumb) that the appraiser’s opinion is the result. In fact it is the MARKET’S opinion of value not an appraiser’s. When I review and see an appraiser make line-item adjustments unsupported by market evidence I know I am dealing with an appraiser who is invoking his/her opinion and not the markets."

In reference to not making across the board adjustments for view/construction quality without them being proven by market response:

Are you implying that adjustments for these things can be appropriate, but should somehow be different for each comp? How would you determine/document the proven market response that warrants the adjustment and its amount?

My initial thought when reading was that market response would be proven through comp sales leading me to wonder if you were/are saying that these type of adjustments should not ever be used at all?

One result of the HVCC, is to drive experienced appraisers out of the business, or into other areas. Many of the remaining appraisers got into the business when the market was "hot". Their training, often inadequate.

One of the comments I read, indicated that the appraiser could only use the square footage. That person is not an appraiser, but a glorified Realtor. Perhaps a case of poor or no training.

Appraiser fees have been reduced, fees to the party paying for the appraisal have increased and the middleman pockets the difference.

If you want really good appraisers and appraisals, be willing to pay for it. Many of management companies are only looking for appraisers with the lowest fees. They are not looking for quality appraisers.

Our purchase price of $155k was backed up by the lender's appraiser at $155k. Howeve, after the lender sent it to the "home valuation group" they reduced it by $20k to $135k. We don't want to put another $20k into the deal and the seller won't reduce the sales price. What a pain this is so we will try another lender who does not use the Fannie/Freddie money.

On July 28, 2009 we sold our home in Celebration, FL for what we paid over 4 years ago. The appraiser said that he could only value the home based upon square footage and nothing else. This is ridiculous as we put over $50,000 into the house after we bought it and it was in pristine condition. The $50,000 was mostly for kitchen modernization and other similar items that normally add value to a home price.

While I totally agree that something needed to be done, the pendulum has swung way too far the other way – as it always does in times like this.

I am looking at purchasing a multi-family dwelling in a nice area in Miami. The comps used were atrocious. For Example, a similar building across the street sold for $200k, $35k less than my offer. Looking carefully into the comp, it was a foreclosure with "major repairs needed". Obviously, not the condition my property is in. Well, the bank accepted that comp as a qualified comp although it was over 10 months old and in poor condition. This was not apples to apples comparison. All the comps provided put this property at an average of $235,000 or higher.

It seems that banks are now trying do deflate the bubble just as much as mortgage brokers were trying to inflate them. Are there any actions we can take towards banks trying to move the markets in their favor?

Just got two appraisals back on my home during a refinance. One appraiser happened to be local, the other from a very hard hit area in another county. The local appraisal was $1,440,000 and the other was $850,000, even though the best comps (not used and/or negligently mis-assessed). One home in escros at $1,600,000 and recent sale at $1,450,000 of nearly identical homes not counted. My loan has fallen apart with no possibility to save.

I live in Boulder, Colorado, a high demand market where single family homes have lost almost no value (and many have continued slow appreciation since there is basically nowhere left to build them in this growth-controlled area). Condos have slightly declined, as more are being build. The rental market is still extremely strong with two universities and lots of temporary researchers and seasonal outdoor enthusiasts.

I just received an "automated" appraisal which was more than 10k under the recent tax assessment. I know I won't be able to fight the assessment because the same home with a smaller lot 2 houses away from me sold for over 60k more in September.

I am seeking an 80% LTV HELOC, however my approval was for less than half of what I applied for. I applied at another bank (a national bank with local presence) and got appraised around 10k higher (at least it was on par with the assessor) and assured by a local banker that I could get closer to the actual value if I pay for a drive-by appraisal (at least that appraiser should know the market). I'm hesitant to spend the money since because of this low-balling, and there is another comp which needed major foundation repair that sold for around 100k under it's repaired value a year ago, which is dragging our comps down (not a forclosure, just distressed).

I refinanced 6 months ago and had an appraisal at 30k over the assessment from a drive-by. At that time I was told by my broker that it was still low but all that I needed.

I have a mid credit score of over 760, with low DTI and am having trouble getting a HELOC for over 35k. No, I am not entitled, however I closed one out for 75k in order to refinance, and my house still hasn't lost any real value… only the appraisal has.

Seemingly the only way I could prove what it is worth though is to sell.

This post is for Barb in Commerce MI. Barb, I wanted to answer your question posed in your post wherein you ask, "So basically if I wanted to sell my home for $1.00 does that mean all the homes in the neighborhood are now worth $1.00??" and I want to answer it with the following question. Barb, if you are shopping for a home and see one with a list price of $100,000 and a similar home listed for $125,000 which one are you going to buy? I know I'm buying the cheapest one I can find of all that fit my criteria. So the answer is yes, it is worth a buck so long as $1.00 houses are available to purchase. Until all this inventory is absorbed, balance achieved, marketing times stabilized and economic conditions beget confidence this will continue. Don’t let politicians lie to you and tell you otherwise. The market will rule regardless how much DC tries to manipulate it. In fact their tampering simply prolongs the pain.

This post is intended for B. Jones of Oneonta, NY. B. Jones, the contention listed in your post is founded with the single most often complaint posed by the public. I say public because I am an appraiser and field many of these complaints when I am hired to review appraisals. Very quickly, if the appraiser did not have comparables to use with similar (or preferably better for bracketing) upgrades, amenities, features and fixtures as your home has then he/she cannot include all that you listed in the appraisal assuming the appraisal was intended for a conforming mortgage loan. If you have a home that features upgrades and improvements not found in the comparable market then your home is considered an over-improvement and super-adequate for your market area. I really wish the real estate community would educate themselves first and then the public second with regard to this very topic. Rule number 2 in real estate is cost never equals value and of course rule 1 is location. Your appraisal was intended for a HELOC and mortgage lending guidelines assumedly apply. I read your post and wanted to share this with you. To expand further, the public should know the 10/15/25 guideline we appraisers use. The 10 means no comparable should be more or less than 10% of the gross living area (square footage) of the subject being appraised. Also, no adjustment should be greater than 10% of the sales price of that comparable. 15 means that the net adjustment should not exceed 15% of the sales price of that comparable. It is a simple calculation whereby the sum of the grid (may be a positive or negative number) does not exceed 15% of that comparable's sales price. And 25 means that the gross adjustment should not exceed 25% of that comparable. It too is a simple calculation wherein the comparable grid, regardless whether the adjustment is a negative or positive number, is added as a positive sum (will be a positive number) and does not exceed 25% of that comparable's sales price. This is just the beginning but I wanted to spend a moment and address your post. Sometimes I get lengthy. I know nothing of the appraisal written for your home but did want to share this with you as it may be a plausible explanation.

And…my lender refused the loan even after the appraisal came over the offer price – based on personal preference disputing the appraisal! Can we have take any action against such lenders who not only have swung 180 degree?

It seems to me that the value of our homes are being undercut by the banks putting foreclosed homes on the market for some arbitrary price that is about 50% below what any other homes in the neighberhood have sold for or are worth. This is not fair. Of course someone will buy that home – and then the rest of us suffer when we want to sell our homes. In many cases that cheap house that has been dstroyed by the owner before leaving… will cost lots of money to get back up to standards, thus adding back in the 50% in value. In the meantime the rest of us loose if we want to sell or refinance.. So basically if I want to sell my home for $1.00 does that mean all the homes in the neighberhood are now worth $1.00??. this makes no sense…

Thanks, Dan. I've already done some of those things. I had e-mailed the appraiser with my viewpoints, but never heard back from him so I assumed it was prohibited under HVCC. There ended up being some bad vibes between us even before the appraisal, when they no-showed for the first two appointments (and didn't even call the second time). At that point I became upset and asked for reimbursement for the vacation time that I had taken off work to go meet them, which I felt was reasonable and honestly if I had flaked out on two appointments with someone like that, I would have offered them at least that without even being asked. But they (I only ever got to talk to the secretary, and the assistant appraiser who eventually did show up for the third appointment) seemed to think I was being unreasonable. I asked the bank (B of A) for a new appraiser at that point, but they told me it would delay the process (which was already weeks behind schedule in the appraisal) further, and I didn't anticipate the kind of low appraisal I got so I went ahead with them. Once again, I should have stayed with my own wishes on that one.

After the initial appraisal, my loan processor told me I could appeal by having my realtor send in some comps. My realtor sent in about 10 comps supporting a higher value. My loan processor, who was quite experienced, told me they looked good and she thought I would be fine on the appeal. When the appeal came back (6 more weeks later), I found that the appeal had to go through the same appraisal company (LandSafe), and they addressed only a couple of the comps that my realtor had sent and gave me an even lower value than the first one. Reading their comments, it looked like the second one had been done by someone in Timbuktu at a desk with a map–they had no knowledge of the local area.

The people at B of A were sympathetic and actually are at least refunding my $500 application fee (that's the thing about my steak and lettuce analogy–you also had to pay for the meal in advance). They never offered me a chance to get my own appraisal, so I was assuming it had to go through LandSafe.

I'm having a hard time letting go of this one obviously because I think it is wrong and could potentially cost me a lot of money over the at least 10 years I anticipate living in this condo, but there's pretty slim chance of anything getting corrected at this point. I've been e-mailing LandSafe, and am due to hear back from their Customer Relations people, but haven't heard anything for a week. So here I sit with a Modelo, counting my blessings , which actually are still many.

I have a Freddie Mac loan, which at this point means I could only re-fi through my existing lender (which is another thing that drives me nuts about this–they already have the loan to value risk whether they like it or not), since I have less than 20% equity. But after October 1, I can re-fi through anyone, so if interest rates get sub-5 again and my value still seems good enough, I'll try again through someone else.

Thanks for your information. I'll consider getting another review, but I think you're right, I don't think the lender would do anything about it even if it came out better. Enjoy that clean mountain air!

John, many a doctor has botched an augmentation and many a dentist has chipped a tooth while filling another. Your appraisal may be erroneous. I would like to share with you that in fact you can talk to the appraiser. His contact information should be in the report. If he states he cannot speak with you, get a letter from your lender giving him permission and that is all you need. It is not prohibited in the HVCC (Home Valuation Code of Conduct) for the borrower to talk to the appraiser. That's a false rumor. I did want to explore for you the principles of substitution and anticipation. In your appraisal are there comparable listings or pending sales? The value may well be predicated on substitution. It's as simple as it sounds and the question to ask is, "Would the market purchase your home/condo today for $(pick your opinion of value) if there are "similar" properties currently listed for less? The answer is a definitive No, it would not. Furthermore, given an analysis of decline rates (I won't bore you with that math) is it proven hence necessary to adjust for anticipation? This asks, "Is the market anticipating a continuation of decline and waiting for a greater economic opportunity before buying?" A prudent opinion of value will analyze these and the value result may well be below any of the comparable sales prices. The key is to evaluate the adjusted sales prices at the bottom of the comp grid and then review all the adjustments the appraiser applied and then analyze if those adjustments are supported by the market reaction or economic condition. For example, an appraiser should NOT make an across-the-board negative (-$25,000) adjustments to all comparables for a superior view. Or, the appraiser should NOT make a positive (+$50,000) across-the-board adjustments to all the comparables because they are have inferior quality of construction. All adjustments should (must) be proven by market response or no adjustment should be applied. I'm not defending the appraiser that wrote the report on your place. I am simply illustrating the fact that everything in the report should (must) be proven by market response and condition. Although the term "Opinion" of value conjures the illusion (and some appraisers succumb) that the appraiser's opinion is the result. In fact it is the MARKET'S opinion of value not an appraiser's. When I review and see an appraiser make line-item adjustments unsupported by market evidence I know I am dealing with an appraiser who is invoking his/her opinion and not the markets. The appraisal practice is very accurate when engaged and resolved properly and is quite reliable. On a parting note, your steak and lettuce story suggests that you believe you have been lied to. The appraiser simply lied as did the chef. Lettuce has simple resolve; I'd send it back obviously and not pay for the meal . . . , well, except for the Sierra Nevada Pale Ale I guzzled while counting to 100 so I don't beat up the chef. Insofar as your appraisal, demand a forensic review by a competent appraiser familiar with your market. If your lender refuses, get a copy of the report, as you are entitled to one by law, and pay for a review yourself. It is typically less than the appraisal cost and make sure you request a "Field Review" with commenting. Make a copy of your report and black-out any information that would let the review appraiser know who the author of the appraisal report is including report numbers and appraisers email, address and/or phone number. Most of us know each other and you do not want any human tendency involved in the review. When you get the review, if it supports your claim, send a copy to your lender. Demand underwriting reconsideration and/or a refund for both the appraisal and the review. I doubt if the lender would heed your demand but . . . , well I recommend a Sierra Nevada Pale Ale and counting to 100.

We just had our home appraised for a home equity line of credit. Initially the bank sent someone by just to take a roadside picture. I guess they then just based their appraisal on our assessment, which was really low. Then we said there is no way our house is valued that low and the bank sent out an appraiser to do an internal inspection. This appraisal came back low, but a little higher than the first one. The interesting thing is that it was noted on the appraisal that none of the interior ammenities were included. We have all ash floors, bathrooms have marble and granite, granite surround around tub, special cut out arches, cherry kitchen/granite counters, all cathedral ceilings, oak cabinets in the laundry room with Corian counter, Kohler sinks throughout, permanent hickory entertainment center in the living room, built in plasma tv, solid wood doors and moldings, Pergo typ floor in the basement, marble floor and Corian counter in the bath there, etc. None of this was counted, so now we are concerned if we need to sell we will never get a bank to appraise our house for what it is really worth, which is at least another $100k than the value they are appraising it at.

Thanks for the response, Dan. A couple of things:

I'm glad to hear you think that the appraiser's job is to determine what the market price "is". That's exactly my view. My problem with my appraisal, though (and many of the others commented on here and elsewhere) is just that: it doesn't jive with the comps. And there are many comments below from appraisers and others that market prices have been and are still "too high", which is a valid viewpoint but I don't think it's the job of the appraiser to determine what the market price "should be". I see their job as to determine what it "is".

If values should be discounted because a foreclosure sale is worth less to the lender than the full market price to a "normal" seller, I can accept that as a valid point. But that's not what's in my appraisal report. What's in my appraisal report is marked down value for my property relative to the comps, based on faulty and outright fictitious factors, such as stating comps have $100K superior "quality of construction" when they are in my same complex with no upgrades, or a $75K view from one upstairs bedroom that overlooks the (noisy and polluting) freeway with some ocean in the background. My condo appraisal came in 25% below the lowest foreclosure sale in my complex, and 40% below the most recent foreclosure sale in my complex (which was a month ago). My unit is being discounted relative to comps based on the very criteria (location and views) on which I chose my unit over the comp units. I'm all about location and views, and I could have chosen to buy units similar to my comps–but mine is better on those factors. But no one is allowed to talk to the appraiser about any of this.

Since you liked my Starbucks analogy, I'll go back to the one I gave earlier which you may or may not have seen. It's like going into a restaurant and ordering a steak, and the waiter brings you a piece of lettuce. When you say "That's not steak, that's lettuce", the waiter responds "Oh, no, our chef is a professional, and he says it's steak, so it must be steak". You may not be a professional chef, but you eat. You know steak from lettuce. I'm not a professional appraiser, but I've been in my segment of the real estate market in my area, and know the strengths and weaknesses of the various locations and complexes–it's a small town and there aren't that many. My appraisal report doesn't show any such knowledge of my segment of the market, nor did the appraiser (well, his assistant, actually) who came to do the appraisal (when he finally showed up for our third scheduled appointment after no-showing the first two times).

I dig the Starbucks analogy but to compare (no pun intended) a purchase of a share of stock to a mortgage loan is like trying to make fresh squeezed orange juice out of a bushel of apples. You'll get juice but it won't be citrus. Buying Starbucks at $17 when you "think" it is only worth $10 completely makes my point. In fact it strengthens it. First, buying at $17 when one feels it is only worth $10 immediately makes me question the savvy of the purchaser. Second, if he loses money because in fact the market deems the share worth $10 then he lost $7 of his invested $17. Let's not forget it was also HIS $17 he spent to buy the share. It is not his $235,000 he is spending to buy the home however, it is the banks $235,000. Back to my point earlier; an appraisal is more an analysis of the collateral risk to the lender than what is the value of the property. Also, defining "value" for mortgage lending simply means, "What is the most probable sales price of the home today." Lastly, what a value "should be" involves forecasting. Relocation appraisers (I am one) are quite apt at calculating the probable future sales price and typically, if formulated properly, will hit the forecasted mark +/- 4%. Relocation appraisers are evaluated on their ability to accurately forecast for relocation companies and those who can are considered a very valuable professional for these agencies. With this said, a good relocation appraiser typically hits market value "today" (no forecasting) with even greater accuracy. Lastly, regarding your comments alluding to what a value "should be," it must be noted that a value "should" never be. That is manipulation for an anticipated/desired result. Value/Price never "should" be but simply "is." Politicians are great at the "should be" game and the result is ALWAYS disastrous. The market determines quite well when left alone. I don't know anything about your appraisal but I can almost assure you that the appraiser who wrote it does. A common mistake by the public is that the public most often wants to compare and adjust their home to the market as opposed to comparing and adjusting the market (comps) to their home. There is so much more to appraising than meets the ordinary eye. I'm writing a book on the topic as we speak that will include an excel spreadsheet/disk that will allow Realtors and the public to "price" their property in conformity to bank guidelines. Someday it will answer many questions and misconceptions.

To the appraisers reading:

Some of you are of the view that real estate values were (and still are, apparently) "too high". Fair enough. I'm not going to try to argue that point with you.

What I'm curious about is how is it then that you determine what a value "should" be? A formula–square footage times acreage times year built divided by zip code? And who gets to make that determination, if we're not going to use comp sales?

In the end, we can all argue until we're blue in the face over what values "should" be. But what do we really have to go on except comps?

I can construct an absolutely brilliant argument complete with colorful charts, graphs, ratios, and elaborate calculations, that a share of Starbucks should sell for $10. But if I want to buy one, I have to pay $17 because that's what "the market" deems it worth. And anyone wanting to sell one can do so for $17. So what is the value of that share? $17. It is what it is, no matter how brilliant my argument is that it "should" be otherwise.

What I'm upset about (and others here) is that my appraisal is way out of line with the comps (even foreclosure sales, in my case), better known as "the market".

You're right, there is a problem. Refi's and purchases for years were over-funded with pressure-inflated appraisals and is rearing its ugly head today. However, the problem isn’t “here” as you put it. It is there, in historical perspective, being decanted by the marketplace. This is a great expose’ on how the market rules. Try as the government might to force the “Home Ownership Right” by threatening Federally Related banks into making stupid loans to unqualified stupid people with novel and stupid lending instruments could not escape the power of the marketplace. Correction to reality was inevitable and we will simply have to let the marketplace do what it does best – take care of itself. So long as politicians continue to muck it up the recovery will be extended and unnecessarily more painstaking. Get Obama and the liberal democrats to stop stealing from the earners to give to the lame and lazy, stop the corrupt in DC from tinkering (destroying) our BANKS Money (our money), stop the fleecing of America and social engineering, stop stealing business’ and giving them to unions (GM and the UAW), stop the disastrous unhealthy kill us all bill and we might stop the fear investors have in America! Back on track, 12 applications, 10 properties upside-down . . . , hmmm . . ., Do those 10 all own nice boats? If any of them are upside-down from a previous refi I bet they do.

In the last 12 deals I have walked across 10 of the appraisals have come in less then the borrower owed. There is a problem here.

I've read many of the posts in this thread and I'd like to comment as a Certified Residential Appraiser and Corporate Real Estate Broker. First a common nomenclature throughout this thread is that somehow a wrong is being corrected with more wrong. The opposite is actually the truth. A wrong is being corrected with a right. Had appraisers not been MADE to value properties by the banks there simply would not be a mess today. The way appraising is being conducted today is close to the way it should have always been – unbiased and unpressured. To Bill from Powder Springs, your home was probably never worth $235, assessed value is sum cost derivative and cost never equals value, zillow and trulia are cost analyzed algorithms and price per square foot is more cost data. Market Comparison is very different and insofar as mortgage lending is concerned, the "value" of a home is actually an analysis of the collateral risk to the lender. It's amazing watching the Association of Realtors (I am a member) loan officers and brokers as well as real estate agents complain about appraisers today. All these people/organizations have one common thread. None of them are lending their personal money in the transaction but are all collecting commissions from the consummation thereof. Never forget the golden rule, "He who hath the gold maketh the rules." I defend appraisers today who are the subject of ridicule. Doing our job today simply makes for shooting the messenger. I've had MANY angry borrowers/loan officers/Realtors resulting from the truth but have never had an appraisal overturned, rejected or fail a peer review. It is not the values are low today it is that they never existed yesterday. No one sees the elephant in the room. When the fox is in charge of the hen house why does the farmer scratch his head every morning wondering where are all the eggs? The banks wrote the rules and DEMANDED the values. The people accepted these stupid loans they couldn't repay. And, the Realtors are the least knowledgeable in the real estate industry. All three of the above were the aggressors’ and the appraisers capitulated by duress. Just like insurance companies and the government "Telling" Doctors how to practice, and we all see today what a mess out health care system is today, It too has been no different for appraisers as we have been "Ordered" for years to either make the value or they would find someone who would and next month, well, forget about appraising anymore.

I am a mortgage broker and consider myself a sucessful real estate Professional. I have also been affected by the economic meltdown and would like to share that a verifible number less than 1% of appraisals were done fraudulently. A market is what it bears. Much vitriol is spent in these comments regarding the real estate industry, and as in any company there are bad players. For the most part it is a great business and I still enjoy participating. Facts are the industry collapsed as a result of guidelines established by the global bankers to loan money to anyone with a pulse. We are paying for that. It was not me a mortgage broker who encouraged it but rather worked within the system just as all the other people felt free to spend all their money. The biggest loser in this HVCC debacle is the Appraiser. They are 99% plus a great group of people that earned a respectable living. Now Congress mandates that all brokers and appraisers and Realtors are cheats and it was our fault and they know how to fix it.Please but Sorry I dont buy it. Appraisers have had their carrers stolen by the government to fix a problem that was by and large non existent and I respectfully submit that if you as a doctor/any business you were told that tomorrow you must work for company X at 1/2 your income you would scream with anger. This is the reality for an appraiser today. You can not be independent(not allowed) and you must work for the man . The Hvcc product stinks I have had 1 home appraised 3 times 325k, 375k ,390k If this is a fair representation which is real. Clients get ripped, Appraiser industry gets ripped and all marlket participants are triplicating their efforts for less. Good luck to us all. And to all the Winers please feel free to cut your income by 30 -70 % and see how you do at your job in the futre.

Recently attempted to refinance via Credit Union to lower rate and term. Purchased a 3 yr. old house at $210K in'03, assessed at $235 in '07. Appraisal came in at $150K this week. CU says apprasisals were based on "comps;" one a 50 y.o. foreclosure and the other a smaller house with a smaller lot with 2 car garage vs. a 3 car atached garage plus a 1 car detached garage. Big bone of contention was the lack of adequate comps and the fact that my 2497 sq. ft. home was appraised at 1700 sq. ft. Apparently, a finished basement (bedroom, full bath, and rec room) don't count for appraisal values but count for tax purposes. According to CU, can't appeal appraisal. Nice to know that my house is worth 60K less than what I paid for it and 85K less than assessed value. I owe $155K so I'm upside down. Can I get some government assistance? Note: every other house in the development is valued at between $190-208K (Zillow and Trulia) with no repos or short sales, and 2 turnovers in last three years, of 21 homes in the development. The appraised value works out to slightly over $80/sq.ft. replacement value. According to my insurer, replacement cost of the house and the extra garage is about $131/ sq.ft. What's up with that? Lender's are going to the opposite extremes to mitigate risks. It now appears that buying or owning a home is on par with buying a new car, except houses are being appraised at a faster rate of depreciation than cars.

This new appraisal system is 1 mans opinion of TODAYS worth of a property. We are right now to the very far Extreme of the conservative side of the pendellum swing. We had the very far liberal side for awhile.. I predict that 6 to 12 months will move us back to center. One reason I think this is because these appraisals today are far less than the cost to produce. you can't sell at that rate long until there is nothing left to buy, then the market is forcrd to move higher.. Another reason is that the municipalities can't stand the revenue loss of the lowered property values, ie: Lower property taxes. They NEED that money to continue their excesses.

I am also 1 of those complaining, )Read my earlier remarks) but to clerify my earlier statements, none of my houses are more than 60% financed, Even at todays appraisal rates…

I recently bought a foreclosure for $170k. It's a townhouse, so finding comps is simple. Similar units in the same development sell for $200k. There are at least five sales around that price in the last 4 months. The appraisal: $172k.

Closely examining the appraisal, I sensed that the appraiser worked very hard to keep the value low – his comps were sales made in winter months, he understated my square footage by not including the finished basement, and even chose a comp with a greatly different floor plan when several others with identical layouts were available.

I suspected that he was trying to "hit" the number I was paying. My realtor confirmed my suspicions – he tells me that these days, all appraisals come in exactly at the agreed sale price. That mine came in 2k over was a sign that the appraiser was having a hard time justifying going so low. Appraisers are now afraid to estimate too high, lest they run afoul of the new centralized appraisal system.

I believe that this is a just and right approach. After all, a property is only worth what another is willing to pay. Wild speculation and widespread seller-rebates got us in to this mess. Only a sound, objective valuation system will get us out.

To those complaining about their re-fi appraisals coming in too low: You paid too much for your house. Accept it. If you can't rent your place out for close to your monthly expenses, you took a huge gamble when you bought it, and you lost.

All of you folks need to realize that your "unfair" apprasials are a reflection of what your property is WORTH, like it or not.

"B…b..b..but Zillow says.." HA!

As a buyer, HVCC causes the process to take longer to get the appraisal done and it's more expensive to the buyer. We lost a home that we really wanted due to a low appraisal that took so long to do we had already paid for the required inspections so we were out that money and had to go look again.

The majority of bank owned properties are run down pits with ripped out appliances and need a boat load of $$ to bring it to livable condition. Trust me, we saw them ALL. Bank owned properties should be considered "wholesale" pricing, not market value. If an appraiser chooses to use one for lack of any other comparables, I feel they should make appropriate adjustments for condition and estimate what it would've gone for had it been owner-occupied and well taken care of.

I was n the middle of refinancing my beach condo when the appraisal came back and it is half of what the property is worth. The appraiser used one bedroom efficiencies that do not have kitchens, heat, are only accessible six months a year against my two bedroom condo with a full kitchen, heat, full access, newly renovated exeterior, ep henry pavered courtyard, landscaping, etc as comparable sales. The appraisal also has errors in it and it compares an one bedroom unit in my own complex as "superior" to my own. This is crazy. I am told I cannot speak to them. A management company randomly selected an appraiser. I am being told more fees could be incurred if I can not close soon while this appraiser is taking his time getting back to us. No wonder our economy is on hold. Someone has to do something about this. The people who played by the rules and did not become greedy are the ones suffering. Why is it we always deal with situations on each of the extreme ends? A little common sense goes a long way.

I just got burned by a low appraisal. I had gotten an appraisal of $650,000 2 months ago, Zillow has my house valued at $688,000 so I felt the appraisal was fair. But the bank wanted a new one and the new one came in at $520,000. The appraiser only used foreclosures, a house that was on the market over 500 days and a quick sale at a discount for comps. There are many other homes that have sold in my area for much higher prices. I live in a very desirable area. The appraiser had no clue about the area and had never even been there before.

The new appraisal system is a farce. I've experienced the same situation where there is a 20%+ haircut applied to every appraisal. Local realtors are seeing the same exact thing accross the board which is BS.

Just what the Banks needed, another way to be more conservative in the value of a home. With this format how can property values ever go up? Use a foreclosed home sale as a comparable to a home sales where the seller wasn't looking to just unload it. How can any appraiser consider that to be an equal comp? I'm sure the Lender would question any adjustment to value because of the type of sale and then say that the appraiser wasn't using good judgement and then take them off their appraiser list. Oops but wait, that's what started this HVCC thing to begin with. When this housing market trys to go higher just watch the Bank's say "hey it's not are fault – it was the "one eyed appraiser" who came in too low, sure we know it's worth more but what can we do we have to live with this appraisal too." hehehe.

How about this joke. I was going through Wells Fargo Home Mortgage and had my appraisal done and it came in at 375,000 on June 1st 2009. I was denied the loan because of income. So i decided to try out my nearest broker. I wanted to make sure my loan got approved before we ordered the appraisal so I wasn't stuck with another appraisal bill. All the conditions on my loan were signed off on EXCEPT the appraisal. The appraiser comes out to my house and the appraisal comes in at 276,000. This was 3 weeks later. How in the hell does this happen? I owe 300,000 on my property and I can't do the loan there now. I am out almost 1000.00 dollars in appraisal because of this jokeHVCC!!!!

So many people talk here about upgrades not being part of their appraisal.

I bet they don't complain about not paying property taxes on those upgrades! Also, I could pay my uncle $100K for $50K worth of upgrades. It makes no sense including upgrades in appraisals when you don't pay extra property taxes for them.

Face it, the appraisal amount is what the bank thinks they can sell your house for (or about) if you stop paying your mortgage. You are free to put up the extra money and claim that your house is triple the bank's appraisal!

Why is that not fair? Cuomo is the man.

Wow, look at all these comments from underwater homeowners. I read a few comments from ppl with 2-3 homes!?!? and complaining about appraisals o these curent value is too low.

You bought it thinking the value will go higher and now complaining that it's too low for you to re-finance.

Must really bites to know you overpaid and cannot unload your houses.

Just look at the comments – its the longest I've seen from any article – no wonder Obama's re-financing thing-a-ma-jig is having problems.

Yes, this definitely is an ongoing issue very much in SF Bay Area… I have had 3 appraisals done for my home and the results were totally different from each other.
I am still in the refinance market after searching around for 4 months and yet unable to refinance because of this one single constraint. I am also willing to put down some more money, but the valuation done by these appraisers does not even permit that to be made possible!

Yes, Houston, there is a problem with appraisals. I've just tried to refi my condo (through my existing lender, B of A), which I bought 16 months ago for $525K, and was denied because it was appraised at $320K. I contested the appraisal (which I was only allowed to contest through the same appraisal company), and they came back with $306K. And this, after the appraiser didn't even show up for our first two appointments, when I took time off work to meet him.

No condo in my complex–including foreclosures–has sold for less than $400K in 7 years. A foreclosure just sold last month for $508K. But it was left out of the appraisal because it was 1300 sq ft, where mine is only 1100 sq ft. So they used comps from lesser complexes to mine, plus a couple from my complex that were marked down huge amounts on mighty shaky grounds. One sale was marked down $75,000 for "ocean view", which it does have from one upstairs bedroom but it's really a "freeway view" (with attendant noise and air pollution) with ocean in the background. Another comp in my same complex was written down $100,000 for "quality of construction", when it's in the same complex. I saw the MLS listing for that one, and no interior upgrades were mentioned in the MLS or visible in the photos. The appraisal report cites a 12% decline in value in my area over the last 12 months, but they're giving me a 42% decline in 16 months.

No one is allowed to question the appraisers decisions. No one is allowed to say "the emporer has no clothes".

It's like going to a restaurant and ordering a steak, and the waiter brings you a piece of lettuce. You say "That's not steak, that's lettuce", and the waiter says "Oh, no, our chef is a professional, and he says it's steak, so it must be steak". You may not be a professional chef, but you eat, right? You know the difference between steak and lettuce. I may not be a professional appraiser, but I've been in my segment of the local condo market, and I'm quite familiar with the options and relative values and strengths and weaknesses of the different complexes. I can tell steak from lettuce, and I was given lettuce in my appraisal.

In my case, it's not about protecting the lender from risk. This was with my existing lender. They already have the risk, whether they like it or not. In fact, it's even more risk to have me with a higher payment. The appraisal shouldn't even matter. But it's shot down my right to refi my condo. I've been swindled out of my application fee by the very program that was intended to help me.

Just got one of these appraisals under the HVCC rules. In the past two years a vacant lot on one side of me sold for 500k, and the one on the other side sold for 675k (these are 1-acre view lots).

These were about the last two lots available in the entire are (one is left at 600k). Somehow my appraisal just came out with the land under my home valued at 300k. Prices have not decreased in this area, except a few for perhaps 10%. I have no recourse, other than to go with a different lender, and then pay them another $500 for yet another appraisal.

What I mentioned as a post after another article is that even though I paid for the appraisal I do not own it. In fact, without a release from the bank that requested the appraisal it is illegal for me to use it anywhere else. That is a serious flaw in this system. I paid for it, I should own it.

I found a credit union that is giving me as good, if not better, rates than the Fannie Mae loan, but still cannot use the original appraisal because the lending bank will not release it. So here goes another $500, but at least this time I will get the loan I want.

Theres no such thing as a crooked loan officer or a crooked appraiser.
Theres only borrowers who wont accept responsiblity for there own decisions, and dont think then need to because they can blame the appraiser or loan originator.

Appraisals are bogus. One more way of bilking money from the already expensive real estate transaction process. I wonder how many people fatten their bellies from one transaction. How can ANYONE judge the value of a property without actually looking through the house, and comparable houses? The data that's shown in the comparable for my home's appraisal is clearly insufficient.
The condition of the house can be a big factor, and it can be very bad even in owner occupied houses. For a meaningful appraisal, one has to go and see at the home inspection reports, AND comparables.

I am a mortgage lender and have served on boards within my state. I am living what everyone is reading. Appraisals are coming in late, below reasonable expected values etc.

It should be noted that there are three major "layers" to evaluate homes. You have the rental income homes in which the renters do you keep up the property as well and the owners do not place improvements into those properties. Retail homes in which Joe Homeowner buys and lives in and this is the biggest group and the REO, shortsale, etc known as distressed sales. In this layer the cause of the distress sales are most of the time money issue related. This although small in the past has become the norm. This expanding layer if big enough effects everyone. This all makes sense to everyone up to this point.

Appraisals are the truth moment. I have seen both sides of real estate agents misrepresent or not know the house was overvalued. I have seen appraisers come in 20% different on total price on the same house. I have seen fraud. At this point in my career anything you can dream I have seen. It all really does happen.

I do have a suggestion:
The best way to ensure your family's financial future is stop waiting for everyone else to do it for you. I do agree that we need changes to keep most of the bad stuff out but I promise greed will find a way around all the new walls we invent. Everyone has their part. The real estate profession has to only allow the people in who prove that they should be in the most trusted dream of Americans and the clients have their job to study, research, and understand what they are buying and asking for. Debt is a very interesting conversation for me with the clients who do not understand it. It is like watching a child play with matches. I wish I could blame all of us, the mortgage guys, but the problem is so much bigger than just my part in it that after watching everything crash on all sides the best advise I can offer is this. No one will care about your money as much as you do. Become an expert at this game we call money. It is just a tool so please stop thinking that we all just hammers waiting for the new nail.

But to answer the original question. Appraisals although very imperfect and nothing more than an opinion is the best way to keep everyone as honest as we will allow ourselves to be.

Rod from Bridgeton again,, I thought I should add 1 thing,, My property taxes are UP,, NOT reduced.. County assessor raised the value aprox. 10K

I have 3 houses, I want to refinance one of them for the lower rates, but my Banks appraisers "estimate" that house at 35% lower than 2 years ago, even though I have added 2 bedrooms and 2 bathrooms and completely updated the kitchen (6000.00 in appliances alone). I won't let them appraise it yet,, I don't want this Very Low price on paper I figure I'll have to wait a couple years and sell it and miss out on the lower rates.. 5 Bedroom 4 bath in Bridgeton Mo. (Suburb of St. Louis) for 135K… 2 years ago, Same house,, 3 Bedroom, 2 bath 180K.. I can't explain it, or even understand it, even with the current financial system problems.. What would it have been worth 2 years ago in todays condition??? or, what would it be "Worth" in todays market without the 2 new bedrooms and bathrooms and updated kitchen??? I DO NOT want an inflated appraisal,, I just want an honest "Fair Market Valuation"… Is that not the job of an appaiser???

I am continually shocked by the sense of entitlement expressed by so many Americans.

There is only one reason for an appraisal and that is to protect the entity lending the money. The lender needs to protect its investment to ensure that if the borrower defaults on the loan the property could be sold to cover their costs. One of the reasons we experienced the housing bubble was because appraisals were inflated to justify the transaction. Everything was wonderful in the housing market when the market moved up. However, when the market declined there were a lot of homeowners that were caught with a mortgage that exceeded the value of the house, especially if they did not put a large down payment on house. If the homeowner continued to make the payments then there would be no requirement to foreclose on the property. However, if the homeowner could not even afford the loan after a variable ARM adjustment or if the homeowner lost their job the lender is holding an undervalued house.

Some people have argued that foreclosures or short sales are not reasonable to include in appraisals. I completely disagree. Just think about it. Foreclosures and short sales are problably the best comparables if the home is of like characteristics and in the same neighborhood. What better way to determine the value of a home from a lender's perspective than to look at what a lender can sell the property when it is distressed? Remember an appraisal is to protect the lender, not the borrower in the transaction.

I think the situation is going to get worse not because people are valueing money more (interest rates are still very low), but lenders are being more stringent on their lending requirements. Lenders are actually requiring borrowers to verify their incomes and put reasonable down payments on the homes to reduce the number of future foreclosures. Lenders are also now considering the economy, which means they will be reducing or eliminating HELOCs and closing credit accounts. They are trying to minimize their exposure.

We have a rough road ahead, but it would have been a lot worse in the long run if we had continued on the path that we were on. It's about time that Americans return to a lifestyle where they live within their means. People should be buying homes that they can actually afford rather than want. I think Americans have forgotten that we don't have a right to a home loan. Whether you like it or not, it's time to grow up America.

Just experienced an inaccurate low-ball appraisal with Landsafe and Countrywide which prevented refinancing. Landsafe understood nothing about the property and valued it at half of what it should have been. Prevented refinancing, and Countrywide's service was abysmal. The unending bureaucracy prevented any satisfactory resolution.

Correct me if I'm wrong, but isn't the appraisal supposed to be reflective of the value of a property based on the amount of currency expected to pass between a "typical willing seller" and a "typical willing buyer"? Now anyone feel free to correct me if I'm wrong, but if a buyer is willing to pay a certain price for a home and a seller agrees that the price is fair, shouldn't the appraisal consider *this* figure into the valuation? The appraiser's job is not to tell the seller what they should be willing to pay for a given property, only what buyers in general seem to be willing to pay for similar properties in the same general area. This model can only serve to stifle any hope of a rebound as foreclosures can't be truly representative of value. Ever.

I just had my HELOC frozen; my bank (Chase) told me it had used a "proven, reliable method" to establish a value for my home that is 31.5% below the pre-bubble appraisal used to establish the line. Sure, homes in my neighborhood have seen a 25% decline overall, so why would mine be 6.5% worse than the rest of my neighborhood?

I think banks are making excuses to futher strangle the credit markets, which is only going to make this situation worse.

I agree, we got an appraisal to refinance and it was super low. It was funny- we actually laughed! We got an second appraisal and it was 200K higher. This is crazy! The first appraiser was from a metro far from ours, so maybe he didn't know the area, or made a mistake? I have no idea where the second guy came from. Something isn't right though. Naturally I agree with the second appraiser (even it is lower than I wish, but still). We were able to refinance thanks to the second appraisal (no we weren't about to lose our home, we just wanted to take advantage of lower interest rates).

We will not get out of this housing crisis until everyone understands that rising real estate prices and refinancing are not a right. I never heard an agent or buyer complain because appraisals were coming in too high, or LTVs were too low. Yes, the pendulum has swung the other way in an extreme fashion, and it will mean that many owners will be renters. In the near to mid-term future in this country, our ability to gain wealth will be tied to our ability to produce it, not by waiting for markets to rise and living off the labor of others.

It will just lead to more foreclosures because the low estimates will put more people upside-down in their mortgages and de-incentivize people who need to shed a property from trying to sell, rather than just dump it on the bank.

Call me stupid; but REALTORS ARE THE PROBLEM….they are the only one's whose price is based on commission of the total price. So who benefits/ed more if a house's price is inflated…they are. And do you think they really want to work for a low priced house…..well, not too hard at least.

Both the article and comments reminded me of how our society like's to push responsibility on to another person or entity. In life there is no basic right to get a loan and to own a home. I think people have forgotten the basic reason for a loan. The reason that people need a loan is simply because they cannot afford to pay for the house on their own. An appraisal would not be needed if a person had the cash to pay for the home or if the home owner was willing to finance the sale on their own.

When you involve a third party, how can you complain about their rules when you don't have the money? It's the classic begger being choosy. The person lending the money needs to be assured that both the person can make the payments and that if they default the house can be sold to cover their costs. In a free market if one lender is being too strict another lender may want to accept the risk. If I was a lender I would want to be conservative on the appraisal and require a large down payment. With unemployment increasing and home prices dropping how can anyone blame the lenders being more tight with their money. I guess it's the path of least resistance, just blame someone else for our problems and not accept any personal responsibility. For me, I find it sad that so many Americans want someone else to bail them out of their problems as if they did not have any control over their own situation.

It's time to grow up America.

The market is made of a willing buyer and a willing seller. The appraisers have contrinuted heavily to the bubble and subsequent depression the values. Do we have appraisers for stocks? Yes The stock analysts are like appraisers, but it does not prevent anyone from buying or selling at a price point that is different than what a analyst estimates. Appraisers do!

I was lucky in Las Vegas. World Capital of Foreclosures.
Bought a short sale Aug-2008 for 120K FHA 3% down @ 6% 30 year fixed. Did a Refi in May-2009 @ 4.5% 30 year fixed with $0.00 out of pocket. NO APPRAISAL NEEDED because it was already a FHA Loan. I gladly pay the MIP of $50.00/month for the next 5 years.

In response to Cathy in Dixon, IL…..

"Now…let’s see, who has really made the money on these loans, the appraiser or the loan officer? And if anything goes bad, who gets sued, the appraiser or the loan officer? Hmmmmm, let’s see, how much did the loan officer make on the deal and how much did the appraiser make on the deal? Who stood to gain the most?….
Posted By Cathy, Dixon, IL: July 23, 2009 7:21 pm "

Cathy, if you are an appraiser in Illinois, then you would know that Loan Officers are required to pass a 100 question State controlled exam to get their license, take continuing education credits every year in order to keep thier license and yes, there has even been some talk about fiduciary responsibility. A good loan officer does not have to make a killing on a customer and even in the heyday of values, we could ask for a value, but if it wasn't there, it wasn't there. Sounds like you have a little LO envy. By the way, our appraisers are piad $300.00 for their apprasals, we charge our customers $300.00 and we eat as a company the $45.00 fee for farming the appraisal out. Not all of us are evil as you would have your readers believe.

An Honest LO

I am in the mortgage industry and have been for many years and I can state will 100% conviction that the pendulum has swung way too far. The HVCC was put together for a reason, and in it's simplist form means well, however things have gotten rather ridiculous lately. I, personally, have lost probably 6 refinances and 3 purchases in the last 3 months due to value. It seems is if, if you use the past as a prior indication, at least there was some communication with the appraiser, if things were close you could work it out and not lose a deal. However I just lost an FHA purchase because the appraisal came in $5,000 less and since the seller was already taking a bender i=on the home they didn't want to lose another $5,000. Come on people, $5,000??? Also, I'm sorry, but there is no way at all a foreclosure or a short sale accurately reflects market value in a neighborhood. A short sale, by definition, is selling your home for less than you owe on it in order to get out from under the loan or loans on the home before you go into foreclosure. So how is that an accurate reflection of the value of my home? As for foreclosures, enough is said without even saying anything else. Let's get our heads together and make some sensible changes that will allow deals to happen to a degree. I mean, if the Federal Government is giving homebuyers $8000.00, then way can't I save a deal over $5000.00????

We got one, and it was, bellow of the price that we bouth the house, even, that we have invested on it, about extra 35 thousand, very desappointed, it seems that they just don't want to give loans at low rate.

07/24/2009 (Friday):

The Banking/Lending/Financial/Real Estate system is stacked against the consumer. The horrible replacement appraisal system still allows for one of the players (i.e., now lenders versus previous mortgage broker/realtor) to pick the appraiser. The system has a built-in corruption premise since whoever picks the appraiser when money is involved will bias it in their favor.

Suggestion #1: Why not require a national register of all appraisers after passing and qualifying to do appraisal work. Then mandate the appraiser is picked by 'random number generator' from the pool of ALL appraisers in the area (e.g., City, County or State).

Suggestion #2: Why not require that ALL appraisals must include all three methodologies so three numbers are provided each time (1) Comparable sales, (2) Income flow/generator, and (3) Replacement/rebuild cost method.

I have a feeling that #2 and #3 will show higher values when compared to depressed foreclosure/bank-owed sold properties. Then all players, including buyers and sellers, can argue about the appropriate negotiated market value.

The financials-real estate system has robbed the U.S. economy and general citizens with its Collaterialized Debt Obligations and Credit Default Swaps 'snake-oil'. Now the revised mandatory 'appraisal system' is being driven by these same corrupt financial-real estate players.

Many more of these sham artists, bank executives, and fraud mongers need to go to prison for their past deeds while being locked-out on any current and future financial system regulatory changes, including the appraisal system.

Currently, a family member is trying to sell their home that was about (A) $235,000 (2-yrs ago), (B) appraised at $170,000 (1-yr ago using 3 methodologies listed above), (C) is now $155,00 on Zillow.com, and (D) recent foreclosure/banked owed sales at $80,000.

Something is rotten in Hoboken!! Oops, that's right the FBI just busted massive corruption and fraud there yesterday.

AzCountry (Phoenix, Arizona)

There is no problem with the HVCC other than the fact that the appraisal management companies (AMCs) are not regulated. The reason appraisal fees have gone up is because the big banks that own the AMCs want to make more profits. The AMCs charge the consumer $400-$600 on average, but the appraisers are only being paid $150-$200. Why are these unregulated AMCs allowed to steal money from the consumers and the appraisers??? It doesn't make sense. By the way, the AMCs specifically tell the appraisers not to discuss fees with the consumers in order to avoid confusion. Confusion??? What a crock… The AMCs just don't want the consumers to know the truth about how much money they are stealing from them.

As for the "low appraisals," it is what it is. The real estate market has been and is still crashing, but realtors and brokers are just upset that they cannot do business as usual with their "team player" appraisers that always found a way to "hit the numbers" to make deals work. During the boom none of these realtors and brokers were complaining about where the appraiser was from as long as the final number was okay to make the deal work.

I'm an appraiser and I work in four different counties. Just because my office is located in one particular county does not mean that I don't have the experience or knowledge to appraise in other counties.

In my opinion the HVCC is good, but the AMCs need to be regulated and they need to start paying the appraisers what their services are trully worth. If things don't change, the only appraisers that will be left are the inexperienced bottom feeders that are willing to work for the AMCs crappy fees and the real estate market will be doomed forever.

My wife and I must have been very lucky. We recently refinanced home we bought three years ago. We felt the appraisal was fair and it was very well documented. The appraiser inspected our home inside and out and asked about updates we had made since purchasing our home. We had plenty of equity in our home and felt we would have no problems. But we were still curious how the appraisal would turn out and we were pleasantly surprised. We had made several sigificant updates, new HVAC, hardwood floors redone, new carpet, exterior painted, new kitchen, and enclosed a screened porch for additional living space. We live in area within the city with nice older homes that have held their value pretty well under recent economic circumstances.

I am a loan officer with a regional bank in the mid-Atlantic area. It seems there are a lot of people out there who "think they know how the system works" but honestly have no clue.

For those of you who have had apprasials come in undervalue, I wonder, "did you try and find the lowest rate lender so you could say to your friends that your rate was 1/8% lower than theirs? or did you go to a REPUTABLE LOCAL LENDER?"

The way the appraisal process should work is that the Loan Officer orders an apprasial in a "blind system" in which the appraisers are vetted for quality and only allowed to appraise property in a market they are local to.

Once the appraisal is ordered the appraiser should look to see what homes have sold in the area looking at the nature of the sales and most importantly the comparability of the homes that sold.

During the appraisal process, we don not even have the name of the assigned appraiser, just to make sure we can't have any influence.

I review every appraisal that comes in and look at the comps used. If there are questions we have a set procedure to have them addressed. Most of the appraisers in our system are only too happy to answer questions and if there are additional comps they will look at them.

Somtimes it is a blessing when a home underappraises. I'd rather my borrowers know the real value of what they are buying and not overpay.

There is more than enough blame on all sides of the real estate crisis. Wall Street inflated the ratings on securtized loans without proper default modeling techniques. The past adminsitration had a HANDS OFF approach to regulation, the banks tryed to maxmize their return to shareholders in the short run rather than taking a long term view, and yes buyers had to KEEP UP WITH THE JONES'S and were willing to risk their financial stability on stupid loans.

I have prided myself in the 11 years I have been in this business, that my clients get the same advice I'd give my parents, my sisters, my daughters or my life-parnter as to what loans to get.

Next time you enter into the largest financial transaction of your life, get GOOD advice, from a TRUSTED source. Just like a doctor or a lawyer, you want someone who is looking out for you and not just here for a quick buck!

No one seems to complain when the appraiser came in way above the price of the house. It's all about greed. These are different times ppl. Deal with it. We don't want another bubble.

builders and home owners are looking to value their property at the highest value to gain the profit they expect; however, with this in mind what property with equal squarefootage in foreclosure will devalue their idea of making a profit. They have raised the roof on prices and caused and inflated value of property. Now they have to take their meds and suffer the consequences of their greed. It is not how nice the house looks or what you have put into it. It is the neighborhood and what the consumer will bear. Not the bad loans that you all push for profits.

I live in one of the swankiest areas in my town–in Fairfield county, CT. I got a bum rap appraisal on a home I purchased less than a year prior to my refinancing. The mortgage broker was in CA, the bank was in Mass, and my home is in CT. The appraiser the bank hired lived an hour away and didn't know the neighborhood and he appraised my house for 130K less than what I paid less than a year ago–even knowing i put in new central heating/air conditioner, waterproofed the basement, and put in a new furnace. The comp houses he used were trailer-type homes on the "wrong side of town" and I lost my refinance. HOWEVER, I got it back for the same rate because I then qualified under the Stimulus Plan and the same bank who rejected me was the same bank who had to refinance me under the Obama package. Oh, and did I tell you that bank is the originator of my mortgage? So I'm not sure how i qualified for the loan in the first place?? It's a huge scam, and to me, it means that the banks don't want to lend money, and are using any excuse to reject you. All in all I still got my 4.5% rate but could not get a home equity line of credit.

I would love to refinance my home but will not be able to under these new regs. My house is on the town tax records as 2BR/1BA. The house is 3BR/2BA and if I have it changed, my taxes will be significantly higher. Since the 'new' appraisals weight the assesed value and tax collector details, I know my house will be valued at my current mortgage number or lower. Also, I own the undeveloped lot adjoining my back yard, which I KNOW would not be considered in the valuation. I purchased the house in 2007 with 20% down to avoid PMI and did not overpay (paid what the previous owners 'swapped' for it to a builder as a downpayment for a new home and over $100K less than they had listed it a year earlier when they tried to sell). Because I live in an area of the town where the majority of homes are summer-occupied second homes, there are TONS of bank owned listings and few sales other than auction or short sales, all of which would be considered comps when valuing my house. There have been non-short sales of properties in good condition recently, but since this new regulation uses non-local brokers,I'll never get a fair appraisal and will have to keep my 6.7% rate!

The problem I see is when the appraisers use foreclosures and short sale comparables. This recession has hit those of us in the residential construction business hard. If a dozen houses in a given area go to foreclosure or short sale because the owner (employed in the construction field) can't find a job and is going broke and has to dump the property to survive, that's an isolated issue. What about the owners not in the construction industry that are doing quite well in other fields despite the recession. Why should they be punished with low-ball appraisals.
This housing problem is just feeding upon itself and being made worse by stupid, short-sighted fixes.

We are in dispute with a recent appraisal on our home due to the fact that the appraiser was from outside our county and used 4 REO homes out of 5 homes used to value our home, and in neighborhoods no where near in comparison. She chose homes on busy through streets in neighborhoods with shoddy or dead lawns while our neighborhood is very quiet and nicely landscaped. She also said our roof was "average" in comparison to all the comps, our roof is 4 years old and ateast 4 of the 5 she chose had roofs well over 15 years old in sad condition. I sent alternative comps to her twice, and she finally only accepted one – but kept all the other she used so the mean price stayed the same. She refused to consider homes IN our own neighborhood as comps that were only 350 square feet larger – saying they were too large to be considered comps – but the bank owned homes that were 100 square feet smaller than ours in a crappy neighborhood was comparable. We are still fighting them on this and I'm now videotaping the homes she used to send in as obvious evidence that they are not true comparables. The pendulum has definitely swung far to much in the other direction.

Our historic home in Temple Terrace FL has had pending sales twice in the last 15 months. Both times the appraisal came in 25% less than agreed upon price. The second appraisal came in 30% less than the first 10 months prior. The house is in excellent condition. Our house is being comped to non-historic homes, homes in horrendous neighborhoods within the prescribed radius, and foreclosures in deplorable condition. I'm sure the appraisers are following their rules, but they are not using common sense. Perhaps there is no room for common sense. The banks and appraisers should understand the circularity of the system: Appraisals are low because the market is bad and the market is bad because appraisals are low. As a side note: I see no other way around it, but it is a shame that foreclosures can be used as comps. Those of us who pay our mortgage (even when our houses are upside down) get the shaft.

You failed to point out one critical issue in your article…the appraisers that are completing these appraisals are producing horrible work since they only are receiving 45-50% of the appraisal fee. In speaking with fellow appraisers, the self respecting, extremely honorable and intelligent ones refuse to work for the Appraisal Mangament Companies. What does that leave you? It leaves you with newbie appraisers working for 1/2 the prior income and producing an appraisal product that you might as well use as toilet paper! Good job Andrew Cuomo!

I am a long time appraiser/broker. One must remember, due to strict lender requirements, appraisal can only be as good as the data available. I belive is generates lender value, not market value. This will help to explain the low-ball appraisal in today's climate.

After reading some of the comments I have to consider myself pretty lucky.

Bought house during boob (2005). I was 19.
Was a foreclosed home for 64K
Apprised at 81K

Early this year tried to refi (was told by the lender that "I am sure you will not have any problem" when I asked about the appraisal coming in too low) after giving them $300 for the appraisal it came in at 65K. I was told that it was too close to what i owed and it fell through.

Just now getting a new roof (paid for by the insurance company) old roof was in pretty bad shape and comment was made by appraiser.

Thinking about trying again now with new roof and 6 months later of payments but still worried about the cost to refi and loosing another $300.

PS. Current rate is 6.375 15 fixed.

We are trying to purchase a home and the appraisal came in this week. Of the five comps all but 1 were sold for a higher price than our purchase price.
1) All five homes were smaller in square footage.
2) Four of the five homes were older by a minimum of three years.
3) All five homes were on smaller acreage – ours being on five acres, the next highest comp being on two acres. 4) Three of the comps were sales within the past 60 days.

The appraisal on our house was $30k lower than the lowest comp but (thankfully) came in at the purchase price. Our loan officer from BofA said we were very very lucky, most of the appraisals he sees come in under the purchase price and it is rare these days for one come in at the purchase price let alone higher.

Its nothing but a free market economy at work: many folks got caught-up in the real estate mania and are now paying the price.

I am amazed reading some of the comments here and feel lucky that my re-fi went through just yesterday. I was appalled when I saw my appraisal…not only was it over $300,000 less than my last appraisal (3 years ago) but the comps used were ridiculous. The appraiser failed to use a home in my neighborhood (1 block away) that sold for full price a few months ago and the house next door to me (smaller model) is listed for $90,000 more than my appraisal. None of it makes much sense to me…I feel bad for everyone having to deal with this right now and wonder how we will ever come out of the housing recession with these crazy appraisal rules.

AS an appraiser, we use only the most "comparable comps." Facts are facts. take a look around, your house isn't the only one out there. the main problem is the lenders got too gready and increased purchase prices to cover closing costs which only lead to more increases. The HCVV has a lot of issues but at heart it is good. An appraiser should not be influenced by a mortgage office issuing demands over value. just take a look at the facts and forget your personal feelings over your house.

I work as a mortgage loan processor for a major financial lending institution and low appraisals are something I deal with on a frequent basis. The realtor ALWAYS says the following in response to a low appraisal: 1) The appraiser is not from the area; 2) The appraiser is an idiot; 3) The appraiser must have never set foot on the property; 4) Can we order another appraisal. They argue with me as though I can do something about it. I am not trained in how to appraise a property, but the appraisers we use are. I trust the disinterested and professional judgment of an appraiser hired by a third party vendor on behalf of a mortgage lender over that of a realtor working for 3.5% of the purchase price. The greater the purchase price, greater the amount of the commission. I wonder who is truly objective. Low appraisals are a significant cause of grief for all parties, as they tend to involve time-consuming and seldom fruitful value disputes. Low appraisals eat up everyone's time and everyone hates them – especially lenders and appraisers.

Now…let's see, who has really made the money on these loans, the appraiser or the loan officer? And if anything goes bad, who gets sued, the appraiser or the loan officer? Hmmmmm, let's see, how much did the loan officer make on the deal and how much did the appraiser make on the deal? Who stood to gain the most? Who doesn't have work if those numbers "don't "fly" according to an individual that sits behind a desk and works for a percentage. AVM's used to be a hot item until those properties disappeared or were really "quite different on the inside". In today's economy folks need to look at utility…not in "upgrades". Are you buying a home to live in it or are you hoping to make a profit somehow just like these "loan officers" who are never on the legal line because of the foreclosure that might take place? Do the loan officers have to take continuing education every 2 years, carry E & O insurance, pay licensing fees and have a strike board against them if they "mess up"? Or do they get to sit back and point a crooked finger at the appraisers. Most appraisers know that "low balling" as you call it means that they aren't going to have a business. PRESSURE PEOPLE love to "blame" someone else. If those of you out there are unhappy with the market, don't blame the appraisers. The appraisers are in place as a check valve. Someone that is supposed to keep everyone honest. If you want to blame somebody…blame the loan officers, they are the ones making a percentage from the loans. The appraisers are making less and less money even after 20 years the fees paid to appraisers are going down…due to the management companies paying them at a considerably lower fee by charging $400.00-$600.00 for an appraisal that the REAL APPRAISER ONLY SEES MAYBE 45% of. So if you pay $450.00 for an appraisal, what is the appraiser really getting? AMC's wouldn't have a business if the loan officers didn't get GREEDY! You want to solve this problem? Go inhouse in the banks and put the loan officers on the same chopping block with the appraisers. If the loan goes into foreclosure, bring that loan officer in and bring a law suit against him just like you do the appraisers and see if your problems don't cease. Make them meet the same criteria the the appraisers have to meet and make his paycheck based on the same criteria. When that happens, all this Hoopla will Cease! The passing of the buck will cease too. Loan officers lead borrowers to believe that the appraiser is the enemy. Next time you go for a refi ask the loan officer what he will make on the deal and ask how much the appraiser is actually getting paid. Hope you get an honest answer.

I think it should be distinguished between a refinance and an actual arms-length sale between unrelated parties.

I can see that tough appraisals protect lenders in refi situations.

But in a resale situation, when a house fetches multiple offers above price, because the mortgage payment is lower than comparable rent, that's different.

We bid $500k on a house listed at 450k, and so did several other buyers. Our appraisal came in at $390k. After 3 appraisals, where the seller submitted all receipts of remodel work, it finally appraised at 490k. The realtors gave up some commission, everyone helped and we're still in the game.

Arthur

I keep seeing how appraisers are killing the deals by turning in "low-ball" appraisals and using foreclosures and short sales for comps. We just did one for a nice little house that had upgrades. All 3 sales used were recent, arms-length transactions that also had equivalent upgrades. All less than a half-mile from the subject. True "comparables" rather than just sales. And it still came in below the contract price. It was priced above what had sold recently in the market and someone made a very quick offer slightly under the list price, but still over what could be justified. Yet, I'm sure that the appraiser will be blamed for killing the deal…

The only thing that has moved faster than the inflation of my house is the deflation.

July 08
- Appraisal $425k
August 08
- Refinance $390k
Jan 09
- Get raise, rates drop, thinking of better loan
Feb 09
- attempt refi interest only (don't ask) to interest+principle.
- Bank Appraisal…$350k (75k drop in 4 months)….
June 09
- considering short sale
- bank appraisal…$320k (30k in 4 months)
July 09-
- reconsidering short sale
- bank appraisal $290k. (30k drop in 1 month)

So in 12 months the appraisal of my house has gone from $425k to $290k ($135k or a 32% drop in 12 months)

All with the same bank (JP Morgan Chase).
http://i2.cdn.turner.com/money/.element/img/2.0/buttons/button_submit_red.gif
We're screwed

This issue underscores the value of a "good" Appraisal Management Company that will assign the appraisal order with care and to the most qualified appraiser when/where available.

That is exactly how we at RBH Appraisal Management operate our business.

If your appraisal needs are not being met please contact me (chris@rbhappraisals.com) to see how we can be of assistance !!

The pendulum has swung so far the other way it came off the clock. I am in the midst of a re-fi and even the appraiser says the appraisel is a joke and has nothing to do with the value of the house. He has 140 pages of guidelines from the bank on "how to appraise the house". Many of them are pretty ridiculous and don't reflect the real world. How about comping it against a house that was bought and bulldozed to built a new one. IMO, that defines the sale price as the value of the property only, yet they are trynig to say it is equal to a home built for $500 sq-ft. The math is so far off it is not even funny. The only saving grace for me, is that in the end, the appraisel was enough to substantiate my loan, but the whole process is really a joke. I feel bad for all of the people that are getting stuck with PMI and higher rates due to a 85 or 90% LTV. Hmmm… lower values… higher LTV… more money for bank. Something is not kosher here.

To add to jeff's comments…. Just this morning I was reminded that the new HVCC will take money out of the pockets of those who actually still want to buy a home. The first way is that appraisals in this area now cost at least $200 more than they did before. In addition, minor errors in the appraisal reports (such as checking a box that says the $1800 HOA fee is monthly instead of yearly) will take many days to fix (instead of a 5-minute phone call). Now that may seem like nothing more than an inconvenience…until that delay causes the buyer to lose their loan lock and the interest rate goes up a half a percent. That's a lot of money out of a buyer's pocket. In fact, it may make the difference in whether or not they can purchase the home.

I am completing construction of a new house in a month. My first appraisal was done 5 months ago, and now I have to pay for a completely new appraisal to satisfy the company. That is not fair to me. Before someone gets on their soapbox to preach about value, etc., let me explain. I will have 50% equity in my house. This will not cause a significant problem for me in the loan process. The moral problem is that I should not have to pay for two appraisals. And if my appraisal comes in lower, I am going to be upset for the simple fact there are not really any comparable homes and sales in this rural area. I am someone who built a home that I could afford, and I feel like I am being punished because of everyone else's foolishness.

I find it amusing that everyone loves to blame the "big banks" (Wells Fargo, JP Morgan, etc.) for the housing crisis. The majority of the loans that are going bad were underwritten by Countrywide and the like. The "big banks" bought these securitized loans after the Rating Agencies slapped AAA credit ratings on them. All the while, these loans were underwritten without verification of income, etc. or worse just flat out fraud. Who's more to blame (1.) the mortgage lender who did not feel they had to underwrite the loans appropriately because they will sell the loans off in in a few weeks, (2.) the rating agencies who were supposed to review the mortgage lender's work, or (3.) the bank who bought the loans assuming the other two had done their jobs?

We put our house up on the market on a beautiful street off the main line in Philly. Not only did your sale fall through due to a low ball appraisal, but so did 2 other houses on our street. The housing market isn't doing poorly because of the economy, it's because of the appraisals that kill the realestate deals. Now we are moving to a new city, instead of buying we will rent, until the banks and appraisers get their act together.

I'm a would be first time buyer in the LA market. I can see why appraisals is a hot topic for anyone connected to housing, particularly Realtors/Sellers.
I feel that no matter what kind of "comparables" are used an appraiser SHOULD take into account local rent and income levels! It doesn't really matter how much homes are listed for, if the people buying them cannot afford to make the payments then we'll end up in another housing mess down the road. No body likes to lose money but if you have to sell in the next 2 years, you're out of luck. Realtors, Sellers, and the Government need to stop thinking they can keep prices propped up. Higher home prices does NOT mean our economy is improving.

as a mortgage broker, I don't mind the fact of having to use an appraisal management company to order appraisals. I know there are big brokerages that have used cash to influence appraisers and that needed to be halted. What I complained about before it went into affect and have now been proven right is, the AMC's will be able to charge whatever they want and it will cost my customers more for the exact same report I used to use last year. I am in a small town in Ohio and have seen the cost of appraisals go 75-150 higher now since this went into affect.

I laugh at all you people who do not understand the industry. Yes, there were bad apples in our industry, but the HVCC is costing the borrowers more because of incompetence on the appraisers they are using. This past January 1st the Underwriters had tightened enough the guidelines and had the remedy at hand. I wish you people who know nothing but blame everyone would know that this system is making more of a mockery of the housing market.The large Banks are the people to blame, they are the ones who underwrote all these bad loans, they dropped their underwriting guidelines to stuff their pockets with money and then use the broker/appraiser/Realtor as the escape goat. The broker NEVER underwrites the loans, the banks say yes or no. So you tell me how this new HVCC is working, the housing market is far away from rebounding, because the mentality of the Government needs someone to blame. By the way, these AMC that are so honest are taking 40% of what the appraisal cost is, what that means is your losing true professional appraisers to COMPLETE idiots that have no idea of how markets change city by city. Stop blaming the brokers and wake up to what these banks have done.

No, I dont feel Realtors are getting a fair shake – as a realtor with a personal mortgage broker, even with our remodels/upgrades (but not overimproved for our area) just to refinance was a lost cause…. yet we know from the desirable area we live in a what true comps have been getting, we know that we probably would not have a problem getting close to what the home is worth… I think the whole thing is a disaster for the current market.

I have an apples to apples comparison that proves the point the real estate agents are trying to make. I had an appraisal of $295K on my home in April 2009. That refinance fell through because my mort. broker did not know that I had to refinance through my existing lender. My Lender ordered another appraisal aprx 6 weeks later, which came in at $245K, $50K less than 6 weeks prior. He omitted comparables that sold high and only incl. comparables that sold low. Picking and choosing instead of giving a fair representation. I have no problem considering the REOs and short sales, just make sure not to omit the standard sales! When a homeowner complains, people assume that they are emotionally tied to the value of their house and therefore irrational. I could care less what the paper value is, I just want a fair appraisal so that I can complete my refinance. I, too, have excellent credit and no other debt except my house. I don't understand the motivation on the extreme-low appraisals.

Overall the HVCC is putting a huge strain on the overall value of homes. This is just another way of showing that when the government (which never has any idea of what reality really is) gets involved with the every day working class people, they make matters worse. With all the complaints that is taking place from Appraisers, mortgage brokers, realestate agents, and most importantly home owners, wouldn't you think the government would take another look at the situation? C'mon man!! People can't refinance, buy, or even sell their homes, because you have some no experienced appraiser doing an appraial for your home. This is completly ignorant. The housing market and economy is already in a mess and this is only going to make it worse. C'mon Obama!! Didn't you say you are for the American People? If so, get involved and take a closer look at what is really going on.

As a realtor/broker, I definitely agree that the change in the appraisal process has had a major NEGATIVE IMPACT on the market place. They have compared homes on Park Place and Boardwalk with comps on Baltic Place, for any of you monopoly board fans out there with resulting disaster results. I've both experienced this first hand and heard about it from the 50+ realtors in our office. Should the appraisers use distressed sales? Assuming these are only occassional happening in the market place-then sure if they want the real estate market to tank even more and see more foreclosures! Otherwise, they are not representative. I've also experienced that when a seasoned appraiser came in close to asking, the bank calls them on the carpet and asks them to justify or lower it. Hey guys, the market is what it is. Don't blame the appraisers just because they priced properties high in 05,06 when that was what the market was dictating. We've even had properties go in multiple bids in the last few months and the appraiser comes in with a valuation below the price offered by any of 5 bidders! What happened to market value?? Upset in Short Hills!

I agree with the article. I recently tried to refinance my mortgage and the appraiser used comps up to 1.5 miles away on the other side of town. The homes does not compare in condition and value. The appraiser was not familar with the area. If the banking system is trying to correct the problem they help create they are going about it the wrong way.
I am sure there will have to be some realignment. It can not continue, if the housing market is to rebound.

I just had an appraisal done and the lender selected an appraiser that was not from my area. The loan was approved and we were just waiting for the appraisal. The appraiser used comparables that were all significantly less than what we paid to finish the building the brand new house. Based on his faulty assumptions about the value of the house, our house was valued at over a third less than what we paid to build it. I provided several other suitable comps and lots of items that the appraiser either missed or got wrong on his report. The appraiser was offended that I would even suggest he had made mistakes and did not budge in his valuation. The company sided with the appraiser and the loan fell through. His mistakes were glaring, age of the home, location, square footage, cost per square foot, to name a few.

I recently closed on my first house and used a government loan. The first bank made 2 appraisals and then could not complete the loan. The second bank had 2 appraisals and in completing the loan had to send a 3rd to check the 2 appraisals from the first bank because that is what the government agency had as documents. It seems the appraisals were noting every crack and chip of paint as an issue and not presenting an appropriate value. The appraisers appear to be scared that without over emphasizing every issue, they could lose their license. The pendulum has swung way too far with appraisers thinking they are contractors and not just valuing a home. In the end, after 6 appraisals the loan was finished. I hope there is change to the appraisal laws so that values can be determined by relevant comps and not used to critique any aspect of a house.

I have seen a few comments here that suggest we should talk to the appraisers about comps, etc. before paying them. What a lot of people don't realize is that you pay the "appraisal management company" (owned by the lender(s)) up front (BEFORE the appraiser is even selected). We have no control over who the appraiser will be or where the appraiser comes from. So, basically, you're required to pay your money to a third party. I don't even know who to sue!

I went to refi my house when the rate was 4.75 fixed and the appraisal came back and I was stunned! I'd been in the house for 10 yrs, put nearly $100K in upgrades and the appraisal stated it was worth less than what I paid for it originally in 1999; losing all equity and upgrades. Reminder, this house was purchased before the market took off. The lender demanded I pay PMI, I laughed and walked away.

YEAH, And Cuomo, that crook, owns one of the biggest appraisal management companies in the country who is DIRECTLY benefitting from all this HVCC jazz. What a lying a$$ hypocrite. It is completely corrupt. We wait excessively for appraisals that would normally be done CHEAPER and quicker. He is responsible for this entire mess. It has cut a lot of appraisers' business in half. Not to mention, there are some real crooks in these management companies, who are out doing walk throughs with no license, while the licensed appraiser sits in an office signing off. Joke.

I wish that the people who write these articles actually knew what they were talking about. They are not in the business so it is hard for them to understand; but then they should not be writing articles. HVCC is a mess and is going against all the help the govt is trying to provide homeowners to refinance. Our business is tough enough as it is these days without HVCC.

I recently tried to refinance my property. It is a duplex unit. The other 1/2 was sold as a foreclosure. The bank "took a bath" with a 200K+ loss. Now my unit appraised at the exact value of that "fire sale" price. The duplex is only 3 years old and in perfect condition. Looking at other comps. the price per square foot should have made my unit appraise for about 30K less than we paid. Not 230K less. I have a credit score of 783 and a nice savings but because of the LOW APPRAISAL we were denied the loan. I feel that I should not be penalized because the bank was not willing to keep it on the market for a fair price. Foreclosures should not be used as comperables!

We are in the process of buying a single home of similiar square footage with 3 times the property 300 feet from our current TWIN home. Our house appraised at $223,000 and the house we are going to buy appraised at $225,000. The comp home that was closest in style and size to ours was being sold by the original owner who had done nothing to the house in +60 years. The other two homes used weren't even comparable. We are still awaiting appraisal review from the bank but hoping we don't have to put our an additional $25,000 due to this terrible appraisal.

Why do so many people here miss the point?!!!

Lowball appraisals SHOULD NOT MATTER.
For sellers: It's no different than lowball offers. You may feel "insulted", but surely you won't accept if you have a choice. You might as well rent out the place. Rent doesn't cover mortgage? well then, you have over valued house.

For refinancing: If a private lender wants to do business, they will lend above so called 'appraised' value. If they have enough business already, you don't matter. Look elsewhere or borrow less, or don't borrow against house at all.

Appraisal should not matter if buyer has the cash to buy and is willing to put up the difference. HVCC does NOT set the price. No one is forcing buyer to pay only what the appraisal comes at. We still have the freedom to choose what we want to pay. hell, who needs to live in perpetual debt. This IS a step in the right direction for America.

I've long thought the appraisal process was flawed. How can an appraiser appraise a home in a "drive by"? For example, I purchased my home in 2006 and recently refinanced. It appraised at nearly 10% over what I paid, which was great. However, I can't help but wonder how accurate this appraisal is when the appraiser didn't see the inside. The inside is MUCH nicer than the outside, which was being painted at the time of the appraisal. What if the inside of my home had been a complete craphole? It would not have been reflected in the appraisal.

As for the role of foreclosures in the appraisal process – they should definitely be included. Afterall, not all foreclosures are trashed. Some are brand new homes that are identical to those in the neighborhood. So foreclosures should affect the price!

The bottom line on this is simple. Are there errors being made through AMC's, yes. However the small percentage of errors we have on an item that is an "opinion of value" is nothing compared to the amount of appraisal fraud that was committed when brokers and realtors choose the appraiser. I was a secondary market investor at one time and an appraisal review manager at another. Now I still work some with brokers and could not be happier having the industy starting to side with a little caution instead of excess. The brokers are ticked they cannot push values again to do home equity 2nd liens. With where rates have been this year, once everyone is refinanced, there will be very limited new 1st lien work because rates probably will not get better for some time. While there will be some, mainly in the purchase area, brokers are scrambling and many, many more shops will close this year and next. It is a sorely needed cleanup of this part of the industry. Realtors are upset because they cannot price a home to payoff the existing liens in many cases which makes that home nearly impossible to sell and they not only lose that sale, but also the sale of the home that customer is buying to replace the one they are selling.

This is the correct market reaction to what these entities have done to their market. Lenders and investors are a part of this as well, but for most the part do not make a living off overcharging others for commission income to live on. True lenders make their money off interest and fees, not one shot large lump sum commissions.

I had an appraisal done 1 year ago on my home to try and refinance my ARM. The appraiser actually penalized my home for having put in a pool that "was too extravagent". Now realize I purchased the home for $347K in 2006 and 1 year later put in a 22K pool. I wouldn't think that would be considered "too extravagent". And, yes, the appraisal came in too low to refinance which I expected. But what I didn't expect was the appraisal to be 30K lower than what I thought it was going to be.

I'VE BEEN SAYING THIS ALL ALONG. THE AG OF NYS NEVER THOUGHT HOW MANY PEOPLE WOULD BE NEGATIVELY AFFECTED BY THE HVCC. BECAUSE OF THE HVCC, APPRAISERS HAVE LOST MOST OF THEIR INCOME, MORTGAGE BROKERS ARE OUT OF WORK, REALTORS ARE LOSING DEALS, NOT BECAUSE OF APPRAISERS NOT MEETING VALUE, BUT BECAUSE THEY DO NOT PUT THE TIME IN TO DO A GOOD JOB FOR $200, WHEN THEY WERE MAKING $350-$400, AND WHILE APPRAISAL MANAGEMENT COMPANIES CHARGE $425 AND MAYBE HIGHER, WHICH MAKES THE PUBLIC PAY HIGHER FEES FOR APPRAISALS. MILLIONS OF PEOPLE ARE BEING AFFECTED NEGATIVELY BY THE HVCC. THE HVCC MAY BE THE RUINATION OF AN ENTIRE INDUSTRY, AND THIS IS ONLY THE BEGINNING, THE WORST IS YET TO COME.

Carla, you hardly seem educated on the full effects of the HVCC. Yes, some of what you pointed to may be classified as "bellyaching". However, much of the HVCC is poorly written.
Yes, banks can maintain an in-house process, however, most do not. The advantage of a broker ordering an appraisal is they can maintain business relationships with LOCAL appraisers that know the market and the area well. Banks do not typically have the time, nor the man power to maintain such relationships NATIONWIDE. So, they turn to an appraisal management company. It's the AMC (appraisal management company) process that is broker. Most of these management companies often charge 450-550 for an appraisal that a direct appraiser would charge $350 for. Yet, the appraisers only see 175-225 of that fee. Much of the "poor quality" work being turned out is a direct result of appraisers having to take on more volume to stay in business, while quality suffers. When you work for an AMC, you are typically not rewarded for better service, or better quality work. You are assigned orders "round robin" style. So, as an appraiser, where is the motivation to really do a good job? If you were in business for yourself, you would need quality and service to stay in business. Yet, with an AMC, all you need is your name on a list. So, what you end up with is a $175 version of a typically $350 report.
I am an appraiser myself. I saw a full 35% decline in my business due to the HVCC. So, consider me biased. But, there are so many more reasons why the HVCC has failed miserably. It's initial goal was to prevent fraud. To prevent influence on appraisers from brokers. Well, let me enlighten you on what's actually happened. First, AMCs are not regulated. They do not even have to be licensed. It is almost as if they have no rules to follow. Also, you must consider their clients are lenders. These lenders need to close loans to stay in business. In order to close these loans, homes must appraise at a point for the loan to work. If an AMC is constantly providing low ball appraisals, they will lose that lender client, and lose money. So, what you have essentially done is shift the possibility of fraud from the broker's shoulders, to the AMC. You have prevented NOTHING. And, you have done this at massive increased costs to the consumer.
Way to go Mr. Cuomo.
Now, keep in mind that nearly every appraiser in the county stood up last year and wrote letters into Mr. Cuomo's office explaining why the HVCC was broken as written, and offered suggestions to truly help eliminate fraud with no increased costs to the consumer. Unfortunately for you, me and the entire industry, over 65,000 letters were completely ignored in favor of a totally broken system.

Way to go Mr. Cuomo. I applaud your lack of complete lack of understanding of the industry you are trying to regulate. (sarcasm intended)

I'm a mortgage broker and my client is looking to refinance his home. The appraisal came in very low because the appraiser had utilized a foreclosed property as a comparable (which I fully support, by the way) but he ignored a home that had closed two days AFTER the foreclosure and that was only a couple doors down from my client. It took me a MONTH to appeal, at which point the value was adjusted. Not only did this not serve the consumer, it now costs $50 more than it used to for an appraisal and if the consumer wishes to shop lenders the appraisal can't be re-assigned so the consumer has to pay another $400 for a new one. Let's all thank Andrew Cuomo for his brilliance in protecting the consumer.

I can't believe it. The realtor does not decide the price of a house. This is done by someone that is trained to do it. This is the problem!!!! Realtors present the house. If the house is priced to high or low the truth will show after the appraisal is finished. The only thing a realtor should have to do with pricing a house is recommending to the potential seller that they get an appraisal from a QUALIFIED APPRAISER. What you want for your house does not make it worth what you think.

I own a mortgage company, and have had many issues with the process. I understand that something is needed, but this is an extreme change that had not been thought out. I have just had 2 appraisals in one week. Homes that were farther away, older sales, smaller home and lot, ect. be used rather than 5 homes that had sold in the past 60 days, by the same builder, same size, lot, ect., on a pond. All sold for $575,000. Our value came at $450,000. Impossible! I had to do their job, and provide them the info. We had to pay another $490.(2nd time on same home) $980 now, and I had to do the research. Customer is steaming.

I just wanted to share my experience with a recent offer I made on a home that was listed at 245k in California. I like the home so I offered 255k putting 20% downpayment. The listing agent called my agent and said that the bank wants to get closer to 270k, I didn't feel it was worth that much. We did a separate appraisal on the home and it came back at 250k. Good luck with the sale greedy banks!

No. Bottom line appraisals are coming in below cost to build new, that's ridiculous.

However, it is what it is, so I'll just hang tough, stay put and take the appraisals to the county to have my taxes adjusted to what appraisers are submitting for actual market value. Then try to hang on.
I did this once about 1 and 1/2 yrs ago and the county did work with me. I would think that armed with current value they would do the same. Bottom line is everybody has to get real including the bank and county assessor. Remember it not a loss until you actually sell it. Keep your cool. Do what you can to stay focused on the future because that's all you really can do. Never give up, never give, stay out of court, eventually things have a way of working out.

i don't feel that my wife and i have gotten a fair shake at all. we had been trying to refinance since november. we have credit scores above 750 and owe about 392000 on our home, we were going to bring 30k to closing but couldn't get the underwriters to approve our appraisals. we have had 6 with a difference of 150,000. the most recent came in at $330,000. the appraiser used only short sales and forclosed homes. in our area there was 5 homes by the same builder that closed within the past 3 weeks, all closed for over $410,000. he wouldn't even consider using those, said they weren't relevant. i understand that we are in a declining market, but they are way beyond unfair in their practices. our neighbor, accros the street appraised at $425,000 4 weeks prior. So we have spent over $1500 in appraisals trying to refinance to save about $700 a month and we have been declined by every bank possible for almost all the same reason. . .declining market and appraisal.

I believe that the people in control are punishing the public for the housing market. I think that some people bought homes they couldn't afford and that has hurt a lot. But lofty appraisals, bad underwriters and greedy companies were even more to blame for our condition.

I can afford my payment now, but why not try to save money so that we can use that for other things. I guess companies would rather find anyway to keep their good standing loans in tact so they keep making more money instead of helping the public.

One of the things real estate Brokers are not taught is how to establish the value of a property that's for sale. We're told to look at comps from the neighborhood and surrounding areas but we're not given information on how to adjust the comps to the current property. How much do you add for an extra bath? What about an updated kitchen or a screen porch? I think there is a role for a Broker/Appraiser who knows how to establish a sales price based on recent comps, plus/minus upgrades and repairs, knowledge of the neighborhood considering short sales and foreclosures and upcoming events – new shopping, roads, schools, etc. Setting the initial price needs to become scientific and less emotional. If done properly, the appraisals should come in close to the selling price.

I recently purchased an investment property and with all of the continually changes regulations was not able to obtain a loan in time (45days) w/ 30% cash down and credit score above 740. Ended up personally financing. Oh and the appraisal (of a bank owned property) came in at the exact agreed upon sale price. Outside of it taking 3 weeks because of the "new" management process it appeared the appraisel matching the sale agreement is just like old times.

My brother was trying to refinance his home and Bank of America sent an appraiser out who did not verify tax information that was incorrect and the comps she used where older, had smaller lots and not even in the same zip code! IT is getting crazy because then the underwriter would not send the information to the appraiser to correct the age of the house on the appraisal because of the new rules!!! The tax card said the house was built in 1899 and in fact it was 1949. Bank of America employees also did not fully explain the refi they offered him and didnt know the product themselves!!!

Part of the discussion that the Realtors and Mortgage Brokers do not talk about is that since they lost the ability to select appraisers, it may be more a reflection of the inflated influence they no longer have that property appraisals are coming in lower.

Also, there is a misconception that banks must use Appraisal Management Companies. So long as a bank has a separation of functions (lending and risk management), there is always the option to maintain the approval and selection of appraisers within the banks hierarchy.

As a review appraiser for a couple of banks I have noted on a few residential appraisals the use of short sales, foreclosures and other distress property transactions. Appraisers make the argument that they are the market. As a student of a couple of market cycles I could not disagree more, and my blood pressure goes way up when discussing the concept of market and non-market sales with my peers. I have also worked in areas where distress sales are predominant in the market, but you can find non-distress transactions and see a significant difference between the two. Appraising for lending is suppose to define "market value", not distress or other less than market considerations.

Recently had an appraisal come in on a property below contract price. The appraiser was from another city, did not use comparable comps-used 2 story homes vs. 1 story brick ranches- as comps. This appraisal was not representative of the subject property by any means, and we were not allowed to talk with the appraiser to inquire as to why he use the comps he did vs. ones 2 other realtors used to make comarison. This new system needs to be scratched.

I live in a a small town in NC. I am a Realtor. The appraisers are now sent in from other places, not even adjoining towns. They know nothing about our market, neighborhoods, and do not even check our multiple listing service. The appraisals are not even close. Some just use the tax appraisal. It is a horrible situation, for both buyers and sellers.

Had an appraisal done in late May, and Thought it was spot on.

also, didn't the "market nuances" help create this mess in the first place?

I would have to say here in Florida the Realtors and Brokers and Lenders have not only been openly ripping people off but they are still trying to.

I just looked at a home that is not even finished. It has no door nobs on it, the appliances are all setting in the kitchen uninstalled. The walls are not painted, the outside of the house is not done. The wiring was not finished.

So I looked up the Company that has it listed for sale. They are asking 2 MILLION for it.

I checked out the Appraisers office to see what it is appraised for and what it is worth.

It is appraised at $450 thousand.
It is like that everywhere here. Realtors are still trying to fleec people so are the brokers and Lenders. This industry is just as out of control and corrupt as Healthcare, Insurance,Wall Street and the Government.

There are 81/2 MILLION Foreclosers coming between 2009 and 2011.

You all better get ready, things are going to get really bad. Before this DEPRESSION is over a 500K house will cost 100K

And it is about time, Brokers and Realtors are dishonest people and have played their part in ruining the housing market. The average person can not afford a small piece of crap house for 400 to 500K.

I am really glad that so many Realtors and Brokers are out of work and broke and cant even sell their own homes.

Here in Florida I have not found a house yet that was the same price as the appraisal, NONE.

That is another reason no one is buying and are not going to buy.

Good ridence to Realtors and Brokers. We need a system that eliminates them forever. No more leaches on the housing market.

First, the HVCC was established to separate those with a financial interest in a loan transaction from pressuring the appraiser. These would include anyone who is directly compensated on the deal (i.e. mortgage brokers / loan officers and their production staffs, real estate agents, etc.). This is a good thing. Appraisers were pressured by 'this deal has to work', 'you have to work with me', I do a lot of loans in this area and more work could come your way', or even 'The value is too low, the deal is not going forward, so we are not paying you'. Unfortunately some mortgage brokers would perform in this manner and also some appraisers would not hold to there responsibility to be an independent and objective valuer of the real estate. This was proven by the relationship of the lender and national appraisal firm mentioned in the article. So now with the HVCC, the local mortgage broker can not longer order the appraisal. This may eliminate the improper you take care of me and I'll take care of you; but at the same time it does change the business model for those professional and ethical mortgage brokers and appraises alike. The local broker takes the loan application and submits to the lender funding the loan with this entity ordering the appraisal directly through their compliance department or with the AMC. This may add a few days and /or costs the lender charges the borrower. Local appraisers are getting this work, however in some areas appraisers are refusing the order due to the changes, thus eliminating a more local appraiser from completing the assignment. This is also unfortunate. Some in the mortgage industry must recognize the importance of an independent appraisal process and not attempt inappropriate influence on the appraiser. Some appraiser have to get back to their position of being independent and not acting as an advocate for any party invovled in the transaction. It is not a perfect regulation for ordering and reviewing appraisals, but something had to be set to prohibit these inappropriate practices. The comments from some in the mortgage, builder and realtor industries imply that the correct appraisal is the one that always supports the deal going forward. Again they have a financinal interest and hence the pressure on appraisers.

It's amazing to see all the belly-aching over appraisals. Look, if you have a foreclosure or short sale in your neighborhood or your appraiser gives you a lower number than you like, that's just the facts. If you bought at a higher number and time has passed where a lower number is coming back, that is the result of the risk you took when you invested. Most of us are in the same boat. Stop crying about it, pay down your principle a little quicker and stop borrowing money you can't afford to pay back. The whole concept of using your home as an ATM has created much of the economic crisis we're in. It's not the gov't or Wall st. that made you sign your mortgage papers, it was you. Whether it was motivated by greed or just bad timing, get over it. I'm in the same boat but looking for ways to remedy the situation instead of pointing fingers at everyone else for my situation. Get mad at yourself for buying into the something that looked too good to be true and learn from your mistakes for a change.

you home owners crack me up ! you had no problem with the apraisals when they were going up in price 50% a year ! give me a break ! live with it ! your house isnt worth what you thought it was ok! its back to reality ! greed got the best of you ! you mortgaged your home out and blew the money ! its not our problem ! now you are broke and loosing your home ! you deserve it !

I know of properties where there were a dozen of offers all at or above the listed price, up to 10% over the listed price. And the appraisal? 20% below listing price. If a property gets a dozen of full price offers, how can the appraiser believe they all pay 20+% too much?

I knew several such cases.

The new system is a joke. And I am not a realtor.

I am a Realtor and part owner of a appraisal company so I am on both sides.As management companies go,We are receiving a little more business but are fees are reduced because these management companies are shopping for the best deals ,leading to competition for the reports.I not sure who is getting the 30% increase in appraisal fees as noted in the articles but its not the appraisers.(I suspect its the management companies,which is passed on to the consumer)
I think that most Realtors really dont understand value.In our market in North Carolina, different areas experience different sales that contribute to the final market value using the sales comparison approach.I know that any Realtor or Appraiser reading this knows for a fact that most home owners think that their home is the best and most valuable in their neighborhood and they look at active lisings in their area and comment how their house is better for whatever reason.What it boils down to is what it sells for.We run in to this everyday.But in reality,the value is based on RECENT sales that have occured in the area as close to the subject as you can get and the most comparable(with low gross adjustments)We are spending alot more time giving additional comps etc. The management companies are going over these reports with a fine tooth comb which is extra paperwork and time for us.The bank would prefer all comps to be next door.Ha,Ha.
As far as lower values alot of times this is the case.Its just reality.In a large neighborhood with alot of homes for sale the competition can be fierce so sellers tend to start lowering their prices.Add in the foreclosures versus existing home and more competition for the sellers to sell their homes at lower prices.My listings have suffered because of this but its the nature of the market..I get tired of Realtors and others blaming the appraiser for a low value!Maybe more education of what value really is would help people what appraising is and understand why some homes are worth less then when they bought them years ago.I think Real Estate is still the best value but some gain and some loose..VALUE is what someone is willing to pay but most important what a bank will loan.Wake up people its not the appraisers fault our market is not its best!

Real estate appraisals have always been a farce, and totally controlled by commissioned salespeople.

I urge you all to read: "The Truth About Real Estate Appraisal" by Stephen G. Bishop to fully understand what a sleazy business it is.

Appraisers have to take the REO market into account if it is a SIGNIFICANT portion of the market. People need to understand an appraiser is valuing a property at a specific point in time. If I appraise a property and I have 5 properties that are in foreclosure that are similar to and in nearly the same condition then it is going to affect the value of the subject. It's called the principle of substitition. At that point in time the house is going to be worth less until those REO sales are cleared out of the market. Why would someone pay 200,000 for a property when they can pay 125,000 put 15,000 of repairs into the property and essentially have the same house that is being sold for 200,000?

This is why we will not have stabilization of property values until REO's are cleared out. In those areas where REO's are being cleared out property values are indeed stabilizing. But it takes time. Don't blame appraisers for low appraisals when we are bound by principles of appraising that everyone has to follow.

That is why it is possible to have an appraisal done six months ago for 250,000, but now your home is only worth 200,000. If at that point in time there are significant indicators of an over supply or a large number of REO's like your property then that has to affect market value at that point in time! Economics 101 folks. And it is amazing how much a market can change in just 6 months!

As to the HVCC when my son was working for me he had a mortgage broker come up to him and say, "We will give you 30,000 in business if you hit the numbers." Blatant fraud folks! This is why we have the HVCC. I don't like the HVCC, but the mortgage industry that is complaining so vociferously is largely to blame.

I don't think the HVCC is the solution. But there is no way it should be the mortgage broker or the real estate agent influencing who can get an assignment. That leads to all kinds of dishonesty! Frankly the lender that actually has skin in the game should order the appraisal; not an AMC or anyone else. You know I never got pressure from banks that were lending their money to make numbers work. In fact they always wanted an honest value.

Also I don't understand why buyers don't order an appraisal before they purchase. I mean they are investing tens of thousands of dollars. Shouldn't they at least know if they are being wise.

And before people get a loan, why don't they go out and spend some money and get a competent appraiser to do the job? Then if there is a question they have something to back up their complaint.

Please try to take the emotions and feelings towards realtors and mortgage brokers out of the equation for just a minute and put this into perspective

HVCC simply prevents consumers from making choices and allows the lenders to force lower valuations

And please be realistic – mortgage brokers are not forcing anyone to purchase a home or to refinance. But if you are fortunate enough to have equity in your home right now becuase you didn't use it like an ATM over the past few years) and you want to take advantage of a 30yr fixed rate at 4.75% you run risks under the HVCC program. If you order and pay for your appraisal you are committed to use that particular lender – it doesn't matter if your broker can switch you to another bank for a lower rate – or maybe the lender changes guidelines in the middle of your application process and you are forced to play by a different set of rules – you are now "married" to that lender unless you want to spend another $350 – $450 for a totally new report and you run the risk of the value being completely different.

And that is just 1 of the many problems with HVCC

Unless you are in the business you can not even begin to understand the difficulties in disputing errors – requesting corrections or God forbid hoping to have the report back in less than 7 business days because the lender and the AMC must do their "Quality Control" review.

many of you are right – the valuation of the property is based on the closed sales and the "market" but when the system forces the appraisals to continuously drive prices and values down – that forces the market lower

COMMON SENSE is what is / was needed – not Gov't control
Sure you can choose to have yoru mortgage broker

Appraisals and appraisers aside, if you bought a home during the blatantly obvious speculative housing bubble and then lost money during the easily predictable bust, you have mainly yourself to blame. Sorry, but c'mon…Did you really think that housing prices could keep doubling every few years? Did you really believe the crap that real estate agents were telling you? Did you really think the house you were buying was worth twice what it sold for a few years earlier? Did you not recognize the scary changes in the mortgage industry and the need to abandon sound underwriting standards to keep the frenzied party going?

I can believe that people saw the danger but thought they could make a bundle and get out before the crash. I cannot believe that people didn't see it coming, though. It was too obvious. C'mon, be honest…you gambled and you lost. All the real estate shenanigans were OK while you were ahead of the game, right?

And for all of you who are so pissed off about the gov't interfering with HVCC, your house would be worth a crapload less if it wasn't for the gov't interfering and propping up housing prices for the past two years. But I guess that part is OK, right?

This screwed me on a refinance loan this spring when rates were at very low rates. I locked in at 4.375 for 30 yrs fixed, then the appraisal came in a lot lower than any of us expected. With the Loan-to-Value ratio being a little higher than 80%, the mortgage company wanted me to pay PMI insurance at $140 per month. I haven't paid a PMI since my first house – 3 homes ago. Hopefully this mess with appraisal rules gets fixed and we can refinance in the next 12 months. BTW: Obama's plans do not help me because I am never late with a payment, I don't miss my payments, I have a job and my loan is not backed by Fannie &/or Freddie.

I most definitely do not feel our recent appraisal was fair. In September 08, we had our house appraised for a construction loan to do some remodeling. The value came in at what we expected compared to what was recently sold and on the market in our neighborhood. A different appraiser came through in June after the remodel was done. His value was 23% lower than the first appraisal.

So did home values come down that much in this period? No. The second appraiser used houses sold in the SAME PERIOD as the first, and they were not comparable sales based on the remodel we did. What a scam. Does he know my neighborhood? I doubt it because he showed up at the wrong house and waited for a half an hour for me. Did our appeal work? No.

Why am I complaining? This could cost us real money each month if it bumps us over 80% LTV, in which case our loan spread over prime jumps up 1%.

The pendulum needs to get back to the middle.

my wife and i bought a condo in 2005 when the market was just past its peak and we just tried to refinance in May because our original loan was a interest only for 5 years…our appraisal came back at 40 percent less than what we paid and it was primarily because of a foreclosure 2 doors down (a single woman with 2 kids passed away suddenly and tragically). If it weren't for this our value would have been significantly higher… but we ended up wasting 400 dollars on an appraisal!

I came to Washington three years ago as a final move before retirement – and at the advice of my accountant purchased a small townhome in order to have some tax shelter. Since prices are high here, I did a 5 year ARM – thinking that I would retire after 4 years, and hopefully make enough in the sale of my home to pay for my move back home. Well, I knew the value of my home had gone down and won't be able to resell in two years at anywhere near the price I paid- and decided to go with a fixed rate…..one that my lender discouraged three years ago. I contacted them, and asked to convert – and rather than work with me – they indicated that I would need to start over with a whole new loan. They sent out an appraiser, and the bottom line is that in order for me to refi, I need to put down another $55,000 to close on the loan. The appraiser included TWO short sales from houses and the other comps were not even comparable- less desirable neighborhoods and smaller properties, but the only ones she could find, since nothing has sold here recently. All told, I am down 130,000 with the current appraisal from what I purchased my home three years ago – so much for retirement. I will be lucky to have a home at all in two years if this keeps up and inflation hits, and interest rates go up. I have never missed a payment, have credit ratings 780+ , no credit card balances and no outstanding debt other than my home. I will more than likely have to take my retirement savings to pay off my home in order to have a place to live – and then not sure what I will live on from there……..am I pissed – you bet!

The appraisal ordering process was so hopelessly corrupt prior to HVCC it is astounding. Having commissioned sales people in charge of hiring the valuation for collateral to be used for government backed loans is ridiculous and frankly anyone who can't see this is either a greedy commissioned salesperson, one of their appraiser lapdogs, or a complete idiot. To all of those geniuses who keep harping about how the value of the home is what the buyer is willing to pay can you please pull your head out of your butt and realize that when you put down 5% (if that much) and the bank loans you the other 95% you did not pay with your own money – that explains why I had buyers wanting the appraisal to come in higher, because they wanted the deal with the cheap ARM payments and it WAS NOT THEIR MONEY being spent!!! – Yes, lets go back to the old system where the realtor refers the buyer to the mortgage broker, who picks the appraiser based on who will do the lookup and then do their best to hit the number – yup that worked out great. And to all those who think that appraisers have little blame in the housing bubble you can pull your head out of your butt too. These lapdog appraiser were running around for the past ten years applying what was known as the "push" – that extra 3 to 6% to make sure that the realtor and the broker got their take. Do you get it – no blatant fraud necessarily, just that constant willingness to push things just a little bit to keep their clients happy. Then those are used as the next round of comparables and that little push gets added again, and again, and again – it was a snowball effect and it played a huge part in this debacle. HVCC is the best thing that ever happened to the appraisal industry and it needs to be put in place for FHA NOW!!

First of all everyone should put in their heads that when you buy a property there is no guaranty that it will appreciate in value in a certain time period and a good percentage of REALTORS do lie to make sales, it's a FACT same thing with Loan Officers and Appraisers and Account Executive of the lenders…The old days which was common practice everyone has a network when they need to raise property values or low ball the values and this Brokers with Realtor Designations are the ones mostly influencing this to exist….Let's face it this are all human beings that will lie, modify, omit, make excuses to close a deal and this happens more in the big Real Estate offices that has to meet a quota, I'm not going to mention any company but people in the industry knows what I'm talking about Anyway change is definitely needed but to be realistic any changes you make will most likely be imperfect simply because most people want the prices high when they want to sell and want the prices low when they are the ones buying which is always a conflict and can not exist at the same time but there's a middle ground but for it to work everyone or majority of people in the industry has to be "HONEST" and not be "GREEDY". Those are the real main factors….So you want a long lasting solution just "BE HONEST" and "DON'T BE GREEDY", you don't live in this planet by yourself therefore you can't have everything your way, you have to share and compromise like it or not

I recently purchased a home (april) and two of my three appraisals came in under "market" value. Understandably, the appraisers are covering themselves because they are partially to blame for the housing crisis. They are getting looked at with a fine toothed comb from their bosses to make sure they are not overvaluing anything.

Long story short, if there is a will, there is a way. Try using a mortgage broker that might have better ties with a "recommended" broker. If the number you want isnt coming in, there is a way to beat it. We had to put down an extra 1% to beat the FHA required second appraisal (if buying in a declining market). You just need to know how to work the system.

What are they so-called real estate "professionals" crying about?

If a property goes into foreclosure, it will sell for (or less than) a comparable previously foreclosed property. Period. That is all that matters to the bank. And it should, given their balance sheets and where they have taken us. The hard-working people of America do not need a depression now.

Is this not common sense? Can someone teach this to the pros?

If you believe the appraisal should be higher, why don't you put up your own money?

The Home Valuation Code of Conduct has a pretty name but offer no effective consumer protection. In fact it does just the opposite and harms consumers specifically and the American public in general.

1) The HVCC makes third party appraisal management companies (AMCs) the favored appraisal ordering method. The AMC business model has a substantial bias toward using the lowest cost service provider which almost guarantees the least qualified and least competent appraisers will be utilized. I would offer that this is why agents and homeowners are seeing more problems with appraisals since May 1. Most competent appraisers will not work for, or will do limited work, AMCs. Winner: big banking.

2) Lenders, initially limited to no more than 20% ownership in AMCs in the first draft of the HVCC, can now own them outright. This allows for immediate short term profits from utilizing lower cost (lower quality) appraisers. The lenders have even gone so far as to increase the appraisal fee charged to the consumer while pushing down the fee paid to the actual appraiser who prepared the report. Winder: big banking.

3) The HVCC limits loan choice and cost for the consumer by squeezing out the mortgage broker. Shopping a loan among a multitude of lenders has become cost prohibitive. Winner: big banking.

4) Appraiser pressure hasn't changed, it's only shifted from the loan officer to the AMC. If an appraiser doesn't hit the number the AMC needs to keep their client happy that appraiser can likely expect fewer orders or be cut off. The consumer and appraiser protection portion of the HVCC, the Independent Valuation Protection Institute (IVPI), has been neither formed nor funded. Additionally, the funding appears woefully inadequate with the bulk of the payments from Fannie Mae and Freddie Mac not coming until latter years of the 5-year payout period. Since the IVPI is new, most of the funds should be in the first years to cover start-up costs. Winner: big bankng, Fannie Mae, and Freddie Mac.

The HVCC neither promotes the public trust or protects consumers with the American Taxpayer on the long term hook as big banks seek short term profits. The only beneficiaries of the HVCC is big banking who have found a new profit center on the backs of consumers and appraisers, and Fannie Mae and Freddie Mac who were able to quash an investigation by AG Cuomo for a paltry $24 million yet to be paid.

I'm in the mortgage business(23 years) and I can tell you that almost 80% or the appraisals I've had completed in the last 90 days since HVCC's inception have had serious problems due to: appraisers from out of the area that don't know that buyers pay less or more when certain major boulevards are crossed; they used comparables that a monkey could see weren't comparable; appraisers sending assistant/inspectors to the property who had just gotten out of jail on a DUI charge, had been beaten up in jail and was late for the appointment (I swear I'm not making this up); someone who is 35-50 miles away but bid on the appraisal assignment and was the lowest bidder and therefore got the assignment. Oh and what if a borrower doesn't qualify or I can get a better rate from another wholesale lender…I now can't use that same appraisal for another lender…I have to order two appraisals because a new lender won't take the appraisal.

Honestly there are plenty of laws on the books that say it is illegal to influence an appraiser or for the appraiser to give a bad value/fraudulent appraisal…but there is no enforcement for the bad apples of the business.

I've always wanted to know why is it that HVCC was hatched in an out of court settlement…how many people got caught doing the bad appraisals, and who was caught accepting bad appraisals? How many executives knew what was going on and were there bonus structures tied to the volume that was closed due to those bad appraisals… Did any of those people go to Jail…isn't that FRAUD? I know the answer. Did any of those appraisers licenses get revoked, did they get jail time or god forbid were they asked to reimburse whom ever lost money on the transaction that they fraudulently appraised.

The truth is in this country there is very little enforcement of any laws and "Law Makers" generally don't know the industry, they just MAKE LAWS and then never properly fund for enforcement. I've personally called regulators and told them where the dead bodies are and I can get a sting set up to stop the fraudsters…I was told "sorry we don't have the man power".

About 10 years ago the Wall Street Journal did a poll asking people 18 ti 35 years old "is it OK to be dishonest if you get ahead doing so"…in excess of 60% of the respondents said YES….should any of us be surprised that the financial industry from my desk to wall street, loan officers, underwriters, bond rating agencies, rating agency analysts, and HOMEOWNERS AND BORROWERS, LIED TO GET THE LOANS (any one remember STATED INCOME?) so they could once again pay off their credit cards and close their loan.

Most of our transactions had appraisal reviews…if it didn't pass the review, it didn't close. OH THATS JUST TOO SIMPLE…and we never had a lender or regulator come back saying we had a bad appraisal.

HVCC was well intentioned but poorly thought out by people that had a gun to their head from an attorney general and didn't want to go to jail.

This agreement should be investigated. It was written for and by the big 4 banks/lenders. By allowing them to own an AMC, it now allows them to collect a fee by NOT making you a loan.
The fact that Andrew Cuomo once served on the board of an AMC should tell anyone interested in the truth all they would need to know.

Well here in california (L.A.), everyone new the market was over inflated. Brokers/real estate agents got to let go of that "bubble". A 2bdr. 2ba. 750sq ft. home isn't going to sell for a half a million anymore, it wasn't even worth it in the first place. Let the blood let out and be done with it so we can more forward and have a normal growth in the real estate market 3-8% not 30-45% as we once saw.

My wife and i thought we were safe buying a bank owned home two years ago, prices were way down and we were able to finally afford a home based upon what we saved for a down payment. We put 30% down.The house has lossed nearly 100,000 in value in two years our hard earned money and equity are gone, and we can't even refi because the bank says our home appraises at X amount.No appraiser has ever even seen the house to compare any upgrades or condition of the house (4yrs old).And the real kicker is there are many homes which have sold for more than there so called comps(REO,BANK OWNED) which NEEDED thousands in repairs (unseen by these appraisal experts!) but these banks tell you a different story. I believe even with the new 125% LTV ratio we missed any chance for a better rate, my bank Bank Of America has told me that it won't be until August or September before they even have the new paperwork regarding the new rules. So much for doing things the right way, we scrimped and saved to watch our money get flushed right down the drain by these politics.

Carla: Refer to paragraph 3 of your article … the lenders caused the problem and now they largely control the process I would ask (and I quote you), "That's a solution?".

As an appraiser of 12 years I'd like to applaud the NY attorney general for his efforts and the implementation of the HVCC. It's doing exactly what it was intended to do. That is let the appraiser do his/her assignment without pressure to hit values. My business took off as soon as May 1st hit. Seems to me the only ones who are complaining have a stake in the property which is being appraised.

I'm an appraiser and experience the HVCC everyday.

1)I hate it because I get paid less for an appraisal (about 25 to 30%). I love it because I don't get mortgage brokers calling me for comp checks(oral reports) for nothing 5 times a day.
2) I hate it because I can't actually talk to a lender when a real issue involving the property occurs. I love it because I don't have to deal with brokers asking me to fudge on an appraisal and overlook actual conditions of the property that are a problem.
3) I hate it because the only thing most AMC's care about is cost and turn time. I love it because I don't have to try and collect from dead beat brokers that don't pay for the work.
4) I hate it because I lost 80% of my client base; which I spent 12 years developing. I love it because now I don't have to deal with brokers that want me to push a value to get a deal done.

Overall the HVCC is a pile of …. But the reason it exists is because I do a lot of review appraisals, and I can't believe the crap that are called appraisals. The mortgage industry is largely to blame for this. I remember the "good old days" when brokers would scream into my ear because it didn't come in at value. Or the days when at times the property really wasn't worth what they paid for it, and real estate agents threatened to blackball you because the deal didn't go through.

Appraisers are not to be rubber stamps. We are to give an honest opinion of value. As we say, "It is what it is."

I have appraised properties for less than their sale value. I have always said, "If you have the comparables or give me a good rational reason for me being wrong I will change my value." Most of the time they give me crap that isn't comparable and no reasons at all.

Yes, I think the HVCC should go away. But I also don't think that the "good old" days are a good way to handle things either.

As the Rabbi said to two people who were arguing, "You are both right!"

I remember several friends who both houses as the bubble was getting bigger and the real estate appraisal was a joke-everyone knew that the appaiser would value the house for at least the sale price, which was of course, a little higher than all the comps. The appraisers worked for the mortgage agents and made sure that the loan would go through so that the mrtgage agent and the seller would all make tons of money. The appraiser got his fee and didn't have to to work too hard.

Just remember that the real estate and mortgage agents along with all the "gotta have it " buyers were the ones who got us into the housing bubble mess in the first place.

So fast forward two years from 2007 to 2009.

People are still losing jobs 2-3 time faster than we asre creatingthem thanks to an administration that doesn't undertsand that you can't let everything we own get manufactured overseas witohut any import tariffs.

INCOMES ARE GOING down, not up. The WORST-maybe FAR worse, is yet to come.

The real estate appraisers are at least not in the pockets of the agents anymore. They are probably low-balling the appraisals becuase they all know that the houses are dropping in value.

The pain won't end until we stop bringing in H1B visa workers, start protecting our industry from competition with countries like China and reduce our oil imports. I don't see that hasppening for 10 years.Your Senators and members of congress are paid off by business lobbyists not to care, so don't look for help there.

Get used to the pain…

I don't think alot of people on this board appreciate what it takes to become an appraiser. I don't know if its different from the states ( I live in Canada), but before I was able to even get accepted into the appraisal institute program at UBC, I had to complete a 4 year degree in economics (and NO, not from an online university). From there it is another 2 years of full time university to get a residential appraisal license, and another 2 years of full time university to become a commecial appraiser. How many brokers and lenders out there have 8 years of university? I could have been a doctor or a lawyer. When I first started, being an appraiser was rather lucrative, and you could make a good living at it. Since the real estate "bubble burst" in the states, Canada has followed suite (as they always do) and are now using AMC's for nearly every appraisal request. I have seen a reduction of about 50% in my yearly income this year so far.
Personally when I do an appraisal, I take EVERYTHING into consideration. If a house sold under foreclosure,its a "forced sale" value, and not nessissarily indicative of its true value. On the other hand, when people see "foreclosure" or "schedule A" in the realtor remarks, they immediately think its a good deal, and I have seen people pay wayyyy too much for foreclosure sales, so its neither here nor there. The basics are that you can't base a value off one sale. I never use less than 6 sales in my appraisals. If one adjusted sale is low or one is high, then I invesitgate further to determine why.
Being an appraiser is not difficult. Being a good one is. If HVCC and AMC's continue to have free reign, you have no idea how bad things will get, because no decent appraiser in his/her right mind would work for the amount that we are now being paid.
The reality is that the problem is complex and too lenghthy to discuss in this board. A good start would be for the Appraisal Institute to make it unethical for any appraiser to work for an AMC.
Anyways, I have to get back to work. 16 hour work days aren't easy.

Had the federal and state financial industry and appraiser regulators enforced existing banking/lending regulations that called for appraiser independence, the HVCC would not be required. The HVCC that is currently in place was revised after a public comment period. One of the changes that occurred was to eliminate the maximum percentage of AMC stock ownership a financial institution or title insurance company may control. At the present time an financial institution and title insurance corporation can own in whole or via joint venture an AMC affiliate. The major national financial institutions own or have joint venture AMCs with First American. It should be noted that it was First American's eAppraiseIT.com AMC affiliate that was part of Cuomo's investigation that led to the HVCC.

The HVCC as it currently exists does not curtail appraiser coercion, it only shifts it from individual loan agents to other parties that stand to benefit. Cuomo should know this, his original investigation included an AMC. eAppraiseIT was accused of inflating appraisals to satisfy demands made by WAMU.

The HVCC does not mandate that lenders use AMCs. They have the option of placing appaisals with their approved panel of appraisers by staff independent of the loan production process. Additionally, there is an exemption for small institutions within the agreement.

Residential appraisal market value estimates are based primarily on the economics rule of substitution. When a local market consists primarily of REO and Short Sales exposed via MLS listings, they are the market, subject to appropriate condition/amenity adjustments. The use of local appraisers familiar with the market should be any lenders priority in a declining market. Why AMCs insist on sending out of area appraisers to complete orders raises questions concerning their business model. Many experienced appraisers refuse to work for the below market fees offered by AMCs. The HUD-1 appraisal fee does not separate out the portion of the fee retained by the AMC. Locally it is not uncommon for AMCs to only offer fees below $175. The public deserves better quality appraisal service, not another under reported fee income for a lender or title insurance company. The AMC portion of the reported HUD-1 appraisal fee is in effect another junk fee to benefit the lender and/or title insurance company.

The HVCC is unnecessary and serves only as a smoke screen without the mandated IVPI. Finally, there is no guarantee that the lenders will return to their prior appraisal placement procedures should the HVCC legislation pass.

So where were all the concerned real estate professionals crying out about the inflated prices being appraised a few years ago? How come they didn't call out "what–that house isn't worth that much!!" Oh yea–they get comissions based on the price of the house.

Finally, we buyers are getting some protection from inflated appraisals. The appraisers need to be isolated from the conflict of interest that was inherent in the old days, with a realtor or mortgage broker telling them what price point to meet. If the Realtors really wanted fairness and to protect buyers and sellers, they would have complained years ago that home values can't realistically go up by 20% or more annually.

The Realtors and Brokers need to realize that the glory days are gone and will never return. The bubble will not re-inflate, as credit is tighter and lenders are appropriately cautious. You need more than a pulse to get a loan now. Also, there is no constitutional right to buy a house using borrowed money. If a lender is going to trust you with other people's savings accounts, they need due diligence to justify the risk and conservatively value the house being bought. The low comps reflect the fact that the housing market is reverting to its historic mean from the early 1990s.

As for using foreclosures as comps, lets all face the fact that every foreclosure within half a mile of your house drops your home's resale value by tens of thousands. If you need to sell in this market, you are competing with foreclosures and short sales. As a buyer, I am looking at all the houses on the market, ESPECIALLY foreclosures, because you don't have to overcome the seller's overinflated expectations.

In response to A Jones, Olathe, KS: July 22, 2009 who was upset because "How can one assess the value of a home without even stepping foot in the door?" after the finding out their appraisal was a drive-by. As an appraiser, we don't get to decide whether we go in a house or do a drive-by. It is whatever the client (lender) orders. It's a lot easier for an appraiser to do a full inspection, because there is no assumptions of what the interior of the house is like. Drive-by appraisals are generally even more conservative because the appraiser is at the mercy of whatever information is in the public records. More times than I can count, lenders have called after receiving a "drive by" appraisal and asked us to go through the house. Guess what? That usually results in an additional fee because we have to go back to the property, research the market again and transfer information to a different form. But once again, the appraisers are the bad guys…

I would mostly agree with what Rodney (Sparta, Tn) said below. He's absolutely correct in that the buyer and the sellers set the "Marker Value" and that the appraisers are setting a "Bank Value." However, the BANKS are technically the purchaser in a mortgaged home. So, technically, the amount the bank is willing to pay IS the market value in a mortgaged home. The bank then enters into a contract with the "owner."

If the new owner wants to pay cash for the home, there isn't an issue with the appraisals… Is there?

What everyone seems to be missing in this discussion is that the lender is a member of the transaction and has to look out for their interests. If realitors, sellers and/or purchasers don't like the stipulations levied by the third party in the transaction, then only work cash deals! (Let's see where that gets everyone!)

The real estate agent system is a HUGE scam and mostly responsible for the housing bubble. Both seller and buyer agents make more money based on the higher selling price of the home. That's like both sides' lawyers in a lawsuit splitting the amount of the settlement money. Would you hire a lawyer to defend you if you knew they were going to get a piece of the settlement money. Why don't people understand this simple fact. Realtors know this and still practice their profession so they are all crooks in my eyes.

Im thinking maybe Cuomo has a vested interest in an AMC.. He's probably thinking that everyone else has made a ton of money in real estate, why not him ehh?

This is not about realtors! Its about homeowners value. Nobody can refinance with this new appraisal rule. Obama's mortgage rescue is in the trash! He quoted 3 to 4 million people would be able to refinance at low rates. So far he is at 50,000 at the most. Obama can see where he has failed……….so its time (right now) to fix it!

A local Appraiser who knows the neighborhood should be able to pull the right comps to do a fair market valuation. It is completely ludicrous for Appraisers to be told to drag property values down in a community because there is a low ball foreclosure in the area. If this becomes the standard, especially with banks dumping properties with Government help, values will continue to plummet. Banks shouldn't influence appraisals, nor should Realtors (I am one), Builders or (and in particular) Politicians. Bottom line: Appraisers are educated to perform unbiased fair market evaluations based on pure data. When you start threatening their jobs, make up a ton of silly new rules, use out of area newbies and then tell them to use distressed properties as comps, you continue to unravel an already unstable market.
Why, for Heaven's sake, even buy a house, if it's going to lose value as soon as you buy it? When you perpetrate market instability, everyone loses.

we all can thank our good friend Andrew Cuomo for whats going on.

This article on CNN must be a joke right? I personally can't believe that we still don't have a pulse or the "real" truth on why we are were we are in the Real Estate and Mortgage business. The fact of the matter is that when banks started placing home loans into mortgage backed securities and were encouraged by our very own government and Fed Reserve policies to make less than credible business decisions is when we got into trouble. When banks portfolio the loans and they are 100% responsible if the loan defaults we have a better lending environment. This is all such a crock of $!@$%$ that it makes me sick. When is the last time a loan officer or a respectable broker actually approved a home loan? The banks needed better underwriting and more verification of the true comparable sales that were submitted to them. That did not happen though because loans were simply securitized and placed into mortgage backed securities were someone else could share in the losses if not completely. The banks need to be regulated. I will state that I'm happy to see so many of the sharks who were in this industry doing other work somewhere else but, I'm afraid the days are numbered for many responsible loan originator's, brokers, realtors and appraiser's because the banks need to pad their pockets even more.

I am an investor who buys and sells several properties each month. I understand the need for an accurate assessment of a home's value. But I have personally experienced lost sales from out of town appraisers using inappropriate comps and area foreclosures.

Is it fair that any seller who is NOT in distress be forced to sell their home at a "foreclosure" price? It is not. Yet the use of foreclosures in appraisals often has this effect. The condition of that foreclosure may have some bearing, but banks are overloaded with REOs and are dumping them at a considerable loss regardless of condition. The banks are replacing their losses with bail-out money so they come out ok while other sellers and the neighborhoods suffer.

The effect of this is, where I previously would buy an undervalued property knowing that I could sell it for a profit, I will not now do so if there are low-priced foreclosures in the same neighborhood. Most of my investor friends are doing the same. These neighborhoods languish and lose value even more.

If investors don't buy the distressed homes and repair them, who will?

My proposed solution: Consider comparable sales, but give consideration also to replacement cost – what it would cost to rebuild this home in the same condition. This is the only way builders will EVER get back into the unfinished subdivisions and may be our only hope for a near-term recovery in housing values. I would even be willing to accept an average of the two valuations, but it's hard to imagine a 1200 square foot home in a decent neighborhood being valued at 35,000 simply because a bank sold one down the street for $24,000.

I tried to refinance my mortgage to rebuild my kitchen. The appraiser simply looked at COMPS in the area. It didn't seem to matter that what he was comparing my house to had a roof that was 30 years older and had the same pipes from 1941 where my place has a new roof and pipes. The appraisal came in way too low.

If an appraiser is out to protect the mortgage company or bank, then why do we care, unless we are shareholders of that bank or company, if the mortgage company pressures the appraiser for a higher value. They are taking on the risk, let them. Why regulate and put into the hands of, in a lot of cases incompetent fools who would be studying to be a computer technician or legal assistant etc… online. These appraisers lack competence and as many have pointed out are not making much since the management company takes most of the fee. It is like any profession, you pay less you get less. Unfortunately the smart and capable appraisers move on to greener pastures and the idiots and morons show up and due interior work and if they are lucky don't screw up the transaction. This is why it is important to let companies fail when they take too much risk, and not to let companies get too big to fail. The appraiser isn't hired for my benefit, it is for the mortgage companies. Lets not kid ourselves. Let companies manage their own risk and not bail them out if they screw up.

As the owner of one of the few remaining mortgage companies in NV – I can tell you that this law FORCES us to place the loan with a particular bank once the appraisal is orderd & will not let you change lenders, even if you can get a better rate somewhere else. so much for consumer protection…we also have inexperienced appraisers messing up because they dont know the area – but they are the lowest priced, so the mgmt companies hire them. The mgmt companies, by the way – are not licensed or regulated and can charge whatever they want – usually taking more than half the appraisers fee. so now one of the most important aspects of the loan is being done by the lowest bidder. forget about refinancing for a room addition or college education – those days are long gone… this is over regulation.
and your comment about isnt that how we got into this mess – well, most of the unethical actors in the RE meltdown have moved onto appraisal mgmt and credit repair.
do you homework. getting rid of the HVCC is the best thing that could happen.

I agree with this article 100%! I am a banker and bought a foreclosure last August in an established 40+ year old neighborhood. The same model home sold 2 doors down from my house and was appraised at $325,000, the selling price. My home 3 weeks later appraised at $190,000, $5,000 less than the bank's asking price and $135,000 less than a house 2 doors down. None of this makes sense. I have customers that have lived in their homes for over 10 years and are unable to refinance or get a Home Equity Line/Loan because of being upside down. These homes were purchased way before the Housing Bubble and it is killing the spirit and economic future of very good citizens.

I agree with [Igor, Charlotte, NC: July 22, 2009 2:46 pm] and other non-real estate people on this post. Most comments seem to be from the real estate lobby.

If you cannot afford something, don't buy. Who are others (that don't acutally make the loan) to say anything about how much loan should be bestowed upon the buyer?

The money that the bank lends belongs to me and I want to make sure that unbiased, data-based, non-emotional appraisals are used, even if it means more conservative means are being used.

For anything above the loan, the buyer is free to pay up with their own cash. Or why don't they ask the real estate lobby to make them a private loan with funds from real estate professionals since they believe so much in real estate?

Aside from the polemics, this is a very interesting thread. There's a problem here of the conflict between two things that are hard to figure:
– Buyer's likelihood to pay
– Property's true value

So, I want to add one relevant item that's a little bit out of the mainstream:

When I bought my first house, I hunted for properties with an "assumable" loan, that is, the new buyer could assume the old seller's loan, like taking over payments with a car. It was an FHA or a VA loan, both of which have microscopic default rates. It was really a good deal for everybody: the seller sold, the buyer bought, and the lender still got paid in full. I don't know how common these are any more, but I think a 30-year, fixed-rate, assumable loan could help a LOT by keeping the loan tied to the property. Then, all we have to do is make sure that the buyer has the ability and desire to pay and monitor the fact that he actually IS paying: not too hard to do.

As long as the buyer has the ability and desire to pay, all is well. When this payability breaks down, problems begin, so we must be sure before the sale that the property is worth more than the loan so that another buyer can move in and take over the payments, like a car. This system worked well for me.

I don't think many people would sign an unlimited liability loan; it must be "no recourse", limited to the value of the property, as in an assumable loan illustrated above.

We're Americans; we should be able to figure this out.

I think the experience my fiancé and I recently had reflects that of a lot of the consumers here. We are in the process of refinancing and had worked hard to have 10% equity prior to refinancing. The appraisal we received this week came back $3000 bellow one that we had received in Nov. despite the housing market in our area showing considerable improvement. The lender informed us that the appraiser did a "drive by" on our house and established the value more on recent market in the area. I mirror others sentiment in that I feel pretty cheated that we paid someone for their appraisal service. I would be able to accept a lower than anticipated number had I felt that proper due diligence had taken place, but this I feel was not a thorough evaluation. How can one assess the value of a home without even stepping foot in the door? This type of thing gives me very little confidence that financial systems will be revamped for the better.

When outside help (financing) is required to get someone into a home, that home is not necessarily worth what someone is willing to pay for it. A bank has no emotional attachment to a home (only an attachement to their money) and if I'm a bank and I'm lending to you based on the asset securing the loan, I darn well want to be sure that the valuation is accurate. That's where the appraisal figures into the process.

If you become rich and famous and want to buy the childhood home you grew up in, you may be willing to pay $1 million dollars for that shack. If it makes you happy do it, but realize you'll probably have to pay cash to do it.

I'm a mortgage banker and trust me I've had tens of thousands of dollars in income fall by the wayside because of low appraisals. The system is not perfect but there needs to be safeguards in place to protect against abuses in lending.

Realtors, buyers, sellers all have a jaded perspective when it relates to their transaction which makes it tough to be objective

I've been unable to refinance because of continually low appraisals. Granted my house is not that large, 1200 sq ft, the appraiser used a 900 sq ft house as a comparable, and then two houses on one of the main roads in my town while my house is on a quiet side street. Although my loan isn't backed by fannie mae, it seems banks are using the same practices regardless.

I have been an appraiser for close to 18 years and the "plea bargain agreement" that Freddie Mac and Fannie Mae made with AG of New York was more to avoid further investigation of their failure to adequately police the appraisal guidelines they had in effect than reduce pressure on appraisers. HVCC provisions prohibiting mortgage brokers from ordering appraisals directly from independent appraisers has cost me 50 to 75% of my business/revenue by prohibiting me from doing business with legitimate mortgage brokers with whom I had sound business relationships with for 10 to 15 years or accept half my normal fee to prepare the appraisal for AMC’s.

It is ironic and unjustified that lenders and unregulated AMCs who were found by the AG of NY to have placed undue pressure on appraisers to inflate values are now permitted to exercise more control over which appraisers will be used, especially, since many of the unregulated AMCs are owned by lenders and have increased appraisal fees to the consumers and reduced the fees paid to the appraisers.

Legitimate mortgage brokers and appraisers were not the cause of the housing bust. If some illegitimate brokers placed pressure on appraisers and the appraisers gave into the pressure then the illegitimate brokers and appraisers should have been punished not the entire regulated mortgage broker and appraiser professions.

It should also be noted that HVCC does not apply to FHA mortgage loans that are fully insured by the government so mortgage brokers can still select the appraiser and directly order the appraisal for FHA loans. If HVCC is deemed necessary why doesn’t it apply to FHA mortgage loans

As indicated by Representatives Childers and Miller when they introduced HR 3044 proposing an 18 month moratorium on the effective date of HVCC:

”HVCC, in its current inception, is too broad in how it regulates real estate markets in the nation as a whole. “This legislation is really for the industry to take a step back to see what needs to be done on a national level,”

A representative of Childress wrote in a statement. “What’s done in New York is not necessarily what needs to be done in Mississippi. The real estate markets are totally different.”
Miller also commented in a written statement about the alleged adverse affects of the HVCC. “I am concerned that [the HVCC] has the potential to increase costs to consumers, significantly hinder a consumer’s ability to obtain legitimate and reliable appraisals, and adversely impact small business professionals who work in the very neighborhoods where these consumers are looking to purchase homes,” he stated.

We concur and support the Congressmen comments and the proposed 18-month moratorium of HVCC and urge all affected parties to support passage of HR 3044 so the detrimental affects HVCC is already causing can be stopped until adequate review and better solutions to appraisal pressure from lenders can be found.

Leaving HVCC remain in effect when it is hindering the housing recovery, increasing consumer cost and putting legitimate mortgage brokers and appraisers out of business or substantially reducing their income due to AMC reducing fees paid appraisers, is a disservice to the public.

Please sign and forward the following petition and forward to everyone you know in the industry and ask them to forward to their representatives:

http://www.hvccpetition.com

Igor,

Do you really believe that people should wait until they have enough CASH on hand in order to purchase a home? I am totally against allowing people to buy a home without at least 20% down, but your response is a little extreme. If that were the case, 95% of the population would never own a home.

Local realtors/builders are part of the problem. I live in small town America – multiply the following observation by "X" and one can see where national trends may exist. A local realtor/builder claims to be "protecting" home values by sticking to prices above appraisals (including VA appraisals for military). He won't come down because he is "trying to ensure other homes in the area aren't devalued.” One way to read that is “I’ve got a monopoly and am looking out for my own interests.” Bottom line is that inflated values have not experienced a downward adjustment everywhere, and the villains aren’t just lenders, or the HVCC. The issue of just who gets to decide the accuracy of a “below market” appraisal will remain a problem as long as there are forces within the industry that don’t agree and aren’t specifically regulated. It changes state to state and even town to town. Locally, it appears that any appraisal that does not meet the Realtor/builder’s expectation must be wrong. If we buy in to that methodology and do not strengthen the appraisal process, then the consumer loses.
Also, I wonder what the historical figures are in terms of impact of appraisals on sales. The figure of 20% of members of the NAR having recently lost home sales because of low appraisals is perhaps misleading. This is not, from personal experience, a new phenomenon. I’m certain prospective buyers don’t decry the lower costs – and many sellers will likely still make money on their homes if they have held them for any appreciable time. Seems to me the problem is somewhere in the middle.

@Matt

Because in order to be willing to pay for it, a buyer would want to feel comfortable that the deal is fair. Granted – they could do the research themselves and figure out if the home/condo is correctly priced, but most people don't want to do that (or don't know how) – enter Appraisers.

Would be the same case (just reversed) for the seller; don't want to get shortchanged. Its insurance

(Matt, Sarasota, Fl: July 22, 2009 2:45 pm) asked: "The value of anything is what someone is willing to pay for it. Why do we even need appraisers?"

Because most so-called "buyers" may be willing to agree to a price, but they aren't really buying the home at closing. The lender is buying the home and needs to protect against the "buyer" defaulting on the loan. If the buyer defaults the lender wants to make sure they can recoup their money by selling the collateral — i.e., the house. Since the risk of default has increased dramatically, and lenders are trying to manage that new risk. They don't want to lose (any more) money. Go figure.

If the buyer is paying in cash, they can pay any price they want and are not required to get an appraisal. Of course, it's only his/her money at stake in that case and they assume the risk.

Being a loan officer now for 10 years I can see both side of that coin. I am trying to be as non-biased as I can be by only going off of my experience with the HVCC rule. I now work with a direct lender so I can order the appraisal from whom ever I want but, I have to agree with the realtors. Most of the HVCC appraisals have come in lower than the AVM value, which was already known as being notoriously very low. When the appraisal comes in on adv. 10% lower than the AVM it should raise eyebrows.

My wife and I just bought a short sale home for $185,000 in a neighborhood where homes with the same floor plan are listed anywhere from $210,000 to $270,000. Granted ours is definitely on the lower end of that, but our Realtor was appalled at closing to find the house hadn't even appraised for $200,000 and lamented the fact that the out of town appraisers just have no idea how to accurately appraise area homes. Given his reaction, and knowledge of what homes are selling for in our neighborhood, I'd definitely say our appraiser didn't give us a fair shake.

The legislation was passed due to a far too cozy relationship between WAMU and an appraisal mgmt. co? Well, the appraisal mgmt co was owned by WAMU just as Wells Fargo owns RELS and BofA owns Landsafe so how is this better for the consumer. It is just another way for the big banks to do whatever, charge whatever they want and our government allows it….sounds like far too cozy a relationship.

It is not fair to the consumer to pay for an appraisal through a lender (and all charges vary), have your loan denied by that lender and then have to pay for a whole new appraisal.

Also, these BANK owned appraisal management companies are charging higher fees and yet paying the appraisers less many. They are also hiring brand new appraisers who don't know what they are doing and are willing to work for less but the BANKS are still charging.

The HVCC is definitely not well thought out legislation but most things that our banking committee are not well thought out….Hey, Chris Dodd, how about that great rate you got from your buddy Angelo @ Countrywide….and you didn't know! What a bunch of b.s.

As an appraiser, the worst part about HVCC is that many of these third party companies are as corrupt or more corrupt than the lending institutions. When you get work from a lot of small lenders, you can afford to stop working with one who puts pressure on you for a value, but when you work with only a few third party management companies, it's a lot harder to ignore the pressure.

I'm not sure that going through these third party companies is doing the economy any good. For one thing, these companies have a lot of ethical problems. Many times they'll tell the bank that the appraisal fee is $350, and they'll offer the appraisal to several appraisers to try to get one to take it for $200. When without the companies, the appraisal would just be a simple $275 transaction.

It just seems that this doesn't fix anything.

So the appraiser should appraise a property for at least the sale price just because someone is willing to pay that amount? And they're incompetent if they don't? Really??? Last I checked, an appraisal was an opinion of value based on current market conditions performed by an independent party who has no present or prospective interest in the property, and has no pre-determined values. Sorry, we're not going to tell you what your house is worth until AFTER we inspect it and research the market. I'm guessing the people complaining that a "stupid appraiser" appraised their house too low are probably the same people complaining that their property taxes are too high.

Just another politician who wants to yell out "i corrected the problem", when the truth is you have no clue. This HVCC appraisal crap was pushed through just like the wire taps and all the other crap in a knee jerk reaction. I have the same problem here in fort lauderdale as you guys everywhere else. I actually had some jerk*** appraiser tell my realtor (who was just letting him in the house) that he "was there to get these values back in line"..thats actually what he said. he did not say he was there to give a fair appraisal, he was there to get "values back in line". what a crock of #$%^. needless to say, he ignorned 6 normal arm-lengths sales within the past 90 days and 2 of his 3 comps were short sales that were people probally selling to the aunts or uncles. the short sales were older, further and smaller. the AMC told me i could order a review for a additional fee at the customers expense. Maybe i'm just "bellyaching". Sure, that must be it. And will someone please tell Bankrate's Holden Lewis, who i assume is a very intelligent person, that the old appraisal rules did not get us in the mess were in, it was the fact the rules were not inforced and nobody cared cause everyone was making money. That was a dumb comment. Banks started reviewing appraisal work with far greater scrunity before this pocket lining HVCC. Now we just cost customers more money and get them screaming at everyone for different reasons. This did not solve any problem at all. it created more. More politicians does the political thing. We made all these changes to stop bad people from getting lonas, now we have stopped good people from getting homes. You guys are so smart.

For those looking to protect buyers from themselves, maybe we should do the following:

Make gambling illegal since people get addicted and can lose everything and lets face it the vast majority of people who gamble lose.

Make credit cards illegal since people can overspend and lets face it, they are stupid and can't be trusted.

Make alcohol and drugs illegal since they kill you over time. While we are at it, ban everything that is fattening and sugary since people in this country have a weight problem.

Make all programs on TV G rated since parents can't be trusted to monitor what their kids watch so the government should do the monitoring.

Where has personal responsibility gone. We are in this mess because of greed, pure and simple. Companies lent out to risky borrowers, fraud happened because people were asleep at the wheel, appraisers were pressured into giving high estimates and were influenced by the upward momentum of the market. The vast majority of people who bought a home under "loose" circumstances still own that home or another one. Look up the % of homes that are distressed or in foreclosure to homes that aren't. I bet it is well under 5%. People are losing touch with reality here. This is a knee jerk reaction to "protect" buyers. Personally I think all of the companies should never have been allowed to get to the point where they were too big to fail. That being said, I think they should have been allowed to fail. Nothing is a better teacher than failure. The vast majority of homeowners would continue to make their loan payments and own their homes. People are being caught up in the mass hysteria. Worst economic disaster since the depression. That was not all because of "idiot" buyers who couldn't help themselves. The fed kept rates too low. Mortgage companies were too lax, and there was no oversight on the packaged loans. Rating agencies were rating these things AAA without knowing what they were made up of. I am sick of hearing people saying that the buyer needs to be protected. No one forced them to buy the house. They were an adult who made an adult decision. Adults should be allowed to do that right or wrong.

HVCC, although I believe well intentioned, is an absolute disaster. As a former mortgage broker, I used a small group of appraisers not because they got the value I wanted to hear, but because they were fast, knew what they were doing, and charged a reasonable fee. Appraisers that we used had to be approved by the lenders anyway. This law makes appraisals less reliable and more costly.

I've never seen realtors lobby for anything that was good for the consumer, just good for their pocketbooks. This is no exception.

Good. Maybe that'll finally weed out thieves who borrow money to buy houses they can't afford then default. If you can't afford to pay in cash, you can't afford it, period, be it a pencil, a car or a house.

The value of anything is what someone is willing to pay for it. Why do we even need appraisers?

I am an MAI appraiser. I also am the only one in my profession to have written a book on the subject that is used for continuing legal and appraisal education. I am very upset at such an accusatory story. But, if true, I'm all for exposing it. Appraisers must: 1. not be biased 2. Use the appropriate information ( comparables) that reflect the forces that affect value. If such is true as reported in your story, why not report very specific examples. If "false" values are being report, the appraisal industry wants no part of it, it adversely affects mortgage finance. Its up to you. I encourage you to follow up.

As a mortgage loan originator I have received multiple appraisals with low values, inaccuracies, representative sales not reflective of the subject property and artificial downward adjustments to value. The HVCC adds a layer that allows unregulated appraisal management companies to use unlicensed "appraisers" with no accountability to the lender or the purchaser of the appraisal services. The HVCC is yet another example of an overreactive government policy that does not address the underlying problem and leads only to additional costs to the consumer.

To all my mortgage broker, real estate sales ladies and gentlemen …. waa, waa, waa.
Grow up; there is plenty of blame to go around. When a person with no formal education, no sales experience and the briefest experience with the English language can earn $50,000 a month sitting in a room selling crappy loans there is something wrong with that picture. When home buyers sign on the dotted line to buy a home they know they have no reasonable expectation of paying for when the lender and the real estate sales person both know without a doubt that the buyers do not meet the guidelines of any actuarial table … there is something wrong with that picture.
A licensed, certified appraiser is the last person to know the price!
When the appraiser arrives; the seller knows the price, the real estate sales person knows the price., (the sales person likely created the asking price out of pixie dust) and of course the lender/investor knows the price. Lender/investor, seller, sales person and mortgage broker do not get paid unless the property sells for their “pixie dust” price.
Appraisers are the gate keepers without whom total chaos would rein in the residential real estate market.
California has had it’s entire economy devastated by years of bad decisions, political apathy and accepting as normal a fantasy that residential real estate prices would by some magic continue to increase forever as wages shrank.

I urge each of you to contact your congressman and ask them to support H.R. 3044. This bill will put a moratorium on HVCC will be for 18 months. HVCC was a hair-brained idea that needs to be rethought. The consumer is being charged more for a weaker product. Not to mention that appraisers took a paycut overnight since the management firms are keeping a large portion of the money.

Its not just the willing buyer and seller price. I'm a CPA and there are many reasons property is appraised. Divorces, estate settlements, etc.

We need to have an estimate of the real value and I agree that the appraisers are either not qualified or in many cases using wrong comps. For example, the school district is extremely important. I spent hours debating with a loan company that using a comps from an inner city school district vs. a highly rated suburban district is not reasonable.

The loan companies are scared to say anything to the appraisers because of the new laws.

I am an appraiser in the Chicago area and can feel my blood pressure rising as I read this and some of the comments posted! So many make excellent points – but the appraisal industry as a whole is so unorganized that OUR voice is never being heard. Many smaller appraisal firms have vanished after decades of quality work and gaining clients and now find ourselves at the mercy of AMC's like Equifax which has unexperienced non-appraisers dictating what is deemed appropriate. The average time to complete an appraisal is now almost double with a fee charged to the client of about $450 with the appraiser receiving $180 (which he/she most likely splits with his supervisor as I do). Additionally, companies like Equifax scrutinize our reports and request anywhere from 5 to 9 comparable sales including active listings/pending sales (which are the ones that KILL many deals as these active sales are greatly taken into consideration these days – whereas the lender could care a less before). The company I worked for had about 10 appraisers – and we would be lying if we said that there was not at least ONE time that value was pumped up at the request of the lender – any appraiser will tell you that- it was a VERY COMMON practice and a major part of the reason that we are in the current situation we find ourselves in – had the lenders just allowed appraisers to do their job…this never would have happened. Every appraiser is also acutely aware of the fact that if the value the lender required to make the loan "work" was coming up short and the appraiser felt insecure pumping it up – the appraiser's fee would be forfeited 100% and the lender would have 100 other appraiser's waiting in line to MAKE THE VALUE that was needed. The lenders had us all by the seat of our pants and we did what was necessary (within reason) to keep our children fed. There is always a range on every appraisal report it's never just one simple dollar amount and today the REO's and short sales (when they are in similar condition to the subject) have to be taken into account…so as long as these sales continue the market value of all homes will notice the effects in some way. I can see that even with the new HVACC program in effect – there are lenders which have found some loopholes and are back to their "business" as usual….but, I for one am suffering with 2 foreclosed homes and homeowners who are beefing about a large appraisal fee which I sure wish was lining my pocket – Thanks AMC's for all YOUR hardwork for my fee….and for sending me to areas that I have minimal knowledge of thus, increasing more problems…but, that's the way it goes I guess….Wish someone had a quick fix….

Jim,
Your opinion is typical of what we encounter. As an appraiser I can guarantee that the appraiser spent more than the few minutes he spent in the house. I sometimes spend hours sorting through sales in a neighborhood. The key is that the appraiser is supposed to be impartial. A buyer is not. A seller is not. A mortgage banker is not. A realtor is not. Of course there are appraiser's who don't do a good job. There are people like that in every profession. We are the convenient whipping boys right now. Trust me, I have never "spent MINUTES" on any report I have completed in the 23 years I have been appraising. Get your head out of the sand. Blame for this mess can be spread around to all involved. It is not the fault of a single profession.

There's an old real estate rule dealing with appraisal values as being determined by an "at arms length" transaction. Meaning both buyer and seller are on the same ground in the sale. These foreclosure sales are clearly not at arms length as the sellers (the banks in this case) absolutely must sell the property no matter how low the pric. These buyers in turn are buying properties "as is", and sometimes have to make expensive repairs after closing that are not reflected in the "sales price" of the comparables these appraiser's are using. Therefore, these sales are not "at arms length" by any means and really should not be considered comparable sales, unless the subject property is also a foreclosure transaction!

If I am giving a loan to some one I would use my appraiser to assess the value. What is wrong about this?

I started refinancing my house in May. My real estate agent and I had ran comparables and we figured my property was worth around 680k to 700k, down from 750-780 just last year. Considering I was refinancing a loan at 473k, that was not a real big deal as I had plenty of equity. For those that will say that my loan is a jumbo loan (above 417k) and not subject to HVCC, you may be correct, but most lenders use the HVCC program for all their loans, not just Fannie/Freddie loans, and my lender follows that program.

The first appraisal the bank ordered came in at 495k, some 200k less than what we had figured (and less than what I built the house for in 2000). At first I thought it was joke. My house was worth less than what I built it for in 2000? After fighting with the lender and providing them with comps for my area that I had already pulled, the lender agreed that the first appraiser had to be way off and ordered an another appraisal. The second one came in at 650k. Still less than what I could sell it for, but high enough to allow me to refi.

It should not be possible for two companies to come up with such a disparity in results if they use the same guidelines. So why the huge difference? My only answer is that the first appraiser was located some 150 miles away and not familiar with my location. The second appraiser was a local company and knew the area in which I lived.

Some appraisers are so scared of getting trouble for establishing a value that may be considered too high, that they are intentionally lowering their valuations. But that action is just as bad as if they were to overvalue. It stops people from being able to refinance or to purchase a property and if that happens due to the appraiser’s practices, then they should be held accountable/liable for their actions.

For all of you "mortgage brokers" who think that income validation is the only necessary and sufficient qualification for a mortgage, let me ask, what happens if the borrower loses their job?

Their fully documented income was more than enough at underwriting, but well, now they've just been laid off. No more income. Nothing to support the mortgage payment. The bank has no alternative but to foreclose. What happens if the appraisal value was inflated by 25%? The bank takes a big hit even though they documented income and put the borrower into a simple product – say a plain-vanilla 30 yr fixed.

This is why mortgage brokers just take the apps and people with the capital do the thinking.

This will slow a real estate recovery, but eventually the market will correct itself by mortgage companies pressuring appraisers/legislatures/congress/etc…. The pendulum will swing back. We had an issue with a ridiculously low appraisal and incompetant appraiser using horrible comps and not counting bedrooms. When we tried arguing the point with the mortgage company offering the HELOC, they didn't care. Right now at least, they are playing it safe. Would you take a chance as a loan officer when your job is on the line and your company has made it clear it wants little to no risk loans. I wouldn't, I would err on the side of caution. They didn't care and my points were valid, but it fell on deaf ears. It just isn't worth it to the mortgage companies and banks to research every time a homeowner has a problem with a bad appraisal. Now, in the future as the banks and mortgage companies risk tolerance increases, and competition heats up then the same loan officer would get scolded for turning down a loan or not working with the homeowner on getting a reappraisal. As time goes on things will change, but this legislation is dumb and not well thought out. Banks and mortgage companies will regulate themselves, but that will not stop it from happening again in say 20 years and neither will this legislation. People will make poor choices or risky choices and get burned and nothing can stop that. That has happened for eons and will continue to happen. Just try and educate yourself and not be one of those people.

I went to refinance and had an out-of-area appraiser low ball our valuation. When questioned, I was told that homes in my market had been significantly lowered due to the real estate bubble. They only problem was the town they referenced is not the town I live in nor was it the municipality, or school district. I also mentioned that the builder was selling my model (no upgrades) at a higher value. Their response, your home is no longer new and you can't compare the new home with mine. My house is only 2 years old. I would have thought that the builder would be one of my competitors should I decide to sell. I also mentioned that I had 2 experienced realtors perform a fair market valuation (taking 1 week) that came in $100k higher than the appraiser. Their response, "realtors are not licensed appraisers." The appraiser took less than 24 hours to provide the valuation to the lender. So I would have to agree with the article, the pendulum has swung the other way.

So the realtors wants their inflated value on an appraisal? Funny, they are part of the problem and now blames appraisers because the realtor can't put an accurate value on a home. I am a mortgage lender and have been pressured many times to get a higher value on an appraisal. Suck it up and admit you can't put an accurate value on a house.

I just refinanced and was lucky the appraisal came in for what I needed to clear my old mortgage and HELOC. I think the appraisal was way under the value of the house given the addition recently put on. The "comparables" weren't really comparable to the home I have now.

Ok, so the mortgage brokers have weighed in and are whining that they're not closing deals on over-valued properties. Big surprise.

There are many solutions when an appraisal comes in "low":
1) buyer puts up a bigger down payment.
2) seller lowers price.
3) buyer finds different lender who provides higher LTV loan.
4) buyer finds a different property.

I bought a house when the market was headed into deep-freeze, and the appraisal came in below the contracted price – seller & I split the difference. And guess what? I had enough equity to refi at 5% last month.

You don't get it.

This is a market-based economy. Things are worth what someone is willing to pay for them. What do you bet that the buyer of a home is going to do a HECK of a lot more researching than the 10 minutes an appraiser spends taking a cursory look. The buyer of my home literally spent months researching. He was a sharp, savvy guy. He was willing to pay a price that we agreed upon contractually. The appraiser came by for a few minutes, asked me 5 times why I did not put the home on the MLS, and the appraisal came in $25,000 low. The buyer was upset because he felt that it jeopardized the sale, and he was more than willing to take a loan for the negotiated price. Ultimately, I caved in because I did not want to pay $450 more to the appriasal mafia.

If you are going to argue that the appraiser is trying to find the "real" value that the lenders themselves can expect, I call hooey. There is no better judge than a well-researched consumer. They check the schools, research comps, and make the most eduated decision. In my case, we were on the border of a less-than-stellar school district, from which the appraiser took "comps." We live on a golf course, the "comps" have no view of it. We did over $5000 of upgrade work to our home that the "comps" did not. The buyer knew this and was willing to pay for it.

Don't you think the buyer would have opted for one of the foreclosed or short-sale "comps" if they were of equal value or consideration?

All this money into the housing market hinges on a single point of failure- irresponsible appraisers who spend minutes undoing what buyers spend weeks or months reseaching.

Allowing forclosures and short sales in consideration allows for laziness among appraisers because they don't have to actually figure out why a negotiated price was contracted. Now they can just throw out some BS comps and call it a day with $450 in their pocket.

I have been in the mortgage business myself for 10yrs & managed banks for 5yrs prior to that. Most on here have covered the biggest issues that we are seeing with the HVCC. One of the issues that some don't want to seem to discuss is that Fannie, Freddie, & FHA are no longer the rules we have to follow as mortgage brokers. The lenders have taken it upon themselves to tighten the guidelines these bodies have set & that is a big part of the issue. The investors for these lenders are writing the rules by which they will except appraisals & the investors want the foreclosures & short sales counted in the values. Problem is when you have an area where the banks just dumped properties for 30k to get them off the books you now have very squwed values. I'm dealing with that right now on a purchase. Appraiser says the true valus is around 75k but because the lenders are pushing so hard to include the REO's & shortsales that will greatly reduce my clients value. Common sense has completley left this industry.

On another note, I'm sick & tired of all the blame for everything that has gone on being laid at the feet of the Mortgage Brokers. Yes, we had some bad apples but the fault starts at the top with the government & goes all the way down.

Hvcc – its a disaster, it limits the consumers ability to shop for the best rates, while at the same time, increasing the costs – whether it be lock extensions, due to increased appraisal turn-times, or the overall cost of the appraisals, due to AMC's. Had a borrower willingly pay for multiple appraisals, at multiple lenders, three in total – approx. $1,200 dollars, because the appraisals are non-transferrable, and the low value was 240, the middle was 285, and the high was 315 – how is this possible? I'm thinking all congressman should apply to refinance their homes and experience this for themselves! I am confident this would go away quickly. Better yet, make Andrew Cuomo list his property, get a contract, and watch the appraisal come in 100K lower than the agreed upon price. Just go back to the drawing board and rethink this mess. Also, has anyone else heard that Andrew Cuomo was on a Board of Directors for a AMC – saw it on a couple of websites, and looking for confirmation.

I work in the mortgage business. The new HVCC rules hamper our purchases and refinaces in many ways. Appraisers that are not familar with the areas are hired. When the underwriter gets the appraisals there are many times they have one or more condtions. As a Broker we can not contact them. I have one right now that the borrowers say that the appraisal has many mistakes, but I can not help them. Then there is the fact that the appraisals cost more but the Appraisers make less. The managment companies charge what they want and make the profit.

You people just don't get it. This appraisal is for bank to decide how much money they should lend you. They are trying to determine how much money they could get back if they have to sell your house as a foreclosure because you quit paying the loan. It isn't a tax appraisal or a "what should I list my house for" appraisal. Bring enough cash to the table to actually have some skin in the game on your house purchase and you'll see that it doesn't matter what the appraisal comes in at since you're spending more of your money and less of the bank's money.

HVCC is supposed to protect consumer ? Here are complaints that are hurting the consumer: 1/ Lender A declined loan but won't transfer appraiser to Lender B who has approved loan subject to appraisal.. Lender B wants complete new appraisal( paid for by consumer) EVEN THOUGH APPRAISAL MANAGEMENT COMPANY IS APPROVED BY BOTH LENDERS AND HVCC SAYS APPRAISALS SHOULD BE TRANSFERABLE. 2/ Appraisal Management Company now wants $575 for an appraisal on a 700k home that used to cost the consumer $350 3/ Since 5/1/09 the Appraisal Management Companies have sent down appraisers from Orange County to do appraisals here . 4/ On a recent list price of 275k seller ( bank owned) got 5 offers over list price . Appraisal came in at 225k ….. killing sale and any chance for this first time buyer to take advantage of this market . 5/ On a refinance HVCC compliant appraisal of 1.7 million 417k loan. Lender required a field appraisal review for a cost ofadditional $350 to consumer ! IN SUMMARY- LETS GET THE FIXES MADE TO HELP THE CONSUMER .

Supply versus demand. If there is a high demand….prices go up…..if there is a low demand…..prices go down. We have an over supply of homes on the market…..fact….not smoke ladies and gentlemen.

Appraisals are to protect the investors…..which includes the average person who invest in the stock markets, invest in retirement accounts and puts their money in the very banks that offer mortgage loans. It is not to justify the real estate agent/brokers ability to set pricing nor to validate what a homeowner or seller thinks his or her house is worth. It allows the investment world to make risk based decisions. Perhaps this is the time to create a Realtor's credit union that will fund these loans with realtor invested funds. Also, to the sellers…..carry a second if they buyer will agree to pay more for your home.

In a capitalistic market the buyer sets the price. If the buyer feels the property is worth more than the bank is will to loan or the seller is willing to carry on owner financing, then they will pay the difference in cash. We have choices that come with responsibilities and the ability to pay.

I live in Homestead, FL and the appraisers are killing the rebound of this market. We have many buyers but the loan size kills the sale. Just remember, everything is connected. No loans, no banks, no appraisers and everyone loses their jobs. They deserve it!

A recent appraisal I had came from 75 miles away. Knew nothing about the area. Gave no ammenity value to view and acreage. Was obviously scared. The result, low value and no loan. Also charged a fortune and had to be paid for with credit card in advance. The AMC company butchered the payment and charged it 3 times! This system stinks! AS to valuation, maybe it's time to dump the 3 comp basis. How about looking a cost to reconstruct and "inflation" since original construction?

RE: 10-20% down…also forgot that if this was in place always, prices would have never gotten out of control and appreciated. (and for those saying 10%-20% down is too much…not back in 2000 price land). This will also help bring housing prices down.

This whole protecting the buyer from themselves is what really upsets me.

Well you see what happens when you don't protect them from themselves.

Worst economic meltdown since the great depression.

What we need is blanket regulation (not over the shoulder) that protects the general population. Like the following:

A) 10%-20% down payment required. Cannot be a loan, has to be cash from the buyer. This does a few things. Makes sure the buyer has the incentive to show they want to buy and can save and also stops speculators and flippers since a down payment will be required and most wont do that. If you can't save money for a downpayment, then you don't deserve to own a home.

2) Your monthly mortgage payment cannot be more then 35% of your take home income (single or married). This does MANY things. Keeps people in houses they can afford, keeps them in a monthly payment that is affordable, allows them to have 65% additional income for bills, loans (like school/car) savings, emergencies, etc. For those saying that's not fair, I'm more responsible and want another house but it doesn't fall in the 35% montly payment, well then put more money down.

C) Reign in personal credit to 10% of your annual salary. (this means credit cards, not school loans, car, house or medical). So if you make 50K a year, you can't have more then 5K in credit card limits. (total). Anyone with money wont care about this. Plus it protects the system from people who can't afford a CC and just go bankrupt.

D) Make sales on houses (not due to reassignment) over the first 5 years be taxed at a higher rate to again stop flippers, investors.

Housing should be about a safe haven…not a money machine.

The problem with appraisers using short sales and foreclosures is that they usually never actually see the homes they are using as comps. All they see is a MLS "Sold" listing that gives them vitals, but not the actual condition of the property. I can tell you from expernience that 75% or more of what is on the foreclosure REO market is in no way comparable to most units being appraised, and that most appraisers do not do any more than pull numbers from a data base when completing the comparables section of the appraisal report.

We refi'd in Dec 08 after 2 appraisals. The first appraiser, selected by a broker, had no idea what she was looking at. We questioned the appraisal (had she mismeasured and only counted half the SF?). Came to find out she was from the County and her only experience was in manufactured housing outside the city. Our house is in a downtown historic district. Her comps were not even from our neighborhood, which even in the current market has fared ok. We found an appraiser ourselves who specialized in our type of property (historic district, luxury, modern architecture, known designers etc) and presented his qualifications to the lender, who promptly approved him. Our loan closed shortly thereafter. There is no substitute for having an appraiser who knows the market, the significance of national and regional architects work on a property, and the features of other properties/amenities in the same neighborhood.

After reading through many comments, I find myself laughing to myself and with my appraising co-workers about what people have to say about appraisers. First of all to think appraisers are making $400 for 1 hour of work is ridiculous. In truth, yes an appraiser may only spend 15 minutes at a property but depending on the size of the home may spend 1 hour inspecting a property. Also appraisers sometimes spend 1 -2 hours of driving time to properties. Add in the researching county clerk's records and PVA offices and you have spent almost 3-4 hours of work even before typing the actually appraisal. Which due to HVCC standards has increased the number of forms to be filled out and therefore increases time spent completing the report. So in total appraisers more than likely spend 6-7 hours of work on an appraisal. Also the typically fee for an appraisal is $275 so if you do the math appraisers are not making any type of outrageous fee.

Secondly appraisers are typically called the "bad guy" in the real estate transaction. People forget appraisers get paid regardless of the transaction finalizing and it is a realtor who has a vested interest in the property. We forget there are bad accountants, bad lawyers, bad politicians, bad realtors as well, but it appears all appraisers take the blame for several bad apples. It is the whole system not just appraisers.

First, lets get the rules straight. The Appraiser's do NOT make the rules. First, there's USPAP (Uniform Standard Of Appraisal Practise)
Second- The "guidelines" as issued by FNMA, FMAC, tell us what "Minimums" they reuire if the appraisal ends up being in a federally regulated or purchased by FNMA, FMAC
Third- These are the minimums, but it doesnt mean that the individual lenders cannot make the "rules" more stringent. It just says the Appraiser cannot go "below" their rules. This means that while FNMA/MAC may allow you to use Comparables that are up to 12 months old..or 2 miles away, the Lender may stipulate that you have to use Comparables that are only 90 days old and withjin a half mile.
So now instaed of jumping thru the old hopes, they have decided to set them on fire before the Appraiser jumps.

Some of you appraisers are a joke!
"Don't sell at inflated prices".

That's the whole problem here. If a willing buyer and a willing seller agree to a price – that is the market value of a home! It's only "inflated" in your opinion because it's not worth that much to you.

The new guidelines are a joke because they completely forbid appraisers from even considering the actual sale price. Allowing appraisers to decide what a fair price is instead of the market is price fixing, plain and simple. In our case, the appraiser who made many factual errors decided our house was worth $100k less than the price we sold it at that same month. Needless to say this caused our sale to fall through.

If you are a socialist you probably think it's a good idea for the government to decide the price of a house to protect us from "inflated" prices. If you believe in free markets, this is a disgrace.

But, I think even the socialists would have to agree that the when an appraisal is full of factual errors there should be a way to get the errors corrected?

Well, thanks to the new rules to make sure appraisers are "independant" this also means they are unaccountable.

These rules had good intentions, but like so many government regulations that are hastily issued, poorly conceived, and they caused more harm then benefit.

It's going to extend the housing slump for years if they don't make changes to these guidelines.

Anyone that GENUINELY BELIEVES the HVCC is good for the consumer must not understand it.

I tried to refinance my house with BofA but could not because of the appraisal. The only comparable used was recent sale of homes. Thesehomes were in poor condition and had not been upgraded in 30 years. After the new owners moved in they had to put in new windows, new kitchens, new floors, new plumbing, new paint and new landscaping. When I pointed out that my home already had new everything, BofA told me that upgrades are considered personal property and not included in the appraisal–is this dumb or what? How can you take the paint on the walls with you when you sell?

What did you expect…the Govn't to come up with a regulation that works?

Make no mistake people. The Govn't and the big banks are in bed together. Washington thinks they need the rebound of the big bank stocks to get everything back on track. They are eliminating compition in lending while taking more work from thier employees for less pay and they have Washington's blessing. Check out who was at the White House on 3/27/09. Remember March was the bottom of the stock market. Obama gave those banks anything they asked for in return for the promise of thier stocks going up. And they asked for the elimination of competition in residential lending. Things like HVCC and HERA/HOEPA are designed to complicate the lending process and eliminate broker competition.

Keep in mind that every loan a Mortgage Broker originated was approved by a Bank! Mortgage Brokers did not create the products (option ARM) or approve them. They simply sold them!

Washington is putting their fingers in the cracks of the proverbial dam for the time being, but there are major fundamentals screwed up with our economy. Like how is GM still around? I am glad I don't have to figure out how to fix it!

The Home Valuation Code of Conduct will further exacerbate the recovery of the housing market. In spirit, the law makes sense. In practice, the HVCC has created a real mess. As a mortgage broker in Park City, UT for 14 years and working with one very knowledgeable appraiser for most of that time, we now have appraisers coming from 30 miles away to appraise homes in areas they have never done work in before. Many don't even have access to the actual information critical to doing a good appraisal. Before you hastily jump to a conclusion about this, ask yourself this…if you were selling YOUR home, would you want the appraiser to be familiar with the nuances of your neighborhood, or just chosen randomly from a pool of low bidders while a seasoned veteran appraiser with high ethical standards sits in his office a few block away wondering what happened to the business he built over 20 years of hard work. This is a case of a few bad apples spoiling the bushel. The good ones are being punished now for the bad deeds of the unscrupulous.

There's another thing appraisers are doing to lower the value of homes. I'v had calls from appraisers these last few months asking what the closing costs were on closed transactions from as far back as a year and a half ago. After the 3rd call from 3 different appraisers I asked why they were calling for this information. I was told that the closing costs and any allowances had to be deducted from the sale price to get the true value of the house. That means that if a house sold for $150,000 and there were $4,000 in allowances and closing costs, the value of the house was $146,000. So if the house next door that is comparable in size and ammenities goes on the market at the 'appraised' value and there were again $4,000 in closing costs, the next house down the street would only be worth $142,000 and so on. Where does this stop. This is killing the market.

My appraiser was 'in-house' and used 6 comparables. I was given the lowest value of the 6, not to mention appraised 60k less than my neighbor of our duplex that purchased 6 months prior, and 50k less than the cities taxable value.

Additionally, if you pay an appraiser directly, that is black-letter violation of the HVCC and your appraisal will be invalid, unless you're doing an FHA loan. So the advice to ask the appraiser if the comps support the value is both useless and stupid.

It's not the HVCC, people, it's the bad market and bad AMCs. Lenders are able to require their brokers to use the AMC that they own. THAT is what is causing low-ball appraisals. All the incentive for those AMCs is to provide low appraisals to protect the lenders that own them.

There are good AMCs out there that actually make thinge better for all the parties in the transaction. I know because I use one. But until we have competition in the market, 1st Choice AMS will be the exception, not the rule.

Alas.

As a mortgage broker we have the option of getting a lower rate for our client/borrower by changing lenders during the process. Now the borrower has to pay for a 2nd appraisal for us to do that. This is on top of the increased appraisal fee to begin with. Again, the politicians get involved and it drives up the cost to the consumer. Thanks Andrew Cuomo!

I am a mortgage broker, not an appraiser. I am also a real estate owner and, through a former employer, who shall remain nameless, but has been in the news a lot lately, I have had personal experience with their "in house appraisal firms prior to this market…I agree with poster "Kevin" below… there are many things wrong with HVCC… 1) appraisers, having been assigned to an appraisal by the figurative throw of a dart, performing appraisals in areas where they have no knowledge… 2) AMC's charging $450 for an appraisal and paying the actual appraiser less than $200 and expecting "quality work" and "adequate time spent" on that appraisal, especially in light of the extra forms and comps that are now required on each appraisal… 3) Lenders steering appraisal business to their own appraisal companies, which brokers were forbidden to do prior to this law… 4)Borrowers being forced to stick with a lender (even in the event of decline) because the appraisal was done through that lender… 5) Lenders refusing to accept transfer of appraisals from another lender EVEN when/if the appraiser who perfomed the appraisal might also be approved by their particular AMC… the list goes on…

This is one of those unfortunate circumstances (a lot of those lately) when the "regulators" mean well, but in their haste to rectify one flaw in a system that will never be perfect, they have caused more and deeper problems than they have solved.

This regulation almost appears to have been created by the servicers and for the servicers and in no way benefits the consumer or the rest of the real estate community.

Why not put the time, money and effort into enforcing the laws that guided a system that worked quite well for decades, rather than trying to re-invent the wheel???

This article could not be more timely for me

I am a Mortgage Broker in Florida and I would have to say that since the inception of the HVCC format the pendulem has def swung to the other extreme

Cuomo said the relationship between Appraisers and Realtors was too chummy and influenced values – but yet the Realtors never had the relationship and never ordered the appraisal – it was always the Loan Officer or the Mortgage Broker.

Now everyone (with the exception of the lender) is isolated and forbidden to even talk to the appraiser and the appraisers are terified that if the report is not conservative that they could be "black listed" and blocked from getting future appraisals (isn't this the exact polar opposite of what we had in the past? How is this fair or impartial?)

The net money paid to the appraisers has been slashed by almost 50% so you have less experienced people who are willing to work for much less that are now doing the job and they tend NOT to spend the appropriate amount of time on research

In a real life example that is happening on one of our files TODAY – a rate & term refi on a condo in Jensen Beach, FL – the condo is on the beach, facing the beach and is a 1st floor unit of a high rise bldg – there are 2 sales in the subject bldg in the last 9 mos (one for $365,000 and the other for $245,000) both are smaller in size – however the value of our subject property is coming in at $185,000 – we are able to provide 9 comps from within a 1 mile radius that support values of at least $245,000 however we ae told by the appraisal mgmnt company that there is nothing that can be done. The appraiser chose to use only 1 sale from within the bldg (of course the $245,000 sale) and ignored the higher sale price – he then used 2 other comps that were almost 10 and 9 mos old respectively and were both in low rise bldgs as the other 2 comps. When I question this I am told that because my subject is a 1st floor unit that these other comps are more similar even though I have 7 other comps in high rise bldgs that are all less than 6 mos old) – I am also being told that even though the unit faces the beach – becuase there are shrubs that partially block the view of the ocean it can not be considered an "ocean view"

This breaks so many "common sense" ruls of appraising is is laughable.

Had the appraiser made reverse claims to try to inflate the value the report would have been thrown out in a heart beat – but yet it is deemed acceptable by the lender to ignore other more appropriate info because they are "being cautious" and want to buffer themselves from possible future decline in value.

And of course – additionally the appraiser that was used was NOT a local appraiser and was from almost 60 miles away

The HVCC system – while fair in concept is going to be a key factor in why the values of properties will continue to be supressed for an extended period of time and this will effectively handicap any possible recovery

HVCC must be repealed or ammended

This whole protecting the buyer from themselves is what really upsets me. If you went to a ballgame and wanted to get your son a hot dog for $5 because you couldn't get a hot dog anywhere else, how would you feel if you were told that the hot dog is too much so you can't get it for your son/daughter? People are in charge of themselves and their actions/decisions. It is true, many people overpaid for homes during the bubble,, but does that mean the system is broken or that people made bad choices and should live with the consequences. We are talking about adults right? These are grown adults making adult type decisions right? People need to grow up and take some responsibility in their lives. If you buy a home and the value drops, that is a risk, but unless you are looking to flip, isn't a home a place to live? The repeating will happen, it has happened before. Bubbles happen, and I don't feel bad for people that are losing their house because they bought too much. Just like I didn't feel bad for people that put all their money in EMC or Cisco during the bubble. Adults need to be allowed to make decisions on their own. There will be sob stories of people overpaying and losing their home/stock/car whetever but those things happen. People need to grow up. For the people making it out like buyers are being protected, try telling that to someone who wants to get into a house and can afford it but can't because the appraisal comes in to low. How is that protecting them if they can afford the house and are willing to pay for it.

I had an appraisal performed by a bank-hired appraiser. She miscounted the rooms, sq footage, lot size, and used in my opinion two wrong comparables. She brought her son to help take the final pictures because she was on a cane and could not get to corners in our yard. The refi fell thru. I went to another Mortgage Broker, they hired another appraiser who measured, added correct comparables, and good actually count the amount of rooms. My home value went up $40k.

Shouldn’t the Market value be AT LEAST the cost of building the home????

Unfortunately no. If I build your exact house and the price of all materials is say 50% less, then that's just life. Your house cost $400K, mine $200K. The value of the house is really based on location, other homes in the area selling and what someone is willing to spend. Not what it cost to build it. I mean look at Detroit, houses going for $1000 dollars. Im sure they spent more then $1000 dollars building them.

Everything is a risk. Unfortunately you like many others bought, built in a market that many knew was over-valued and over-priced.

Here's my situation;
Zillow says $118,000. Orange County Florida Tax Assessor says $135,343 (2009 working value is $100,336). Insurance company says $150,000. Real Estate contract and buyer say $65,000. Appraiser says $60,000.

Why a difference of 250%?

Now, will someone post a link were we can actually DO something about this?

HVCC ensures that large lenders now get a cut of every appraisal fee. Appraisal management companies are owned by large lenders like Wells Fargo. Wells Fargo requires brokers and their retail customers to use Rels, or Res Direct (which are each owned by Wells). At the closing table, the borrower is required to sign a statement saying that they understand that Rels is owned by Wells, but they were not required to use them. Wells in fact requires these borrowers to use Rels and therefore this is a RESPA violation, which is why Wells wants the borrower to sign the form. How does Wells and other major lenders get away with these RESPA violations?

POTENTIALLY INFLATED APPRAISALS ARE NO LONGER AN ISSUE. STOP PUNISHING A HEALTHY INDUSTRY OTHERWISE FOR THE SINS OF A HANDFULL OF PEOPLE WHO INFLATED APPRAISALS. I HAVE BEEN A MORTGAGE BROKER FOR 24 YEARS. THE INDUSTRY AS A WHOLE IS FOR THE MOST PART VERY CLEAN. THERE ARE TOO MANY PEOPLE TRYING LEGISLATE THEMSLEVES INTO HIGHER OFFICES SUCH AS MR ANDREW CUOMO. THE UNITED STATES IS NO LONGER THE COUNTRY IT ONCE WAS, TOO MANY LAWS HAVE MADE THE UNITED STATES AS CLOSE TO A POLICE COUNTRY AS A DEVELOPED COUNTRY HAS EVER BEEN. POLITICIANS ARE ALL CROOKS AND CORRUPT AS WELL AS POWER HUNGRY, LIKE MR CUOMO. ON ANOTHER NOTE, THESE APPRAISAL MANAGEMENT COMPANIES ARE RIPPING OFF THE APPRAISERS AND KEEPING 50 TO 70% OF THE APPRAISAL FEES AND DOING NOTHING TO DESERVE IT. WHAT A CORRUPT SYSTEM, I BET MR CUOMO HAS A HAND IN THOSE COMPANIES TOO. WAKE UP AMERICA, POLITICIANS ARE A BIG PART OF THE TROUBLE AND MR CUOMO, A CARREER POLITICIAN AND THE SON OF ANOTHER DRONE POLITICIAN CONTINUES TO JUSTIFY HIS JOB BY LEGISLATING BULL_____, ISSUES. HEY MR CUOMO, WHY DON'T YOU TAKE ON GOLDMAN SACKS INSTEAD, OR ARE THEY TOO BIG FOR YOU ??

Which of the following does not have a vested financial interest in a deal going through (i.e., whose compensation/economic benefit does not depend on the closing)?

A. Real estate broker
B. Mortgage broker
C. Mortgage lender
D. Seller
E. Appraiser

Here's why brokers are mad: on a $300,000 home, the listing broker and selling broker will probably share about $15,000 as their joint fee; the mortgage broker might get about $4,800 (2% on an 80% loan); the lender gets annual interest of about $14,400 (that's 6% of 80%); the seller could get thousands, tens of thousands, or more in capital gains depending on what their investment basis in their house was; and the appraiser gets (trumpet sounding): about $350, typically.

PS: The only professional who is not an advocate for the seller is also the answer to the multiple choice question above.

Trying to correct the problem with the HVCC only has created an even larger one. These appraisers are getting paid regardless of their work & what the house appraises for, & they, from my experience, are using inappropriate data & research for values. When I have fought them on values with sufficient data, like 13 arms length transactions & sales on the same block within 2 months, I was told the whole area was in distress & they had nothing else to use. Even the listing sale that was used in the report & abutted the property, was on the market for $200,000 more than the value he brought the subject in for. To top it off, this appraiser doesn't do the research on the # of units & calls the client for that info & then has the audacity to put my name as the owner of the property. If we are to expect expert work then we should get expert results. The blame falls solely on the politicians for knowing & allowing this all to happen when this bubble was being created. Additional regulations are not going to be the answer, enforcing the regulations that were in place would have! As usual, our well paid government officials blame everyone else for their mistakes.

Appraisers caused this real estate mess. Neighbors were allowed to re-fi at values VERY much higher that reality a year ago. They accepted the loan assuming their 200K home was worth 347K. After a lay off they will lose their home with no possible way to sell a 347K mortgage with only 200K value.

i'm a realtor who sells about 65 properties per year over the past 5 years. i've seen the best of times and just about the worst of times. i've seen appraisers drive by and snap photos only, or come on and measure in 5 min and then drive off to the next house where they'll collect another $400 for 1.5 hrs of work.

i agree that in the past appraisers were part (just one small part) of the problem that led to the real estate and financing crisis we're still trying to climb out of today.

Appraisal management companies are a #($*& joke, however. just to justify their jobs they'll make appraisers do stupid things that make no sense. the worst part, as the article points out, is they'll have random appraisers from hours away come to my city to do an appraisal when we have dozens of hungry, worthy appraisers here. it is AGAINST THE LAW and CODE OF ETHICS for me to practice outside of my "area of expertise" despite having a license to do so. Why? Because despite my training, the lack of specific knowledge in a non-native marketplace will lead me to make mistakes. One little slip up could cost my buyers or sellers thousands of dollars, etc. This is the problem with appraisers in this situation.

I always liked having the mortgage broker pick the appraiser because I used only the best brokers and they used only the best appraisers. I didn't try to sell people homes that were overvalued. As a Realtor, I was honest with my clients. I just wanted a smart appraiser that was going to do a good job–find the best comps, give weight to the right features of the house, not miss rooms, not write a shoddy report, be willing to take some imput from an agent from time to time, and be willing to answer questions over the phone. Yes, this created more "risk" but only when you put stupid people together. The problem wasn't the process it was stupid people not being held accountable.

Appraisal management companies aren't doing much for holding appraisers accountable nor making them better at their job….they're just adding another layer of bull s#(* we have to deal with.

….my 2 cents.

yes, now the pendulum has swung too far.

I see two problems. First the Appraisal management companies farm out the appraisals to the lowest bid from appraisers willing to do the estimate. This limits the quality of the appraisal (less time on comparable due diligence, inspection of property, etc.). Second is the assignment of an appraiser not familar with the neighborhood of the subject property. This is a big problem in rural areas where there are many factors to consider on the overall value of the property and its location.

As an employee of one of the big five banks I have been held to HVCC for about three years now. Honestly, this was a horrible hit to us loan officers at my bank for a long time as we were the first to implement. First it began with LO's allowed to pick appraisers and speak with them on a regular basis (wrong, but standard in the market). Then we were allowed to pick a panel of appraisers, but still speak with the one who recieved our order. Finally, the ball dropped about 2 years ago when they said zero communication with the appraisers. This was a huge disadvantage as brokers and other bankers were still able to get deals done that we weren't by influencing values (only kept the high market higher). In all actuality this change needed to be implemented as the system had to be tightened. Yes, I agree we've seen some values come in low due to short sales and foreclosures, but everyone in my position can't deny that values are based on market comps. In the past we didn't use these as comps due to them being extrodinary to the market, but with more than 50% of homebuyers being first time buyers and half of those buyng short sales or foreclosures this is the market. How are you going to sell your home for $250,000 when the bank is selling the same home 3 blocks away for $150,000? It's not going to happen and therefore they have to be considered. I don't like it, but this is reality. As LO's and realtors we all know that our pay check is based on finding clients and closing deals. We also know that in order to keep our referrals coming we have to treat our clients with the utmost respect and protect them from all circumstances they are not aware of in the mortgage/real estate industry. This being said, if an appraisal comes in low due to zero available comps, low purchase prices in recent months then we owe it to our customers to acknowledge they might be over paying for this property. They might not, but as a lender I'd rather go to my client and say "the value came in lower than the purchase price. This might cause some problems with your financing, but at least you know before you made the biggest purchase of your life that you have choices." 1) take it as is and maybe have to adjust down payment 2) renegotiate the sales price (not bad for buyers) 3) walk away from the transaction if nothing can be done. These don't seem like bad options to me. So we have to go back to the drawing board again and find a new home or work a little harder at saving this deal. Having been dealing with HVCC for so long now I think my perspective leans less towards my pocketbook and more towards saving our country and maintaining clarity in the mortgage industry so foreign nations continue to buy up our debt. Otherwise rates go up quickly and the industry come to a hault again.

"When an appraiser is called out to your house, to complete an appraisal, talk to them first. Ask them do the comps support the price? If they are unwilling to talk then dont use them and dont pay them. If everybody did this they would be forced to start evaluating with regard to everyones needs." This has got to be the best one yet – What people need and what they deserve or are entitled to are often two different things. Appraising for what people need is what got us into this mess in the first place. You dont call the Doctor up on the phone and ask him whats wrong with you or tell him you need a clean bill of health. You go in for an examination so he or she can take a look at you. Depending on the situation the appraiser will not be able to provide an opinion of value until they get back to the office and review all of the data they have collected. This includes inspecting the house and property, collecting data from county records, reviewing and observing sales and listings from the subject market area, etc. Most of these things take place after the inspection so the appraiser knows what to look for and what to use in the evaluation process. An appraisal is one person's opinion of value at a given point in time based upon available market data – thats it folks. I also agree that more should have been done at a local level and agree with another comment that; "Whats the hardest to believe is that a NY attorney general got to decide what is best for the entire industry, appraisers, Realtors, mortgage brokers alike. That’s where the real corruption is…"

I am an appraiser. Let me say that I use 6 or more comps in each appraisal. Underwriters are much more strict and the appraiser is not the issue. Tougher requirements have been a cause for some family's not able to buy a home. Realtors need to get realistic houses don't sell @ inflated prices in this economy. Always easy to blame someone else.

I am a real estate appraiser. After reading some of the comments I would like to address a few things. 1)Just because the bank charges you $350 does not mean the appraiser gets all of that. We have our own contracted fees with the bank and if you go through a management company, they get their cut too. I'm not suggesting 15 minutes is or is not adequate for a look at your house but what you don't see is the time driving by and photographing comparable properties as well as all the time to research and write-up the report. In today's market it has become more time consuming. 2)When our job is to determine the "market value" of a property (for refinance or purchase) there are guidelines we have to follow. One is that the value is that of a "typical" buyer not a "specific" buyer. Just because one person is willing to pay a certain price for a home does not mean that is what it is worth. Could this hamper the purchasing process, probably? But we are doing are jobs as mandated by the varying entities that control the process (state law, FIRREA, USPAP, etc).
I think we should stop pointing fingers about this mess. No one group is responsible for the melt-down. It was a group effort, a few bad apples (ok, maybe more than a few) in every industry contributed. It is up to the responsible people left to help clean-up and rectify the situation. We need to work together!

HVCC is flawed in so many ways. Take a look further at who has ownership in some of these Appraisal Management Companies (AMC's). Big banks like Bank of America and Wells Fargo actually own the AMC's and REQUIRE that you use their own AMC! How ridiculous is that? Such a blatant conflict of interest. I could go on forever about the increased fees, the increased turn times, the lack of accountability if there is mistake, and the lack of appraisal portability between lenders. HVCC may have been well intentioned, but it was not well thought out and is now very poorly executed. There are now alot of unintended consequences that need to be addressed.

HVCC is a disaster, and the housing market will not recover as long as it stays as is. The appraiser getting the work is taking the lowest bid and then puts in the least amount of work. If you have complex or out of the normal property that normally would have taken a bit more effort by the appraiser you are screwed. I have one that came in 200K short. The buyer had done his research before making an offer and had his own appraisal done, which showed a value of $425K, our HVCC appraisal came in @ 225K, they used a trailer as a comparable to a single family home, houses that were 4000sq ft bigger, inconsistent adjustments across the board. We have no options, no recourse, and cannot even call the appraiser to discuss. They basically threw it against the wall and sent it in. What suprises me is that the problem was WAMU and their appraisal mgmt co and now we all have to use an appraisal mgmt co. The logic here is seriously flawed.

Let's please understand something. The lender is buying the house, not the so-called "buyer". The buyer enters into an agreement to purchase the home over time from the holder of the loan (the real owner), but may default on that agreement. Whether a lender wants to enter into this arrangement, and how much interest he demands for the use of his money, depends on his assessment of and appetite for risk. We've swung from one extreme to the other over the past 10 years and it will take a few more to settle back down to equilibrium. Live with it.

Kristina, IM an appraiser. While I agree your relationship with your appraiser is very important, IF he/she was providing you with a "comp check", they were doing so illegally…Check USPAP out and see for yourself…

As an appraiser, the most time spent completing one is in researching other comparables and completing the report. Time onsite is does not take as long. Appraisers are not making $500,000/year, but more like a 10 -15% of that. Check it out on Salary.com if you don't think so.

Carrie from CO below said it best. In fact, I just came back from opening a home for an appraiser and we had this very discussion (literally 30 mins ago). His commission has been cut nearly in half and the reason he's holding out is because he hopes there will be positive changes soon.

We recently refinanced….the appraisal did NOT accurately reflect the value of the property. He did little more than check the tax value. I would sell my house today for the tax value …. anyone interested?
I was disgusted with having to pay so much for so little.

hopefully the Dems can repeal the law of supply and demand and fix this problem

Finally the truth is coming out of the mortgage mess. Appraiser ethics indicate they must be impartial. The freedom from impartiality must be sacred to be effective. The market should be the appraiser's measure of value. Realtors interfer with the appraiser and so do lenders. It is a no win situation in a money go around affair. You can complain about the value of any appraisal but in the end it is just an appraiser opinion of value and there are many.

I recently built a new home. Due to the housing market, the cost of materials were substantially lower than when we first applied for the building permits. In the end the cost of building the home was $403,000.00. The cost of the land was $125,000.00. So, I am into a brand new home built during the worst of the housing bust is $525,000.00. Immediately after the home was completed (04/2009) I applied for a re-fi because the interest rate was 1.25% less than what I was paying for the construction loan. My (new) was appraised at $450,000.00. Shouldn't the Market value be AT LEAST the cost of building the home???? Or is the land I built it on now almost worthless? Fortunately, because of the amount of equity I have, I am still able to refinance. I agree with the complaints.

I'm an real estate investor/wholesaler/rehabber in Philadelphia. All the complaints listed by realtors in this article are right on the mark. We are frequently seeing appraisals that are definately not apples to apples. Newly refurbished homes being compared to foreclosed/vacant/REO homes that need 6 weeks of work to be livable again as well as appraisers ignoring other recent sales with higher values. Appraisers are just trying to cover their ass…getting the numbers right is not a concern

My boyfriend had to reduce the price of his home by $30,000 because the appraiser used gutted & trashed, foreclosed homes (coincidentally sold by the lender who hired the appraiser) as comps to his turn-key home. The "comparable sales" were anything but comparable.

No matter what the condition, the sale of a bank-owned property should not be used as a comp for the sale of an owner-occupied property. A bank's primary motivation to sell is to get the property off the books, and the bank is willing to sell at a lower price than the market would normally allow.

A person comes to my house for 5 minutes and spends 15 minutes pulling comps, you can’t tell me that is going to give an accurate answer.

That sure didn't matter when prices were going up up up.

The point here is that many of you (along with the Realtors) cannot accept the simple fact that your house IS NOT worth what you think it is.

The housing boom was a facade and the growth was a facade. Any economist worth his weight will tell you you have to look at 2000 prices to get an idea of what houses are probably really worth along with adjusting for 'normal' inflation growth.

Im sorry, but if you think that your house is worth $300K, after it was worth $100K in 2000 without any real reason for it to appreciate, then you are just delusional.

And lastly, something is worth only what someone is willing to pay for it.

Welcome to the new housing market.

To Charles Ann Arbor, MI: July 22, 2009 10:31 am

You stated this perfectly and I couldn't agree more

Realtors, whether they are working for the Seller or the Buyer have a monitarily-based interest in selling a home for as high amount as they can. They are not interested in negotiating the price down for buyer or having the Seller lower the price. Why would they? Each would loose money. No one who deals with a realtor should make this economically dangerous assumtion.

Arrogance abounds.

Just like buying a car, don't let them know you what it and be willing to walk away if you don't get it…especially in today's economy.

The people of this country seem to have know idea what a tremendous amount of power they could wield if they would only choose to exercise it. Many of them are, but there could be many more.

If enough consumers did this, this power could definitley have a positive impact that would benefit the people of this country.

This is yet another situation that Attorney General Cuomo is meddling in that he does not fully understand. The outcome of this new appraisal law has only brought forth poor appraisal work and higher appraisal fees in the State of CA. Appraisers now are only making a 1/3 of what they were once paid. We have longer delays with one or two companies being added into the mix to do a simple task of faxing in an order. It also destroyed independent appraisal business. Not mention money leaving the state of CA when many of the AMC Companies are not in state. The biggest joke about this is the many of the larger banks own the AMC Companies. The whole thing is a joke and the sad thing is the banks, the consumer, the real estate agent, the mortgage loan officer and the appraisers all lose out. Thank you Andrew for yet another bad decision.

HVCC is a worthy idea gone completely awry.

Example: I am a lender working with a borrower buying a second home in the mountains of Colorado. Prior to HVCC, the appraisal would have cost $325, and I would have ordered the appraisal from a local appraiser who knew the area. But with HVCC, the appraisal costed $460, the management company sent out an appraiser from a completely different county who had to rely on the listing agent for the information he needed to do the appraisal (keep in mind, the listing agent works for the SELLER — so how is this "protecting" the buyer?), the appraisal took twice as long as usual, and once it was finally received, the investor required a desk review of the appraisal anyway because they were not convinced of value.

Also: One little known fact about HVCC — most appraisers are being paid much LESS than they were before — some are having their normal $350 fee cut in HALF because the management company takes a huge cut. But if they don't work with a management company they receive no work, other than FHA. So good appraisers are leaving the field in DROVES.

We are taking the absolute cornerstone of a loan package — the appraisal — and putting it in the hands of the appraisers left in the business who are willing to work for half what they used to make two months ago! Would you do your best research and put in the tens of hours needed to do a really good appraisal for half of what you used to make in April?

HVCC costs more time and money, does not protect the buyer, and is hurting honest, accurate valuation. The only winner on HVCC is the "Appraisal Management Company".

When I tried to refiance, CountryWide now Bank of America, wanted $3,000 up front to the closing. Wells Fargo wanted $1,000 for the appraisal that was non-refundable if the appraisal didn't come in at what I thought the house was worth. Both said my home was only worth $197,000 (which was based on the sale of a foreclosure) and the only the square footage of the house was considered in the appraisal. None of the upgrades are included in the appraisal. Funny, my insurance company says my home is worth $240,000. I asked about a loan modification – I got laughed at by both Countrywide and Wells Fargo. It appears the banks have gotten a lot a bailout money that hasn't reached the consumer. And adding insult to injury, all their fees are going up. The middle class is getting screwed again!

As a Realtor, I am constantly challenged when doing CMA's (comparable market analysis) for my Buyers and Sellers. When you have a foreclosure or short sale in the neighborhood it skews the valuations. When someone loses their home (due to a loss of job or health, or poor decision-making) it should not negatively impact the value of the rest of the neighborhood. That's like saying people who make bad decisions in their home ownership have the right to take money from you and your family. So wrong on so many levels.

Cuomo needs to stop prostituting the American dream and follow Spitzer’s lead and get his own hooker.

Ah, two hundred and some-odd comments. Can I say something that hasn’t been said? Probably not, but I couldn’t wade through all of the comments. So…

The problem is in relying on appraisers to value a property. Appraisers are not qualified to value properties. They have not been schooled in statistics, risk mitigation or valuation techniques. They just don’t have the skill set. Appraisers should be there to support a value of a willing buyer and a seller. With the advent of securitization, the securitizations groups and banks have come up with what seems to be an objective measure of value – farm it out to a third party. The people who buy these securitizations have eaten it up. The reality is that the appraisal should support the transaction (does it make some sense) and then the lender should be the one to analyze the entire transaction in conjunction with its current risk portfolio. That’s it. That simple. But that responsibility has been abdicated by the banks.

Appraisals are ridiculously inaccurate. It just depends on the person doing it and how diligent they are in pulling comps. I had two appraisals done within 3 months… One came in at $217k and the other at $250k. You just have to cross your fingers and hope to get a good value because you can't use logic or common sense. A person comes to my house for 5 minutes and spends 15 minutes pulling comps, you can't tell me that is going to give an accurate answer.

Just because some idiot is willing to pay too much for a property doesn't mean that the government or banks have to lend them the money to buy a risky property at an outrageous price in a declining market.

Earth to realitors: The "good times" of the past few years are not coming back. Welcome to 2009, where we have checks and balances on lending to prevent another expensive financial meltdown.

I recently had my house appraised. I actually thought the amount was accurate. My concern was the 15 minutes the person spent oniste and the $350 I had to pay. Assuming an appraisal takes an 75 minutes after commute time and documentation, an appraoser is billable at over $500,000. That simply is not a sustainable cost element of the process.

More than 40 percent of all residential sales in the U.S. are foreclosures.

I'm an appraiser and in my region there were two flats in a certain neighborhood going for $260,000 in 2006 but are now going for $30,000–that's NOT a typo– $30,000.

Think about it, if someone can buy a house that the bank is dying to unload and you get it for a steal that house is going to compete with yours and depress the market.

Banks should use local appraisers. If you happen to know of any activity in your area then TELL that to your appraiser, but keep in mind that your information may not be right.

I've had people tell me that the house across the street went for $300,000 a year ago but in reality it was $275,000 three years ago. Sometimes people know their neighborhood and sometimes it's just gossip.

I get a big kick out of people who think short sales and foreclosures should be left out of appraisals. Quite the contrary. These are sales, just like any other. If 10 buyers in your neighborhood can buy homes for $1.00, then that is what your home is worth. Common sense dictates that you do not buy a home that is more expensive than comparable homes in the same neighborhood, becuase you will lose value the day you buy it.
There are many obsolete homes in many older neighborhoods, so why would I buy an obsolete home with no central air, when I can buy a new home that is up to date?
Most Realtors sell homes at retail, whereas many educated buyers are buying homes wholesale. Realtors need to educate sellers and refuse listings if the seller demands too high a price. A smart and successful Realtor knows how to price a home to sell, becuase that is when they get paid. Dumb Realtors take any listing, just to fill their inventory. Those Realtors are just wasting the sellers' time and costing them money.
I talk about many of these things on my blogs at LinkToMeet.com.

I always thought an appraiser's job was to determine what was a fair "market" value for a real estate transaction. Yet, when you have two seperate parties, both with knowledgable agents, agree on a given price for a home, what gives the appraiser the right to negate that contract by stating that the buyer is paying too much?

I know of multiple instances where two seperate parties had agreed on a given price yet when the appraisal came back, the "value" was completely out of line. The buyer was still willing to pay the original contract price but the lenders won't lend on the purchase price but rather the appraised price. It is border-line collusion when the lender has a direct say in who can and cannot be an appraiser for a given property. If you're an appraiser and you know that if you value a home on the "higher end" you could risk losing future assignments from your biggest client (a bank/mortgage company/etc.) of course you're going to remain super conservative. It's really getting out of hand.

I've been a mortgage broker for over 18 years. HVCC was a knee jerk reaction and is causing problems.

The main issue is that these appraisal management companies are interposed between the broker or lender and the appraiser. Normally, in a perfect world this wouldn't be a problem. BUT… now the appraisal management company is raising appraisal fees the borrowers pay while paying them less. In the old days, an appraisal would cost $350. Now some companies cannot give a quote, would you want to order a product where you don't know the cost? Even if you are quoted a price and it is $450 the appraiser may get $300.

These management companies don't seem to use appraisers from the local area. Appraisals are taking longer as they are making people drive far to do an appraisal on an area they don’t know. The appraisals are flawed and then the underwriter will come back requesting more comparable sales or an explanation but we are not allowed to talk to the appraiser. We have this extra layer to go through and as we have no contact or relationship with the appraiser it could be weeks to get the new info, where prior we'd call the appraiser and say we need X and receive it in a few days.

Borrowers on purchase loans stand to be out of contract for failure to meet deadlines and refinance clients cannot lock in early or will lose their locked in rate due to appraisal delays.

This new system is causing many problems as borrowers are forced to pay more while receiving an inferior product and I doubt any appraisal management company will indemnify anybody for losses incurred due to their actions or negligence.

To the chagrin of many I do agree with using foreclosures as comps. The lender wants an idea of property value and part of the reasoning is to evaluate risk if the lender needs to sell the property. In the old days before there were many foreclosures, a foreclosure was a rarity and wasn’t the norm. Now it is the norm and with multiple foreclosures prices are going down. We will see prices be soft and values not raise in the majority of markets for at least the next 2 years regardless of what real estate agents tell you.

Cuomo has "helped" the housing market. A moratorium on the HVCC is unjustified. I know that many realtors are complaining… they need to live with it and move on. Many homes are still listed much too high. The seller needs to list the house at a reasonable price, and the agent needs to be accomodating. Appraisals use comparables, it is the way it is done, the seller needs to do his/her homework. To answer the question, yes, we got a fair shake. We purchased recently, and was hoping the appraisal would be $10,000 less. Then we could have negotiated an even better price for our home. Yes, the appraisal fairly reflected the current value of homes in our neighborhood. Then again, homes in our neighborhood range from $150,000 to $450,000, that is why the comparables in the area tell the whole story.

Lets just do the same thing again and artificially inflate the prices so we can do loop this entire mess again. I have personnally seen the realtor go back to the appraisor and push for an increase in the value because if they don't the sale won't go through. Never mind the real value. This was rampant during the rise in real estate to the point that if the realtor did not get the appraisal he wanted, he would no longer use the appraiser. Appraisers got smart real quick. Realtors bare the brunt of the blame for where we are today, but they will not accept the blame because they have no consequences for their actions. Go ahead, blame it on the banks, appraisors, the builder, the previous owner. If I plan to buy another house the appraiser better use all sales in the area because the day he puts me into a financial deal that is not properly represented, I will see him/her in court. They are still trying to sell houses in my neighborhood at about 30 % more than what they really are worth. I own my house. If someone is willing to pay $250,000 for a $200,000 house, I don't want him in my neighborhood. What do you think they use for deciding taxes in any given area?

The problem is that the apprasiers using the foreclsoure comps have no idea of their condition. They have not been inside those foreclosure comps. They cannot make a meaningful adjustment for condition on foreclsoure comps – they vary widely. Also, forclosures are sold "where is, how is" with absoultely no recourcse and less than perferct title. How do you adjust for that? Apple & Oranges.

Realtors will cry at the drop of a hat.

The fact of the matter is both banks and Realtors and their affiliate lending arrangements have put us in this position. The willingness of both to use credit scores; a previously unproven derivative to drive up home prices beyond reason, only goes to show that we should not listen to them.

For the past 4 months the National Association of Realtors have put on numerous work shops to layout talking points for the removal of regulations that safe guard the public and the home mortgage business. This is just another one.

An Appraiser is a disinterested third party that does a static analysis on a value of a property using facts and not pie in the sky fiction or want to be’s. We should leave the appraisers alone and let them continue to do their jobs.

If you want to do something constructive for the housing market, overhaul RESPA and eliminate affiliate lending arrangements.

So where were the "Realtors" when unrealistic high appraisals were being used in the past? Did not see anyone step up and say this is to high. No they just took the commission and ran.

We attempted to refinance our home back in April when rates plummeted to 4.25% for 30 years. The appraiser who did the job came late, had never been to our part of the metro area, was experienced only in foreclosed properties, compared only to foreclosure sales and our home shrank 400 sf from 2002 appraisal. Needless to say the appraisal did not allow for a refi and we have been fighting the system ever since to get our money back for the faulty work. The system is completely broken. We missed a chance to reduce monthly payment by $300, which we would surely have pumped back into the economy in other ways. We have never missed a mortgage payment.

yeah us evil Loan Officers and Realtors and our "Belly Aching", we have nothing to complain about at all, right? Just that our entire industy has been turned upside down by people who had no business being in our industry in the first place, and by a Government that can barely keep its own infrastructure together. Yeah, the HVCC is good for us. Just like the taliban was good for Afghanistan right? Do away with the HVCC, and lets get back to business as usaual. This downturn has gotten rid of the dead wood and the scam artists, let the honest hard working realtors and Loan officers who help people buy homes get back to work without these ridiculous ploys from over zealous power hungry politicians wanting face time. we deserve to be able to feed our families too.

Conventional loans should be in the hands of the loan originators. This protects the client from unnesseccary fees for appraisal & operating in the dark. Once again the government under this Obama regime trying to control business flow & small businesses are being hurt by this. The cause of the mortgage crissis was not about the appraisals/appraisers. This crissis was about the greed in the Federal Government when the Democrats took over the houses at the end of 2006. This is about the Democrats bullying Banks into loans they did not like. This is about pulling the plug overnite on sub-prime mortgages as if it would not effect the world markets. This is about getting Pres. Obama elected while the rest of the world suffers.

Quote:
"shouldn’t the buyer and sellers set the price as long as the lender is willing to lend at the requested amount?"

The appraisal is for the lender, so that they aren't lending 120% of the property's value at the interest rate (and other requirements) they would use for an 80% LTV. If you don't like it, find a lender who will loan you 120%. But it's infantile to expect the same terms as someone coming in at 80%.

Each state is a little different however Illinois appraisers do have to have at least an associates college degree and many hours of class and two years (2500 hours) of apprenticeship under a certified appraiser in order to be a certified appraiser. It has become so difficult that last year only 6 new appraisers got their license in Illinois. This should help all those out there that think appraisers are dumb apes with no brains.
After all this training and education most appraisers are lucky to get $200 per appraisal that now takes 4 to 6 hours to complete. These same appraisers also have to pay their own taxes, liability insurance, gas, MLS and realtor dues etc. None of them are making a killing.

Appraisers also have to follow the lenders guidelines that have become VERY strict right now. They MUST use comparable sales within a mile and under THREE MONTH OLD. Now with this requirement how do you get by not including REO sales since these are practically the only sales out there? If you don't include these the lender comes right back and tells you to add sales! Everyone thinks an appraisers word is the final say. Almost every appraisal done these days comes back from the lenders underwriter wanting additional added comparable sales which usually then results in lower values.
In theory the HVCC is a good thing (letting appraisers give true values) however it was gone about the wrong way and the only people profiting are the lenders who own most of the management companies (bank of america/Landsafe, Wells Fargo/Rels etc) and take at least 1/2 the consumers money for appraisals that it then asks the appraiser to change. Now instead of the mortgage broker telling the appraiser what to do, the lender tells the appraiser what to do and profits from it via half the consumers money.

But if we truly go back to the root of the problem we have to remember for years people have used their homes as ATM machines, mortgage brokers AND real estate agents have pushed people to buy houses that were too expensive for them and lenders gave these same people loans that they weren't qualified for (no interest, no documentation) and finally the consumer bought homes that were too big and too expensive and then took money out of the newly bought house via refinancing to buy the furniture and big screen TV's to make this house a home. NOW who exactly is to blame EVERYONE!

I'm seeing a lot of complaining about using foreclosures and short sales for comps. If there are "arms-length" sales available, we use them. If there aren't, you use what's out there because they are setting the current market conditions. Lenders want RECENT sales. And if it's a declining market, and you use an older arms-length sale, they want time adjustments. There is no getting around it, folks. If you're in a declining market, your home value will reflect it. And as for the upper-end homes, there are fewer and fewer people who can afford the high prices, and therefore fewer "good" sales to support the high values, whether you're selling or refinancing. The market stinks, and we're just going to have to deal with it until it starts turning around again. You may think your designer windows, high ceilings and cabinets add a ton to your value, but the appraiser has to PROVE any adjustment that is made with market data. And there very rarely is any for things like that. On another note, are there appraisers out there doing work in unfamiliar areas? Absolutely. But the choice to take those assignments is theirs. And almost every appraisal management company wants a list of areas the appraisers will work in. Unfortunately, too many will continue to accept work in areas they're unfamiliar with, which can result in poor quality work due to a lack of resources and understanding of current market conditions. It's ugly, and no one likes it. But the problems created by lender's giving loans that never should have been given, realtors setting higher prices because someone would pay it, and appraisers valuing a property based on the sale price have all come around to bite everyone in the you-know-what. It's going to take awhile to turn around.

There is a petition going around right now to lift or revise the HVCC.
Borrowers, Realtors, Appraisers, and Loan Officer's should sign this.

Please go to:
http://www.hvccpetition.com/

File this under it's funny when it happens to them. Real Estate agents are overpaid and add no discernable value to the home buying/selling process anyhow and will hopefully be completely replaced with computers.

What is "market" value, the price one person is willing to pay for a certain house, or the price others have been paying for similar houses? I think these appraisals are protecting buyers from getting screwed on pricing, and then being upside-down the day they set foot in the house. And isn't that what we're trying to avoid repeating?

I am a loan officer and I have had 3 upset borrowers in the last couple of months.
1st one – He paid for an appraisal on his own ($300) and then shopped around for a mortgage refinance. I explained we couldn't use his appraisal, we had to order one through an appraisal management company and he will have to fork out another $355.
2nd one – Ordered the appraisal, it came back low, and now we can't do a conventional loan, we have to now go FHA. I called the appraiser to ask if we could change the appraisal form to FHA, and he said they would have to go back out to do another inspection and they would charge him another $350. If I would have been able to use my appraiser that I've worked w/ for 10yrs now, he would have done a comp check for me first and would have been able to tell me that the value is going to be lower than we expect and we would have known at that point to go FHA.
3rd one – The appraiser that the appraisal management company used came in very low and only used foreclosures and short sales as comps. I looked into finding some more comps myself, and I found 3 legitimate sales that fall within comp guidelines and sent them to the appraisal management company. After a long week of waiting on the appraiser for him to look at my comps and re-evaluate, he did come back w/ a new value of $20,000 more. This appraiser was obviously lazy and doesn't care about the borrower, he already got his money and what's the outcome matter to him…he's gets paid no matter what. He doesn't need to build relationships w/ loan officers or realtors anymore….he gets paid to do a half A@% job.

Appraisers are wrong on this. On a mega scale the average priced hoem should not cost more than 1/3 of the net income of the purchaser. If not then you would have a reater disaster than what we have now. On the micro or regional test the result should be the same. The appraiser helped the buble and there should be the last ones to complain. For their past folly house prices would have to nbe further reduced. In Canada where there is no Fannie-Mae where baks can dump their mortgages for face value, houses did not decrease but on the contrary they continue going up, always at a moderate rate.

Awwww, poor realtors. Cry a little louder, we can't hear you!!!!!

Do what the rest of us have been forced to do: Find a new profession.

The only time an appraisor should use short sales and foreclosures should be when a certain percentage of homes in the subdivision have been sold at distressed prices. The problem is what threshold (%) should be used. An appraisor should not use these transactions is a very small percentage have been sold undert those terms. Banks operate under different conditions. First, they have no desire to be in real estate, so they want the property off their books. Second, they have reserves which are used to offset the losses they incur. Third, they operate from the loan value, not the market value perspective to determine the amount of loss they are willing to take (so, if the balance on the mortgage is $100,000 on a home worth $150,000, the bank will take $100,000 or maybe less just to get it off their books. This does not represent the fair value for the property or those around it). Homes for sale by individuals do not have the ability to set aside reserves or take losses usually. In some respect, the appraisor is comparing apples to oranges by including short sales and foreclosures.

I am unaware of any laws or rules that appraisers can follow to know when short sales and foreclosures are acceptable. If there are none, then it is left to the individual appraiser to decide which leads to wide variations in what value is given to a property.

Since the media and subsequently, the mass audience has pointed fingers at everyone, the appraisers have taken a beating which is going to cause them to ensure they do not over value a property at this point. If everyone would just go back to the basics, including appraisers, the fair value could be determined.

I have been in the lending industry for over 20 years. I agree their was a need for additional regulation in regards to the appraisal industry, but it could have been done on a local level, with much more effective results. The entire industry is reacting in the extreme, and these extremes are affecting our local market. Recently a large portion of loans for my clients who are either refinancing or purchasing have been declined or canceled due to to the appraisal situation you speak of. The appraisal companies offer a rebuttal process, but that seems to be a waste of time. A recent attempt on my part to have the value reconsidered, with perfect comparable sales in hand from local experts, took two weeks. Details of the comparable sales provided and why they shouldn't have been (condition, area, square footage, etc), and details of additional better comps that were omitted was provided. Our rebuttal was completely dismissed, with no comprehensive reason as to why, except that the appraiser was holding to the original value. I know very well the area in which these properties are located, and I know for a fact that they would sell for much more than what the final appraised value stated. One recent example is a tear down home, on a lot in a less desirable neighborhood was appraised at close to the same value as a custom home built by the Owner/Builder in the most desired neighborhood in our town. How can that be? It makes no sense at all. Our market here is moving for desired properties in desired locations which are priced reasonably and that is not being taken into consideration from out of town appraisers who are not familiar with this area. There also should be guidelines in place not allowing distress sales to be used as, only taking them into consideration when other sales and pending sales at higher values are available. Every local market is unique, and these kinds of guidelines applied to local markets will do nothing to slow the crash or assist in a long term recovery. Their is sure to be no rebound until the pendulum swings back to the middle. Not enough guidelines to protect the consumer got us into this mess, too many guidelines that make no sense, will never get us out.

When an appraiser is called out to your house, to complete an appraisal, talk to them first. Ask them do the comps support the price? If they are unwilling to talk then dont use them and dont pay them. If everybody did this they would be forced to start evaluating with regard to everyones needs.

Its like paying some handyman $300 and telling him dont worry about the quality of your work and if the job doesnt come out right then just dont worry about it Ill pay you anyway!
This is completely rediculous. I dont care what the government comes up with for laws, we the people are paying for the appraisal and we expect quality that will make our Real Estate transaction work!

I think the appraisal should have a 30% impact on the price of refinance or sale. You do an appraisal and 3 months later the price is lower. That makes the appraisal you did (3 months ago) worthless.

When you finance the house for 30 years, what about the last 20 years when the house has increased in value by 3 times original. In the beginning of financing, the Banks have so many ways of raping the consumer. In example when the treasury yield goes down the Rates go up and when the yield goes up the Rates GO UP.

Lets lay the law down where it needs to be laid. What the Banks can do and not do. They are raping the consumer and then the government bails them out when they fail. Well #!@&^$%# bail out the consumer who needs it. If we just refinance everybody at 4 % with no appraisal the economy would be flooded with cash. Cash that everybody is not giving to the banks with their unscrupulous manner.

"Lowball appraisals"??? Has anyone heard the media reports about declining markets??? Maybe the appraisal is reflecting what is actually going on in that market…wouldn't that be crazy. As for fees involved…the appraiser is making less than ever, as the appraisal management companies charge the consumer more and give the appraiser half the fee or less. And shall we discuss the push on lower turn times? How is an appraiser supposed to complete a perfectly accurate report if the AMC wants it back in 8-24 hours? Most appraisers are juggling many clients and inspections each day. What is the hardest to believe is that a NY attorney general got to decide what is best for the entire industry, appraisers, Realtors, mortgage brokers alike. That's where the real corruption is…

here is the economic impact we would like to see work.

rates are down, right?
people could use more discretionary income, right?
so, if we let people refinance to a lower rate it lowers their payment and maybe even saves a few loan problems. this helps the economy as people would have more discretionary spending money.
but if the appraisal precess is stuck then no one can get a lower payment.

seems like we are asking for problems if we do not create a mechanism to allow refinances to occur that are reasonable.

You know I have been sitting here reading alot of these comments and found myself quite upset as some of you just really don't understand the way the Real Estate world works! I'm a Real Estate Agent and yes the new rules are an adjustment but if I do my job right we shouldn't be in a situation where my client is either forced to sell their house lower due to a low appraisal or my buyer chooses to walk away. However what most of you don't understand is there are a lot of short sales and foreclosures and they should not be considered as comps. It's not my clients fault that some bank loaned money to someone who clearly wasn't ready to buy a house. Three years ago banks were loaning money to anyone with a pulse. Not everyone is responsible enough to own a home. Our economy will never get better when we have idiots who think they deserve a handout…let's just pretend your trying to sell your house and you know that there are some bad comps in your neighborhood due to short sales or foreclosures so you do lower your price because of their mistakes??? I do think that this new way will work if banks would weed out the bad appraisers and only use the ones that know what they are doing! As for someone else's comment about what Realtors make and what Loan officers make…well they for sure make more than $200 per deal, if not that's their fault. Keep in mind most Realtors have to pay their Brokers a percentage so we don't make what most people think we do…don't get me wrong we do ok but so does the Loan Officer. In short STOP saying Real Estate Agents are whiney and learn how comps are really suppose to work!!!!

Lawrence Yun, just like David Lereah before him, is a paid shill of the National Association of Realtors.

It would appear both of them got their economics degrees out of a cracker jack box.

The National Association of Realtors is a criminal organization that should be prosecuted under the RICO act.

My issue is really with the lack of being able to get refinancing. We purchased our house brand new at 350k about 3 years ago and the appraisal came in at 240k. There is a short sale going on a couple of houses down from us (hasn't sold yet) for 230k, that really affected our appraisal. So, even though we have always paid our mortgage on time, we are unable to refinance at a lower rate.

HVCC isn't the problem; it's the lender using middle man management companies to order, manage and submit the appraisal. We have appraisers coming from far outside our region who do not know the area and are bringing in very low values. Refinance loans are sent to appraiser with a "blind" value target and although purchase loans are also sent "blind", the appraiser must review the sales contract, so they know the target value. About 50% of our refinance appraisals come in too low, but more than 90% of our purchase appraisals hit the value or better! Now that's not a good system. Lenders should use a small basket of appraisers for each region, to ensure more accurate values from those that know the area. I've had an appraiser from 125 miles away do a refinance appraisal and it was low by a good 20%. A comparable home sold 2 streets away and that appraisal came in at the purchase price whch was 30% higher than my subject. The application of HVCC is the problem. I'm with a national lender and their HVCC application system is a mess!!

As for short sales and foreclosures, your claring ignorance is apparent. Distressed parties will sell at a distressed price just to "cut their losses". The foreclosing entity doesn't want to invest any more money into the property, either through fix up, or carrying charges, therefore the property is a fire sale. Their "books" look a lot better to their boards if they don't reflect an inventory of foreclosure or short sales.

Stick to reporting facts.

I am sorry, but a homes market value is what someone is willing to pay for it. To think otherwise is foolish. Are we to police what people pay for artwork as well? Someone may be willing to pay more for a home than you or someone else, get over it. People are willing to pay $8 for a beer at a ballgame or $5 for a hotdog. It is just the way it is. You may not think so, and maybe you will be one of the people sitting on the sidelines waiting for a bottom when market values increase dramatically.

Now I can understand appraisers protecting mortgage companies interests, but at some point mortgage companies will feel the competition as things get loosy goosy in the industry and lets not forget their main interst is making money for shareholders. If that means loosening up the purse strings to lend out more money for higher appraisals than that will happen beleive me. Right now they are shoring up their financial condition, but if you think for one minute that in a year or two they won't be lending more money out or making it easier then you are mistaken. For those that think appraisers are now pricing in market conditions fairly and are doing their job, beleive me, a lot of them are not. The mortgage companies don't care right now because they are being ultra safe. When that stops, the mortgage companies will track problem appraisers. I feel some appraisers got some sort of certificate from a one day 2 hour course on appraising.

There will eventually be a groundswell of interest in appraisals and it won't be coming from realtors and homeowners in the future, it will be coming from mortgage companies looking for more profit. They will be the driving force in correcting lowball appraisals.

I don't know about all locations but in Parma, OH an REO home will be included in the appraisal.

An REO home on a 40ft wide lot with broken, deteroiated windows, leaking roof, falling down one stall garage, broken plumbing, broken driveway and 1,100 sq ft and on and on, sold for $40K. This home was included it the appraisal of an immauculate 1500 sq ft home on a 60ft wide lot with a new 10ft wide driveway, replacement windowns, new roof and a 900 sq ft garage. all sided and updated in the last few years. Needless to say this home on a lot and half was appraised around the same because there was nothing sold recently except REO's.

Appraisals are done sight unseen, regardless of condition by appraisers that can't find the arera even if they had a map.

I was unable to obtain a refinance as the appraser used on our home was from another area of the county we live it. We have 2400 ft raised ranch with a fully finished lower area. The appraser only included the living space of the upper floor which significantly reduced the value of the home from the orginal purchase price. The appraser them compared our home to other homes in the area that were 1/2 the living area as ours.
This is inconsistent with how the home was apprased when we purchased it in 2007 by the same mortgage company. Comparable homes in the area with same living area as ours have sold recently for more than what we paid in 2007. It seems to me that banks and mortgage companies have changed the rules used by the apprasers to avoid providing refinance and providing mortgages. It is easier to hold onto the TARP funds they have rather than lend it and manage their businesses in a reliable, efficient and fair manor.

"Market value" is a con overall. Everyone who works in the real estate business only works to push values higher to make more money themselves, thus artificially inflating the prices. Since as a buyer there are no affordable houses to be found you must settle on the high price/value of a house. House values are so far beyond what people make these days and that is the real reason for the housing bubble pop action. The whole market value blather is a farce. Greed simply outpaced earnings of the average American.

The point made here several times that the price at which a SELLER and BUYER are willing to do business in the exchange of an item (in general) is in fact the definition of "market value". But concurrently another point stating that what's really at issue here is the lender's risk comfort level is equally valid.

The lending industry has for many years indirectly set the market values of real estate because they are the true BUYER in each transaction, by virtue of the fact that they are the majority financial contributor in the deal!

If everyone started to significantly increase their cash down payment for real estate purchases the scenario would be different.

The issue becomes that Government apraissers aren't held to the same standard. So you get locked into a house that is loosing value, but your taxes continue to increase extracting your working capital from you.

most cities will not use short sales or foreclosures for valuations to obtain property taxes. So if we have to pay taxes on this value, why are appraisals allowed to compare a beat up foreclosure to a move in conditioned house…

I also had a problem with a small town appraiser (when I live in one of the best areas of the capitol city of my state). Because my neighborhood has very little turnover and many owners are the original owners, he used "comparables over one mile away and over ninety days old," stating that they were "unavoidable." He also stated in his appraisal that "increase in value is due solely to appreciation in the market," even though he did not ask me if I had made any improvements to the house. I only needed another $6,000 appraisal value in order to refinance. When I asked for reconsideration based on $40,000 improvements made to the house, I was given ZERO reconsideration. I was told I could get another appraisal, but in the meantime, I lost my interest rate. Like many others who have posted here, I don't think the appraiser had much knowledge of my particular area. These facts (plus others I have not set out here) caused me to file a complaint with the appraisal board. I would suggest that others do the same.

For God's sake, get a brain. Read what you just wrote.
I am a Loan Officer of 18 yrs experience as well as a RE Broker.
Again……read what just happened. Cuomo, from NY, just sued WAMU for BEING TOO COZY with appraisal mgmt companies. SOOOOOOO, what the answer he comes up with?
He REWARDS ALL appraisal mgmt companies by giving them a virtual monopoly on appraisals.
READ IT! You wrote it.
My gosh, can't you see what you wrote? Does this make any sense at all?
I will say it again, cause no one is getting this.
Cuomo (and the idiot Chuck Schumer) has successfully sued an appraisal mgmt company. The Mgmt company LOST the case. They then gave ALL Mgmt companies a monopoly on the market.
Such a deal! How stupid can they be? Forget all the other arguments like the law circumvents the Regulatory process, did not allow appropriate legal amount of time for Congress and public entities to comment, etc.
Just think how stupid it is.
And these same idiots want to run health care and GM and everything else?
We are in deep caca.

It is clear that like so many "experts," Ms. Fried has no real world experience.

Have recently been subject to an appraisal that reflects a value 30% less than just 1 year ago. Area realators admit a solid 8% decline in home values while out of town appraisers compare my home with short sales.

It is my understanding that comparables for only the past 6 months can be used. If that is true, then values can be disproportionately lowered based on too small a sampling and one that is too reactive to short sales and foreclosure pricing.

The appraisal under the new HVCC regulations have hurt home values. Any one interested in refinancing or selling a home is being hurt. This isputting a real Estate recovery in real risk

What seems to be missing from the current appraisal rules is an appeal process. I recently refi'd my house and had issues with the types of homes included in the comp set, which drove down the value of my property. There was no viable way to appeal the report or have a second appraiser's report considered in the refi process. If I'm willing to pay another $300 to have a second appraisal done, shouldn't there be a process to allow that input to be counted in the process?

The HVCC mandates the use of appraisal management companies, which is exactly how WaMu was ordering the appraisals that were called into question by Attorney General Cuomo. How is this an improvement?

I bought a short sale abandon home in 8/08 for 370k and when I tried to refinance they said it appraised for 320k. The appraisal when I purchased was 425k. The comparables they used were before I purchased my home. It is crazy. Also, when I purchase it the appraisal cost me $250.00 and now I had to pay 400.00.

I've read all of these comments. Just spent 90min and went through 2 glasses of green tea. I am without words. There is so much finger pointing it makes me ill. We are all "the consumers", we all profit. But then again we don't because somewhere down the line our profit gets put right back into the system by spending. I am a Realtor since 2005, I got into the industry because I enjoy helping people and looking at different homes, and secondly I liked not being chained to a desk for 40 hours a week and being micro managed by someone who makes a fraction more than me. Lets put things into an even keel perspective. There is corruption in every area of this argument. A portion of Realtors, a portion of Mortgage persons, a portion of Appraisers, etc. I really wish more people would have the patience and thinking power to take a mental step back and realize that this system encourages and perpetuates corruption. We ALL have to make money, we ALL need to profit. And the amounts needed are increasing every year. And by doing so we take from someone else on the most basic level. Yes we do. And if you want to argue that I really invite you to learn how our actual monetary system works. We are all chiseling off of each other and we all want a better life. So seriously what is to be expected? HVCC is another band aid as a result of some kind of breakdown yet again. How long are we going to keep pointing fingers? Call it greed, call it ambition, call it hopeful thinking to tomorrow. It will 99% involve money. We are all here for the same reason and have the same needs. We need a better social system. Period. What could be more relevant than actually discussing the root cause?

I recently refinanced my home. I purchased the home new in September 2006. The appraisal came in at a value approximately 13% lower than the original sale price. Considering the price drops I've seen reported in other parts of the country, I consider this to be reasonable.

WELL HERE WE GO AGAIN …YES LET THE N.A.R SET POLICY AND WE CAN RETURN TO THOSE HEADY DAYS WHERE PROPERTY WAS GAINING TEN PERCENT A WEEK. YES LET THEM CREATE ANOTHER BUBBLE BY REASSURING PEOPLE THEIR HOUSES ARE WORTH MORE THAN REALITY DICTATES. THEN WE CAN GO FOR ANOTHER BAILOUT SPIN WHERE EVERYONE CAN SAY GEE THE APPRAISER SAID IT WAS WORTH THAT SO WE BOUGHT BUT NOW WERE UNDERWATER…HELP. TIME FOR SOME REALITY TREATMENT.

Of course with every article especially one who is not an industry expert you only get half the story. There are many flaws with HVCC and characterize it as “belly aching” is frankly insulting. We need a fix that is true but HVCC is not the way. Why are FHA appraisals not included in HVCC? Because they have a system worked out to monitor appraisers. Why are we not doing this for all appraisals going to Fannie and Freddie? We have to make this whole convoluted system? One reason is money the big lenders have a share in the appraisal management companies, that’s Andrew Cuomo included. Funny how costs going up 30% and the actual appraiser doing the valuations are getting 1/2 to 1/3 LESS money. So they have to do more, less quality. Everyone must know appraising a home is an art not a science yes short sales and foreclosure must be considered. But when you have someone rushing to get the next appraisal, the art goes out the window.

Anybody leaving a positive comment is obviously not a buyer, seller, real estate agent, or mortgage professional. Here is my take as a loan officer. Before this law took affect, lenders already were looking long and hard at appraisals. The standard guideline for an appraisal is to have 3 comparable sales. That has'nt changed but lenders required 6 comparables including 1 current listing and 1 pending sale. This has been the norm since last year. Lenders also have access to comparables and if any were skipped for use than an accounting had to be made as far as why this was the case. Long story, short; the crisis forced this natural correction and that was ok. The appraisals that were being done were solid for the past 1yr. Then we had the Attorney General Andrew Cuomo step in trying to be the hero (the government is always too little, too late but they have to somehow justify their sorry existance). Sorry Attorney General, the free market system beat you to it. All you did was double the cost of an appraisal for the consumer and muddy up the housing market even more.

ok i refinanced a few months back.
i have a loan amount less than half of my value so value was not a big issue.
i was upset by the appraisal though because the appraisal the only recent sale a few houses up which would have certainly placed my value higher.

seems like they have gone out of their way to depress values on appraisals.

very dissappointed.

The problem is the banks don't distinguish between good appraisers and bad. A bad appraiser will now make as much money as a good appraiser, and will produce very poor work. The 10-20 year veteran appraisers are getting the short end of the stick. They built good appraisal business with multiple referral sources and now have to live with only doing appraisals when their number is drawn out of the hat by a bank. There is no checks and balances with the new system, just like the old system except this time in the banks favor. Horrible appraisals are being done because the appraisers now only make $200 per deal and are grabbing the first available comps, instead of really researching the area and choosing the right comps for the property. There needs to be a new middle ground, and an 18 month moratorium would allow lawmakers to find that middle ground.

This is definitely out of whack. We were never-to-be sellers of a house because the appraisal came in 35% lower than a previous appraisal. The people being hired are idiots. When the transactions are arms-length, shouldn't the buyer and sellers set the price as long as the lender is willing to lend at the requested amount?

And no, short sales and distressed sales aren't comps. When a defaulted borrower and lender dump a property on the market quickly, the lack of liquidity and forced sale results naturally in a lower price. A regular sale is not comparable to a foreclosure sale. Your ignorance of the basic fundamentals of economics, liquidity, business and real estate mean you should stop sharing your opinion and probably just report news to the best of your ability.

We are now renting the house, an immense pain in the rear, courtesy of ignorant stupid appraisers, government, and business editors.

As long as appraisers use foreclourse sale properties to determine property values the housing market will continue to fall as more and more foreclourses keep flooding the market…

Someone here said that if someone pays a given price then a home is obviously worth it. Is paying over sticker price for a car worth it? If a candy bar costs 50 cents and your kids wants to pay a $1 for it, is it worth it? Just because someone is willing to pay a certain price for soemthing doesn;'t make it worth it.

As for the home comaprables… if I am looking at homes, I want to know what the area averages… including foreclosures and short sales. That way I don't overpay for something. If a lot of homes in the area are shortsales and foreclosures, that is an indicator of several things, including the prices were too high and the local area is risky to buy in, so I should pay less or move on to other areas.

Appraisers are not the villains, and never have been. As a responsible mortgage banker, I ave always looked to my appraisers to provide a fair market estimate to protect my borrowers, as well as the company I serve. Have a lost a few refinances because of low value, you bet. However, those are the breaks. The fact of the matter is with the Fannie Mae and Freddie Mac refinance relief programs I haven't had to worry much about appraised values since I am able to lend up to 125% of the value to put the client into a better situation. This doesn't mean cash out or debt consolidation. It means giving them a loan they can live with instead of the garbage some other fly-by-night "banker" gave them. I believe the real issue here for the builder and the realtor is that they are being forced to renegotiate deals in the best interest of the buyer, and that takes away from their bottom line. Truth be told, I make $200 on every loan I get closed for a client; the realtor on the other hand makes thousands of dollars. Think about it, on a $200,000 purchase I make $200, the appraiser makes $300 to $450, and the realtor/ broker gets anywhere from $6,000 to $12,000.
My advice to the realtors and builders out there is to accept that we are in a new economy. There are new rules to play by, and we are all going to have to do more in order to make the money we used to make.

Buyer A agrees to purchase a home from Seller B for $250,000. The appraisal comes in at $200,000 for all of the reasons discussed. If buyer A is willing to pay $250,000, how is the home not "worth" that price? How do home prices ever move upward if nobody can get an appraised value equal to (or anywhere near) the sales price? These aren't small differences – they're huge. Seller B is forced to sell for $200,000 (keeping prices depressed) or not sell at all since most buyers wouldn't have an extra $50,000 sitting around.

Appraisal costs have gone from $300 to $440. The underwriter can have no contact with the appraiser even to answer simple questions. It has mandated that the appraiser can longer be an independent fee based appraiser he has to work for a management company and wait for his turn in the que of assignments. For the appraiser who established his business relationships all is lost. For the worthless appraiser who did not hustle he is now on the gravy train. Everyone has business relationships, that doesn't mean falsify or distort your finding. Everyone has to make a decision to do the right thing or lie and be deceitful. No different for an appraiser. Just man up and do your job. Report the pressure and let the legal system do its job. This is the beginning of the destruction of the small business man. Just add more layers and distance from the consumer to the provider.

I have a question, how do you hold an appriasal company accountable? I was going to refinance my 6 year old house until I got the appraisal back this week. They appraised our modern 4,600 sf premium built house in a upscale area on a 5.5 acre lot at $265,000. 1,600sf of that includes a fully finished basement, thats carpeted, drywalled, recessed lighting, that has two rooms, full bath, built in bar area, etc. They valued the basement at $5 sf. The week before the appraisal we finished a 40×72 polebarn, with electric, water, finished ceiling, at a cost of $55,000. They gave us credit for $25,000. It was ONE week old. They used only 3 comparables in the area. One was a 1,600 sf basic construction house that had no basement, deck, barn, etc!! Our house has a very large 3 level deck surrounding a pool and hot tub, that we were given $2,500 credit for? That was a $45,000 deck! Our 6 year old house would cost minimum $400,000 to build, not including the barn, and 5 Acre lot. yet they appraised it at $265,000? Oh when they compared our house to the $1,600 sf house, the additional size was valued at $20 a sf???? So I have written the appraisal company and finance company asking for an explanation. But how do I get the money back I paid for this appraisal? Oh two houses of similar size, age, construction, sold in a 5 mile radius of my house at $410,000 and $485,000 but they didn't use them as comparables??? So some appraisal company that just got paid $325, just cost me a 1.5% interest savings on a $300,000 loan that I have because there appraisal came in stupidly low.

When we refinance our home in May of 2009 we expected it to go down a little from the refinance of 2006 which was $150,000 but we did not expect it to go to $120,000. Therefore we could not include all of our bills into this refinance.

For far too long people have been treating their primary residence as an investment instead of a place to live, raise children, and relax. I think that this is a issue of professionalism in the industry, nothing more. I have just paid 325K for a beautiful home in Orlando Fl. and my real estate agent has already warned us that the appraisal could come in low. I really do not care if it does or does not because in the end I bought the house because I love it and I want to live there for a considerably long time; not because I want to flip it in 1-3 years for a profit. The appraisal industry certainly needs tweaking but should not be pushed around by a bunch of whiney real estate agents that helped get us into this mess in the first place.

Just refi-ed. My appraisal was with very close to the zillow.com "zestimate" (and the appraiser did his own analysis).

When I bought the home 7 years ago we were pretty house poor–it is our first home. The price now is beyond what I could afford, despite my raises and the house aging. The bubble has supposedly burst but it still isn't clear how to me how I could expect someone to come up with this kind of money for my house. Needless to say this is small potatoes compared to SoCal (which is why I left there. It was obviously not sustainable…) and I am not cashing out home equity.

The only $ number I care about on my house is how much I still owe on it. Couldn't are less what it is supposedly worth.

As a mortgage broker there are many safeguards in place within the lending industry that have prevented bad appraisals and appraisers. What everyone is missing is the big picture of the the fat cats at the top of the banking industry and Wall STreet who have caused he financial mess we are in, and now all of the eyes are off of them and on to the little guys who just try to make a an honest living day to day. Indeed you have some bad appraisers out there, but not enough to have caused the mortage meltdown.

One state attorney general should not have that kind of clout to mandate a law, especially never having worked in the mortgage industry. This ruling needs to be overhauled immediately, as the potential to recover from this mortgage tsunami will not happen, In fact it will collapse the lending business. Most appraisals that we have had to order are coming in excessively low, and with much error, and the consumer is paying more to have an appraisal done, and than is not able to move forward with a purchase or a refinance. So the consumer is losing money, and the Appraisal Management Companies are making lots of money, as they take a cut of the fee, and pay the appraiser very little for the appraisal. I suggest that everyone write your congressman about this as we need an immediate change of this HVCC law.

The apprasal by the mortage company is to protect the mortage company. It is not for the buyer or seller nor does it have anything to do with the agreed price. The bank wants to know if the loan goes bad what is the property worth. Short sales/REOs should be included. It should be a low value. Buying a home is a priviledge and responsibility. We should act like it.

Yes. I bought this year and the appraisal had a foreclosure in it. It actually supported my price point. I had made an offer that was lower than the real estate agents on BOTH SIDES wanted me to offer.

I got the house and the appraisal reflected not only the current price, but made me aware of the continuing state of the community. There have been multitudes of short sales and foreclosures in the neighborhood now. My home value is about $15,000 less than when I bought. That being the case, I am SO VERY GLAD THE APPRAISAL forced down the price.

By adding in the actual activity in the neighborhood, we are allowing some kind of tally of possible volatility. This is important for many. I live in the DC metro area and this is the case. What about people that buy in other places where the market is NOT already beginning to bottom.

Let's not inflate again!!!!!

There are plenty of checks and balances now from an underwriting standpoint with multiple reviews of appraisals to comply with market conditions. There is no question the legislation has added red tape along with some unintended consiquences. One of the biggest issues however is that folks selling a home in this market need to be aware and or realize their home is NOT worth what it was 3 years ago or even 6 months ago in some areas.

I can see everyone is taking just one side: his/her interest. But unfortunately, it is buyer market, and buyer says what it worth, not the seller and not the appraiser.

Our appraisal fairly reflected the value of the home in our purchase of a home last month. The bank had dragged their feet so long on the short sale that the value had declined below the purchase price. The appraisal convinced the bank to lower the purchase price to meet the appraised value, so in the end we got a better deal.

The real question is whether they should have factored in the possibility of a further decline in value, for our mortgage holder's sake. We believe the value will continue to decline for a while but it is at a price now that we can afford and we are enjoying being in our own single family home again, finally. Been waiting many years for the crash to come.

When house values were inflated it was ok. Now that appraised values are perceived to be less that expected it's a major problem. We are starting to see housing return back to affordability, and it's about time. The deals that are falling through because of the low appraisal are just protecting the buyer from over spending on a house.
NAR, really, cry me a river.

When I first was asked to determine the sale price of my realtor's home he was selling for himself, I said 398K. He laughed and listed it at 525k. 2 years later it sold for 395k.

Realtors are not always competant.

I am constantly amazed at some appraisals and how they are done. I need to move for work. I built my home, it's custom. Very high quality construction. It's not a track house. Top of the line windows, doors, 2×6 construction though out, I can go on and on. The question I have… why do I get compared to homes build with lesser quality materials and craftsmanship? Many of the homes that I'm compared to houses that hardly meet building code. That will need new windows, siding, and some structure repairs in less than 10 years. Yes it cost more to build my house, in fact I have my home priced over $40k less than what you could build it for today. I Have checked on that fact. So how can my house appraise or comp to those other homes? I can wait to sell and it will take a buyer that wants quality, but I'm concerned that it will be hard for that buyer to get a loan.

When my wife and I went for a HELOC we got an extremely low appraisal. The appraiser who I can only guess as having limited experience didn't count 1 room as a bedroom when it clearly was, had a closet and everything and counted another bedroom as a walk in closet. The walk in closet was 9×18 and had a walk in closet itself that was 4×5. Can you imagine the idiocy of such an appraiser and the power they yield. Our home is a 5 bedroom 2.5 bath and we live in a town of 6,000 residents, and she counted 3 bedroom 1.5 bath homes in the center of town as opposed to us in the desirable lake area as comps. ??? She also didn't count our neighbors sale that had occurred within last 6 months since she probably missed it, and after I pointed it out she felt it was not similar since their house was slightly larger. Their house was about 600 sq ft bigger, but the majority of that space was a huge open 1000 sq ft room above the garage and a 600 sq foot attic room that you could only stand up in the center of the room otherwise your head would hit the ceiling. None of our rooms are dormered.

The problem with appraisers is they are human, and worse, they can be incompetent humans. The power they yield is ridiculous. She came in $50,000 less than the second appraiser we got. We ended up getting the loan through another bank. Funny but the first bank lost our business and we are little to no risk. Their loss. I think as banks become more competitive a corrective action will occur, and lower appraised value appraisers will be out of work. Just my thoughts.

Does the new rule help things, absolutely not, but rules will be bent and as time goes on, something tells me the values will increase regardless of market conditions due to banks wanting/needing more business.

I recently refinanced my home and the appraisal came in much lower than expected. It didn't affect my ability to refi, but the appraisal was lower than my tax assessment basis and other recent appraisals for smaller homes in less desirable neighborhoods, nearby. I believe appraisals vary widely due to industry "back scratching" and who has a vested interest in the outcome.

Houses have been valued at far more than they are worth for far too long. Sounds like maybe the appraisers are starting to get THEIR act together.

The 18 month moratorium is not a perfect solution, but it is the best solution to correct this mess force fed upon consumers. Appraisals are taking several weeks rather that a few days and this forces people to lose rate locks or pay to extend rate locks. Moreover, these HVCC appraisals are not “portable”. If a borrower wishes to change lenders, he must start over with a new appraisal and new fees.
As for your position that short sales and foreclosures are fair game for comps, this is true topically. However, when an appraiser ignores several legitimate transactions ( buyer to buyer vs. foreclosure) to travel beyond the customary 3 mile radius simply to use short sales and foreclosures for comps, well, you have what we are experiencing today. The majority of appraisals prior to this rule were desk reviewed and others were lowered by the underwriters if it looked out of line. Succinctly, a cogent system was in place. This was simply a political move designed to be pro-consumer but when Cuomo’s own constituents started flooding his office with complains regarding his ill-conceived plot and his gubernatorial aspirations were in jeopardy, his team immediately started backtracking. Let us also not forget that many of these homes in trouble were purchased at the height of the market. Appraisals are educated opinions based on factual data. As real estate climbed and buyers (including Treasury head Tim Geither, utilized escalation clauses to pay more than the asking prices), appraisal values rose along with it. As soon as the market changed and job losses added to the mortgage delinquencies, values corrected. A person’s primary residence should not be a commodity like stocks, but many people bought several homes in a few years’ window because it was their new “day-trading” quest. The initial wave of delinquencies was from investors buying multiple homes with no money down and interest only loans. Then, others fell in line. The new FHA head, picked by The President and just sworn in, was a top executive at World Savings Bank. Know what they offered: ONLY interest only negative amortization loans. You know –the ones with the 1.75% teaser rate and the 25% increase in loan balance yearly? The gave consumers Truth In Lending forms with the lowest teaser rate but recorded the more accurate worst case scenario forms in court houses with teh other recorded loan docs. Feeling confident? God help us all when our elected officials continue with this nonsense and the media spins it further. Guess editorial fact checking went the way of the buggy-whip.

Wow! What an easy target to lay blame on the appraiser. The Realtor and the Home Builder's are disgustingly innocent in this whole fiasco. Even NAR's Chief Economist is talking out of both sides of his mouth. Here is a simple economics lesson: An oversupply, with little demand, leads to the MARKET placing downward pressure on values.
In addition, it would have been helpful for local home builders/contractors to understand supply and demand. Do you think that they would have kept building homes had they understand the areas absorption rate (40 active listings and 2 closed sales in one area for instance). Would they have kept building homes if the average marketing times for the homes were over 8 months?
While I don't think the HVCC is a good anecdote for lenders and appraisers, this mess is pretty much everybody's fault. Consumers have to live within their means. Hopefully, a valuable lesson has been learned.

All you people stating "the best way to establish the current market value for anything is whatever a willing buyer is willing to pay and a willing seller it willing to take" are ignoring one big factor – whose money is at risk? The bank has every right and responsibility to ensure they aren't risking their money on a bad loan that will be instantly underwater and eventually be foreclosed on. Just because you find a buyer dumb enough to pay your bubble wishing price, doesn't mean the bank has to go along with it.

We're slowly getting back to the days of a real down payment, and it's bringing prices back to reality. No more funny money loans to prop up prices (and commissions for everyone involved).

I was told to take my assessed value from my most recent property tax bill and deduct 20%, that is the figure appraisers have been using as their start point in our area. My appraisal came in at a figure I believe to be extremely low. Some of the homes used by the appraisal company were on the other side of town and some where foreclosured homes. This is a another example of appraisers unfamiliar with the town.

It's always interesting when an industry is forced to change. For 8-10 years the appraisers would come by and provide whatever value was requested. A number of friends refinanced and were asked by the appraiser "what do you need the appraisal to be." And don't tell me these were the rogue few. So real estate prices surged and everyone happily lived in the bubble. Now that the bubble broke all those folks living high on the hog due to inflated appraisals are crying foul?

Folks, this is a classic market correction. Why are the last 3 appraisals given more value than the previous hundred? Because these are the most relevant values AT THIS GIVEN TIME. With home movement so slow, the first 20 might have still been part of the bubble. Why should those count at all? The problem here is that in a correcting market appraisals are going to drop. The comps won't be relevant because the time value of money is dropping. Of course they don't fit in the bracket the real estate agents think they should be in because the market is correcting itself. I didn't hear any of the agents complaining during the bubble when a house might increase in value by $40,000 in 3 months, so why complain when the market is deciding to value the house at a more appropriate level.

Would you complain if a stock price tanked because you bought the stock and expected it to stay in a range of its peers/comps? Sheesh.

THIS NEW LAW STINKS – HOME VALUES ARE BASED ON APPRAISALS DONE BY OUT OF TOWN APPRAISERS WHO KNOW NOTHING ABOUT LOCAL CITY PROPERTY VALUES – JUST ANOTHER WAY TO KILL THE HOUSING MARKET RECOVERY!!

Using foreclosures, REO's or short sale comps while determining the value of a home is 100% unreasonable and not just bellyaching as mentioned. The banks hiring the appraisers are the ones accepting less than loan amounts for these homes and then turning around and basing home values on those lowered amounts. It is circle of price manipulation. The banks and lenders want to loan less money so they allow appraisers to use the comps for homes they have dumped for less than expected prices. The consumer is still getting robbed here. Nothing has been fixed.

I am a real estate broker in NC. Appraisers are using comps that are older than 6 months and houses that are not comparable in size and location. I recently had a home that was under contract for $360,000 and the appraisal came in at $311,500 for the reasons stated above. Needless to say, the deal fell through even though the house was well worth the contract price in this market. I might add that it is interesting that the valuations for property tax purposes don't seem to follow the same guidelines – I wonder why?

This kind of backlash is to be expected. Sure, there are/were honest appraisers out there, but most lenders weren't using them during the boom.

In 2002 I put the first bid on a condo in SoCal, at asking price. It bid up $36,000 in 18 hours, pricing me out. How could an appraiser support that much $ difference in less than a day? Yet the place sold for even more.

So I left SoCal. Now where I live there is a house I've been watching. It sold for $150k in 2005. New owners stripped out the heating system, painted garish colors, tore out a bathroom (it's a room full of studs & pipe caps) put in cheap flooring and ruined the yard. Did a cash-out refi for $188k and took 5 kids to Hawaii, then bought fancy furniture and appliances. Went into foreclosure and put the house on the market for $238k. Now the bank is trying to sell it for $165k, but it is in much worse condition than when it sold for $150k in 2005.

How is an appraiser to put a value on that? Other homes on the block are much nicer, and have working heat. Will an appraiser tell the bank they are asking too much? Would a bank listen?

As a real estate investor, I do see the flaws in the appraisal process. Just a few weeks ago, I had a house appraised by an appraiser from a different state. I asked him if he wanted to see any documents or information that I can provide. He told me "it's ok, the appraisal process is so much easier now these days because everything is on the MLS." What? Are you kidding? Do you think MLS is error-free?

He spent all his time measuring the size of each room. He could simply ask for a copy of the survey and a copy of the blue print that I already have.

A week later, I received the appraisal. Wow! It's appraised as the same as the piece of crap two doors down. Although the house is probably worth 80K to 100K more. Why? Because he only used "hard facts", i.e., number of rooms, size of the room…etc., to do the appraisal. He didn't care the kitchen will probably cost $60K to reproduce or the bathroom will take another $20K. Well, you cannot complain if you find an under-value property.

My point is: Lenders need to hire appraisers who know the neighborhoods really well, not just any appraiser!

HVCC is a train wreck. The utter stupidity of goin from a licensed and regulated profesion to a non regulated appraisal management company is something that only the government can come up with. The biggest joke is that the same people who ran the sub prime mess and ran thier banks into the ground are now the founders of some of the biggest appraisal management companies. The appraisals are riddled with errors, many of them do not even bother to verify the construction type. I have seen frame homes depicted as block, mobiles called modular homes. Values are all over the board, some are under valued, some are over valued, zero consistancy. Borrower are paying an average of 150-200 more for an appraisal and it comes back as utter garbage. I would estimate that it has cost my borrowers thousand more over the life of the loan due to rate locks expiring, which is a direct result of the new HVCC. HVCC is a complete disaster. Not only that but also we no longer can tell how much the appraisal will even cost, we get a range of 300-500 and do not get the final price and invoice untill after it is completed. The whole point of RESPA is to have accurate disclosure and give borrowers a right to shop. Where is any of this possible in a system that does not give accurate pricing, and borrowers have no rights to shop for 3rd party services. How can you let a company that has no license or formal traning control something as complex as appraising homes. The only thing that HVCC does is further supress the housing markets from recovering. Way to go! In my opinion everyone from the senate down should be fired and replaced, decomcrat and republican. Welcome the United Socialist Republic of America!

There are just as many problems with HVCC. If we want to have "unbiased" home values, why leave it up to the banks? We can blame realtors, appraisers, brokers all we want but the bottom line is the most money made during the boom years was made by the lenders who implemented the "risky" loan programs. How are they held accountable? By being given billions of our dollars to "help" out homeowners in need. The begins with the lenders, and now they have all the control. In some countries this would be called a monopoly, but here it's just the way it is..

I've read through most of the posts. I am not particularly fond of realtors and view them as being the same as used car salesmen. I have a equally low view of appraisers, and view the profession as a whole as one betrothed to whoever is paying them and being entirely willing to provide whatever result is desired by whoever the appraiser is doing its bidding for. I also don't think too highly of bankers. None of these professions are populated by particularly honest people, and all of them seem to have a large number of opportunists who will do just about anything to make a buck. I am an attorney who has spent better than 20 years in the commercial and residential real estate field, and in that time I have had experiences with a number of people in the business, and have had several personal friends who are also in these professions.

As for appraisers, they play by their own rules and provide a result orientated product. A "good" appraisal is at best an educated guess that is based on historical facts. Unless exceedingly easy to obtain (and therefore difficult to ignore), most appraisals don't bother with historical facts, and make up what is "relevant" to obtain the targeted result. Currently, in the context of a partition lawsuit in which the court is trying to determine the "value" of a property for which there are no ready buyers, the same property – a commercial horse stable on about 1.25 acres – is appraised by one appraiser at $380,000, and another at $190,000, with both appraisals within 6 weeks of each other in the summer of 2008. Not surprisingly, there really aren't any comparables, and the only property used for a similar purpose (two lots down from the "appraised" property) was actually sold (after 18 months on the market and as part of a lawsuit between battling owners) in August of 2004 for $325,000, with nearly 3.5 acres and almost twice as many structures on it as the appraised property.

Neither appraiser even referenced the only actual sale of a horse stable in the area. Neither appraiser contacted the local village to learn that if the subject property were sold, the village would require extensive repairs to bring the delapidated structures up to code, all of which severely impacts on any valuation of the property as anything other than a tear down. Neither appraiser addressed the issue that the only viable use for this property (other than remaining in the hands of the current fueding owners and being run as a stable) is as a vacant lot to park construction or landscape equipment.

Yet, both of these appraisers are able to get on the witness stand and with straight faces "defend" their respective pieces of fantasy as being based on objectively meaningful facts. IMO, but both of these guys are in the same category as escorts for hire for a "date".

When I bought my house two years ago, all they compared was the prices and square feet of the house that were sold in the last 5-10 years. The bathrooms where also a bump in the proce. When I want to sell it, they use the prices against my house value. I think this is funny that the realtor are trying to work both sides of the fence. A house sold is a house sold. The realtor need to put up and shut up. They rank #2 on my list swinders.

I went to refi in late May. There were 2 homes that sold in my sub within 6 months that made me beleive that my appraisal would come in close to what I purchased. The appraiser choose not to use them and went with sales in different areas one and not even the same city. When I asked why he did not include the homes in my sub he said the size although both where with in 300 sq feet of my homes size. He said my home was one of the best in my sub, but valued well below the 2 that sold. No I don't think I got a fair appraisel and beleive the new rules are a problem as clearly the appraiser was worried about getting his hand slapped.

Come on people, this is basic supply and demand. The opinion of value is based on what is probable as of the date of inspection. Appraisers should be using the most recent comparable sales in the closest proximity to the subject. If REO and short sales are driving the market then they ARE the market. In a declining market listings are even more important than the most recent sales. If the last sale was $150,000 but now there are two listings being offered at $125,000 to $135,000, its not probable that the subject will sell for $150,000. A buyer will pay no more for the subject than would be paid for a suitable substitute. Period.

Appraisers are fully licensed and should be found individually accountable, after all this is their livelihood too. I have seen many appraisals come in with lower values with HVCC, and although the bill was passed with good intentions, the end results are folks encountering even more stress in an already stressful process.

I am a mortgage broker in NJ. Although I agree that the "system" was out of whack, I don't believe that artificially inflated appraisals were the problem. I would be surprised if they accounted for more than 1 or 2 percent of the problem.
Now, only the consumers are the losers, as appraisers with no "local knowledge" put questionable values on homes. Where the consumer really loses is in the cost of the appraisal. We were working with roughly 6 appraisal companies, each charging between $325 and $345 per appraisal. Appraisals are now costing the consumer roughly $425, making the appraiser the only winner. Add to that a deterioration in response time – causing delays in the mortgage process and the consumer loses again.

Correct valuation should be what the property was worth before the bubble. It should be priced at 2002 level and adjusted not for inflation but a recession to make it affordable.

Maret value is defined as the price negotiated between a willing buyer and a willing seller. If they both agree on a price and there is no colusion or fraud, then that IS the market value. In no other negotiated sale does a appraiser carry such power.

What you don't hear is that the appraisers who couldn't get any business before because of the quality of their work and frankly work ethic have never been busier. The quality of work has plumeted. Appraisers make about half now and could care less about going the extra mile. Higher valued properties and commercial appraisals were more expensive because they take more time. Rushing an appraisal is impossible. My experience over the last month has been horrible. No shows, three week turn time, 30% higher cost. If there is an error here is the process. The Loan Officer calls the processor, the processor calls the Lender, the Lender calls the management company, the management company calls the appraiser, the appraiser doesn't understand and calls the management company who calls the lender, who calls the processor who calls the loan officer… Get my drift. Inefficient. Everyone wants to blame inflated appraisals. 2005-2007 85% of all appraisals had a review appraisal done internally by the lender. Even if it were a lender there was an internal review process. The underwriter and the review appraisers double checked these appraisals. Yes there was fraud that got through the system. From what I am hearing fraud is worse than ever now as a % of closed transactions.

I recently sold a home where two appraisals were required for an FHA loan. First appraiser came in a little below asking price. Second appraiser came in a little below the first appraisal. After the second an off the record comment that was made, if I come in a little low they (lenders) won't ask for a third appraisal. The second appraisal occurred two weeks after an appraisal management company was contacted to schedule a second appraisal. This extended timing makes it important to get a lender who will lock in a rate for 60 days which is rare.

No. My appraisal sucked, and the appraiser was from a town 30 miles away in another state.

Of course with every article especially one who is not an industry expert you only get half the story. There are many flaws with HVCC and characterize it as "belly aching" is frankly insulting. We need a fix that is true but HVCC is not the way. Why are FHA appraisals not included in HVCC? Because they have a system worked out to monitor appraisers. Why are we not doing this for all appraisals going to Fannie and Freddie? We have to make this whole convoluted system? One reason is money the big lenders have a share in the appraisal management companies, that's Andrew Cuomo included. Funny how costs going up 30% and the actual appraiser doing the valuations are getting 1/2 to 1/3 LESS money. So they have to do more, less quality. Everyone must know appraising a home is an art not a science yes short sales and foreclosure must be considered. But when you have someone rushing to get the next appraisal, the art goes out the window.

As someone about to enter the market I WANT a tough appraisal to help me believe that I am not over-paying in this very unstable situation. The last thing I want is a new-car situation, where the house I just bought is worth less than what I paid.

Did anyone ever hear of old values? The closing date of a sale is NOT the day the price was set. If you bought stocks based upon yesterdays prices (set 45 to 90 days ago) the markets would NEVER recover. Appraisers are dinosaurs. You can't expect appraisers to protect a recovery in the real estate market. They are only there to protect the lender and insurer and they are not using the best tools, because the best tools (a large downpayment) are not consistent with The American Way. Go back to community lending by community banks with seasoned loan officers and make the banks hold their own loans. Then values will be representative of something important. But progress has brought the securitized loan to the housing market (they call it progress) and now you can not and will not push the dog back in the cage.

Solution, large downpayments or no purchase. Sorry President Obama, it is not consistent with the short term fix you hoped for. But my education and upbringing taught me to do it the "right way" not the "fast way".

Oh, by the way, we need to make the bankruptcy rules a lot tougher for those negligent homebuyers. If they take more risk when filing a bankruptcy they will think a little harder about messing with a risky transaction. I am NOT advocating debtors prisons, only because that costs the government (the taxpayers) money, but I am thinking 25 year amortization of the unpaid debts. How about having the Treasury hold those notes (We'll call them bankruptcy notes) and the Treasury can "sell" them to investors (just like the original mortgage loan that they defaulted on). We can also break these loans up into tranches and sell them in different risk-reward bundles. It will be a whole NEW market for Wall Street. Wall Street will recover and Main Street will learn to only BUY WHAT YOU CAN PAY FOR.

AND THAT'S NOT A BAD THING!

I am a mortage broker and feel as though the HVCC is a catch 22. Something was needed to keep appraisers in check from inflating values so we do not ahve another housing market burst but at the same time, it makes loans take longer and you do not have direct contact. The 2 biggest issues is with the cost incresing drastically since there is now a middle man involved and when you have appraisers who are not familiar with the area, they can not properly evaluate the area's market. There is no way a state official should set the bar for national policy.. All in all, we are stuck with it and must move forward and figure a way to jump this hurdle in today's market

You people that bash appraisers are uneducated in the appraisal field. I think you ALL should get a copy of USPAP and read it (very thick book) esp all you Realtors and homeowners that bitch all the time. Guess what times suck and if an appraisal comes in low it most likely because it deserved to come in low. Yes I am an appraiser and I do many purchase appraisals and I am shocked how people get mad when they offer 150K on a house and I appraise it for $110K (guess what I am protecting the bank and even you). And as far as an appraiser driving to far and not knowing an area once again you should read USPAP because it forces the appraiser to disclose his lack or expertise or do what he/she needs to do to be competent in the area. So yes an appraiser can appraise a house 100-200 or even 300 miles away as long as they do their due diligence and do what they need to be competent in that market area. You may also not have this problem if the Realtor's stop listing properties higher then what the market is doing. Just go on MLS and search all single properties witin .75 miles of the house you want to list (if its a single) and take all the similar homes and if the range is from 90-175K then don't list the house for $220-250K and then blame the appraiser when it does not come in because all you do is get the borrowers hopes up and then shot down

Comon just use some common sense before passing blame and one again I say before you bitch buy a copy of USPAP read it and see what appraisers have to go through to produce a credible appraisal.

Enough said.

The real problem (and it is a real problem)is the method used to determine the value of a home.If there have been 100 sales in a given neighborhood at say an average of $200,000 but the last 3 have been foreclosure/short sales etc at say an avrage of $100,000 then the last 3 at $100,000 are given the mose weight in determining value of all homes. That is 3 out of 103 sales. Why should the 3 be used to override the 100??

In May, I had a house deal bust due to a low appraisal, but I don't fault the appraisers. I think the real estate agents are fighting this because it lowers their commission. The appraisal actually came in at exactly what the Tax appraisal for the county was and the amount that we wanted to offer on the house. It was our agent that convinced us the value was more. For me, the appraisers are saving homebuyers from a greedy market that can not accept that their house value have declined in this market. This market will never go back to what we had over the last 10 years.

HVCC's intent was to distance "interested parties" from the valuation process and protect the appraiser from coercion and undue pressure to arrive at a certain value. Unfortunately, it has removed them and the third party vendors from amy position of accountability to thier clients and customers.

With the requirement of the MCA addendum to appraisal reports, appraisers have wide latitude to adjust and account for market movement. What is happening is that sales contracts are no longer setting the market and establishing values, appraisers are! If you think a no-doc loan was dangerous, try to get your head around the impact of that.

Apprasiers are afraid to bring an appraisal in at or over value, because of the potential implications to thier livelihood. If the lender suffers a loss, they do have the ability to come back on the appraiser, via his E&O insurance. If they lose thier E&O, they lose thier ability to appraise for the majority of the firms.

Like all of our government and citizens reactions to our current economic plight, it is exaggerated. While these are not necessarily "knee jerk" reactions, they certainly did not involve persons who are intimately familiar with the real estate portion of our economy. We will have serious valuation issues as a result, and it will, undoubtedly, impede recovery in several real estate markets. I suspect that this one issue will hamper enough locales that it will become a regional and then a national problem.

I work for a large lender and I can tell you appraisals have gone to the extreme other direction where many appraisals are coming in much lower than they actually should (based on the available comparables in the area). They also must do something to address the REO and distressed sale as they are (artificially) weighing down values. Should they take them into consideration? Sure–especially when they're the only recent sales. However, they should also weight them differently than a non-distressed sale as the REO properties in almost every case are being sold for less than what it's actually worth. Until something is done to address the REO situation, it will continue to weigh down the rest of the home values in the area. That's not really fair.

I've been a licensed Mortgage Broker for over 25 years. Lenders have numerous tools to scrutinize an appraisal with and if they used these tool on a regular basis there would be no need to use Appraisal Management Companies. They can run an AVM or Automated Valuation Method which verifies if the apprsaised value fit within a bracket of value that fits the property, they can have a desk review of the appraisal where another appraiser they have on staff or hire reviews the appraisal for accuracy, or a field review where another appraiser actually looks at the subject property and comparables in person. If quality control had been done more over the past few yewars we likely would not have seen the volume of fraud related to inflated appraisals that have resulted not only in foreclosure but huge loss to lenders on those specific properties. In general appraisers hired by Mortgage Brokers or Mortgage Bankers that are originating loans for Wholesale Lenders are not going to inflate their values, they are licensed and rely on their profession to support themselves and families. The HVCC has increased the cost of a single family appraisal in my market almost $100 and they are taking longer to be completed as well as some not being at all realistic in value.

My contract was $193k and the house appraised for $193k. Coincidence…I think not? Why bother with an appraisal if it is just going to be a rubber stamp? We need objectivity in this industry.

The new rules certainly caused trouble for us. We contracted to have our new home built right before the economy tanked, putting down $100K toward the $291K build price. Construction loan appraisal was fine. Built the house, went to convert to a regular mortgage after the HVCC rules changed, and couldn't GET an "acceptable" appraisal. It wasn't that it came in too low; it was that there were NO acceptable comparables within the one-mile radius required. Our new home was built in a very old, historic area with almost no turn-over in ownership. If we hadn't been able to borrow money from a family member we'd have lost our home not due to an inability to pay the mortgage, but due to NO mortgage being available. Bizarre.

I refinanced last month in Wethersfield Ct. and my appraisal came through without a hitch. The amount was in the range that I expected.

There has always been the suspicion that real estate appraisers are less than honest about their "science". When hired by realtors (representing sellers) they inflated appraisals to help make the sale (and thus the high commission for the realtor). Now hired by the lenders, they "low-ball" the appraisal. Wouldn't want to not be "on the list" or one would lose work. There is nothing scientific, honest or professional about appraising real estate. At best, it is an artful guess by someone who knows the neighborhood and is neutral. Each property should have 2 appraisals done by two independently paid (from a pool of funds) appraisers who are local, actually inspect the property, and are able to be taken to court if they are incorrect. That will put an end to the shady practices of this "profession".

I work in home lending and have seen that the appraisals are have been off as much as 25% After doing our own research and showing better comps were we able to finance the deal. Appraisers are angry because they are getting paid a fraction of what they used to due to HVCC and are trying to protest by lowering values. I've even talked to some of them about it. There needs to be some type of middle ground on hiring appraisers because at this point homes won't move, willing and qualified buyers can't get financing, and there won't be an economic recovery.

People have still not come to reality as to what their homes are worth. The Shiller Index shows that prices are still too high in real terms based on historical norm. Something like another 30% drop in real value is necessary for the bubble to deflate. That drop will come from price declines and/or inflation. Maybe the latter course would be less painful, kind of socializing the loss, but we are currently in a recession where inflation has come to a halt. Therefore, prices will fall.

The realtors and home buyers ran off a cliff, Wile E. Coyote style, and are still in denial that they are suspended mid-air.

We were fortunate to refinance in May 2009 (30 year, 4.5%). Our appraisal was about right, being fair to both parties. Near-dissolution of the US Real Estate Cartel is my hope for 2009. Who needs 'em?

I just purchased a 1700 Sq ft home on the west sied of Albuquerque NM. It has 2.5 bath rooms 3 beedrooms and a study. It was appraised at $115k. Now i purchased the home at $105k and it was a forclosure. I am no real estate expert so you tell me.

I have read many of the comments below and many have very valid points. There possibly could be one piece missing from this equation. Many of the lenders own appraisal management companies or are major stock holders in these companies. As a mortgage broker I am seeing values get cut to move a loan from under 80% with no Mortgage Insurance to just over 80% or all the way to 90-95% which adds Mortgage Insurance to the loan and helps protect the lenders financial position in the home. HVCC may have struck a blow to remove realtors and loan officers from having any influence in the valuation process. My question is what is stopping lenders from having the exact opposite influence on certain files to improve their financial position on a property?

including foreclosures and short-sales is the way it should be done ! its not the appraisers fault ! they are doing their jobs correctly ! its the dumb ass real estate agents that continue to cause problems ! they are just like car salesman . they only think of themselves ! they want to make a bigger commision !they are the ones that got us into this mess by misleading the people always lying and pushing people to offer more than they can afford ! they can kiss my ass ! i look forward to the day they are no longer needed ! and its coming sooner than they think ! anyone with a third grade education can pass the test! the NAR is full of deceit and lies !anyone can sell their own house without the help of a realtor ! problem is that the NAR runs these adds to make people think that realtors are a must ! far from the truth . they need to be exposed !anyone can sell a house themselves ! anyone ! the NAR wants to increase first time buyers credit to $16000 now . hell no ! have they forgot what got us in this mess to begin with . it should be a 20% min down payment ! live with it ! the NAR whants to create another bubble ! how stupid are they ! oh yes and they claim housing has bottomed ! hell no ! no even close ! have fun reading this …. http://www.fieldcheckgroup.com/2009/06/04/6-5-beware-real-estate-false-bottoms/

These are the main points in my letter to California's Office of Real Estate Appraisers in June:
1) Everybody knows that it is the big financial institutions, including Fannie Mae and Freddie Mac, that caused the current economic crisis. It is not acceptable and wrong that Fannie Mae and Freddie Mac scapecoat appraisers. During the bubble time, the lenders kept pushing agents to make loans, — no doc, no income, no credit, no problem. Whatever value a property is appraised, they just take it.
2) There are "bad" appraisers. But existing rules are good enough to find them and kick them out of the biz. It's just a matter of implementation. There are staff appraisers working for lenders, why don’t they check the qualities of appraisal reports?
3) Appraiser is one of the best regulated professionals. USPAP is a very good documentation that tells appraisers what and how to conduct in the appraisal business. In addition, lenders can always evaluate appraisers' work accordingly, and put "bad" appraisers on "black list" and report to state authorities. There is really no need to have another rule, especially a stupid and customer hurting rule.
4) If appraisers are the cause of the bubble, AMCs are absolutely part of it. AMCs are just advertising companies, and they are far less regulated than appraisers. Why put them in charge? Why give them so much extra business opportunities without bearing any responsibility?
5) AMCs very often assign work to under qualified appraisers, or to those who are not familiar with the subject's neighborhood. ( I have an example in which an out of area appraiser assigned by AMC used totally wrong comps and reached a value which is way under market value.)
6) AMCs do not accept trainees. But California requires 2,000 working hours for a trainee. So, sooner or later, appraiser will extinct in California!!!
7) In appraisal practice, the final value of a subject is picked up from a value bracket determined by comps (adjusted). Now, under HVCC, an appraiser assigned by AMC is most likely to pick up a value close to the lower end of the bracket. This is very harmful to the economy recovery. It is wrong to inflate value. But it is also wrong to deflate value.

I own a mortgage company and still successfully funding residential (and commercial loans). That said, HVCC is does nothing to "protect the public, lenders or appraisers" from false values. The market polices that – all appraisals are reviewed and have been for some time. If an appraiser is out of line, he can be black listed from that lender. This cannot be undone easily. This kills an appraiser who just spent years getting his license. They will not risk that for $400.00. Appraisers must know the local markets – you likely bought your home because of specific local knowledge. Also, the appraisal management companies have raised the prices but pay the appraisers less than they made before, significantly less. It is about profit for them and now appraiser has to do 2x appraisals to make the same money – he or she cannot afford to spend the time to get it right so they will come in low by default or lower level, out of town appraisers will agree to perform the services for a cut rate price. HVCC is about profit not accuracy and that will drive values down.

For those that simply took this as a "Realtors are blaming appraisers," you obviously are a little below the grade level that Money is targeting and didn't think before you wrote that. The specific problem here is appraisers doing appraisals completely outside of their geography of expertise. Every appraiser I have talked to has criticized this new system, and blames other appraisers for the newfound woes of the lenders they used to do a good number of appraisals for each year. HVCC has simply created a middle-man that gets to make a bunch of money assigning appraisals, often to people outside of the area of expertise or knowledge. Then, most probably don't have access to the local MLS of that area, so they can't cross reference listing information against tax records. It's just a cluster that sucks for too many people. They should repeal it until they get a solution. Collusion is bad, but I find it hard to believe that anyone is being dragged into overpaying for a home in this market.

As a Mortgage Banker for a number of years, I have worked with some fantastic appraisers, who were hard working, quick to respond, and gave true value of the property.

I have worked with some fantastic real estate agents as well, and I have noticed with time, that real estate agents at large are to blame for the "BURST" in the housing bubble.

I say this because of the lack of control regarding commission fees, (4-6%) is ridiculous for the amount of work that real estate agents "CLAIM" they do. I see a price of a home that my borrowers desire, and simply inform them that if the price doesnt get accepted about $30,000 below what is being asked, the sale of the property will never go through. Time and time again, borrowers are forced to include a realtors commission into the sale of the home which should be totally illegal, but so many times it happens.

If you regulate commissions for realtors, less fraud will be committed, their ability to put pressure on the appraiser will go away, and the housing market will stabilize by true value. Time and time again, real estate agents put their hands to the throats of appraisers to come in at value, or risk losing them as a referral source for life. Just as in mortgage lending, if you cannot get a client a loan, the realtor will find someone who will and ultimately, risk everything to achieve that sale and truly remarkable commissions.

If you think about it, $15,000 commission to the realtor for selling a $250,000 home is ridiculous. You telling me that a real estate agent should be paid as much as a doctor in a month? Some of these real estate agents have criminal pasts….and you wonder why our nation is financially in turmoil.

My refinancing appraisal came in well below market due to an appraiser unfamiliar with the market. I live in an neighborhood with older homes and the appraiser was from a town 100 miles away with only new developments. The methods of determining market values are very different – price per square foot may work in some markets, but not when you are dealing with 100 year old homes.

The current process is definitely flawed.

It is reasonable for the mortgage companies to hire their own appraisers. The real problem is that they sometimes hire appraisers that are not familiar with the area they are appraising.

One thing that people are forgetting is that the mortgage brokers have just as much to gain from an inflated value as the real estate agents since they are also paid on valuation.

I'm an appraiser in the Phoenix AZ area. The majority of homes being sold are REO or short sale. If you have 10 sales in a development in the past 90 days and all 10 are bank owned or short sale properties, what do you think sets the market? A lot of these homes are in better condition than non bank owned properties. If you have two identical houses, is someone going to pay more for one just because its not bank owned?

There is also another problem of anybody who can't refinance their home filing a complaint with state appraisal boards. It takes years and hundreds of hours of schooling to learn how to properly appraise real estate. Just because you think your house is worth more (ofcourse with no data to back it up) you shouldn't file a complaint without knowing the regulations of appraising. This is wasting a lot of time that could be used going after appraisers who are actually commiting fraud.

Oh, and the HVCC is not good for the economy or housing market. These AMC's are a joke.

I was a realtor for 5 years and have been lending for 10 years. Appraisers are just doing their jobs — take the comparable sales, whatever those sales are, and adjust their valuations to make them comparable and thus indicative of the value of the subject property. Before the real estate crunch, these comparables were consistently climbing (sometimes rapidly) in valuation, afterward the comparables are falling — and the appraised values reflect that. I haven't seen any change in the number of low appraisals, but the ones that do come in low stand out more amidst less sales volume. Appraisers don't drive the market, they reflect on it — buyers and sellers drive the market, appraisers are there to give investors reassurance on the collateral of their loan.

Other than those who committed fraud which is a very small part of the problem, don't blame appraisers, don't blame subprime lenders, don't blame realtors, and don't blame banks. None of them ever would have been paid without someone signing on the bottom line. Nobody ever forced anyone to take an option ARM, to put 0% down on a subprime loan, to use their home as another debt vehicle after they maxed out their credit cards, or to pay 10% more year over year for the same property — if a fool and his money are soon parted, isn't the fool to blame?

I've run national retail lending platforms. In the past I had used both internal and external individual appraisers, appraisal management firms, title/appraisal firms and in two instances had our own internal appraisal review team reviewing files after they had been underwritten.
The new HVCC was well intended, but is poorly designed and executed. It grossly neglects the impact of 1) Appraisal management firm economics; 2)Appraiser risk aversion; 3)Mortgage servicer behavior; and 4)fair market value of owner occupied and listed homes vs. rapid sale pricing dynamics.
1) It is very true that larger appraisal management firms, who saw rapidly reducing fees as the market struggled, have attempted to recoup those fees by keeping more margin and paying less for an appraiser's services.

2) Appraisers themselves, seeing their colleagues lose entire sources of business because of a bad mark by an internal appraisal review team, realized quickly that they will never lose future assignments by being too conservative. They therefore have a predisposition for understating value and "playing it safe."
3) To say that short-sales and foreclosures are representative of what a market is like belies the servicers/hedge funds appetite for cash flow. Many servicers today rapidly mark a house down below market to gain an edge. Typically, you see servicers price homes based upon a "90-day distressed BPO price." Meaning, the servicer knows no one will be in the house and that damages could easily develop, so the home must be priced to sell rapidly as is. The BPO, or Broker Price Opinion, value is often set by the same real estate broker who hopes for the opportunity to recieve the foreclusre listing. This presents another bias toward pricing the property below fair market value. In order to receive more listings from the servicer, the agent is incented to price it to move quickly and as a result move themselves higher up the approved realtor list of the servicer. These homes are typically sold as is, and take 3-4times longer to clear approval with the servicer than a standard sale. As such, any buyer knowing they have no recourse on the home and may encounter repair issues unknown at the time, must also be very conservative on their price.
4) Contrast this with a home that is occupied by the owner who maintains it during the sale process, prices it to sell in a reasonable period of time, and is willing to repair minor items as needed. It is not a comparable sale and therefore should not be weighted equally. But again, an appraiser has nothing to "gain" by doing so and much to lose potentially.
The result is, I have often seen a single foreclosure be given far too much weight in a neighborhood where owners tend not to sell because of the attractiveness of the neighborhood. Using only the recent foreclosure(s) can be a gross understatement of real resale value.
Servicers are swamped with real estate management staff who are being pressured to generate cash flow. If an entire neighborhood was decimated by fraud, it would be appropriate to use the short sales and foreclosures in values as they would be likely occurences again.
But if the foreclosure is the exception over the past 2-3 years, it should be given relatively little credibility.
The current HVCC does not allow for any intelligent recourse on a poorly completed appraisal product. Customers pay higher fees with no evidence of better quality product. Given that most major mortgage platforms have discontinued or severly curtailed their wholesale lending platforms, it would suggest the lender has greater controls in place to monitor communications with any service provider. They also have an employed staff of underwriters trained to review appraisals as needed based on the strength of the deal. The losses currently being experienced arose out of mortgage banks only QC'ing at best 10% of the bulk loan pools they purchased, pools filled with poorly constructed income verification.
Today's challenges will not be cured by tighter appraisal standards, but rather by the ongoing requirement to confirm a borrower can actually afford the loan they are getting and home they may be purchasing. If a buyer and seller agree to a fair market price without any collusion in the price setting, this should be the single largest determining factor in the setting of value.
Anything else, and we're kidding ourselves about the accuracy of the "value" of any property. An occupied home maintained by the owner should be valued well above the property "vacated" by the servicer who purposely priced below market to have an artificially lower days on market.

Abolish the HVCC. It had the right spirit but will hurt more than it helps.

I am trying to buy my first home right now and I have not been able to get a home in 4 months because investors are coming in and paying cash now. When I do finally win a bid, I'm concerned that the appraisal will come in too low and this will be another obstacle. I want to buy a house and as of right now I can't. I've put in 7 offers, with 3 of them being 10,000 over the asking price and they have still not been accepted. My friend bought a house and the appraisal came in 20,000 below the price because they were comparing a brand new built house with a warranty to foreclosed houses that have holes in the wall. These houses should not have the same price per SF.

Appraisers have always been a big problem. A willing buyer and seller determine the value at a point in time. Most appraisers have no concept of that and need to have college degrees.

HVCC has accomplished nothing positive. Inexperienced and desperate appraisers willing to work for a smaller paycheck are getting the business, and as stated above many are appraising areas they are not familiar with. Borrowers are paying a much higher appraisal cost since there is now a mandatory middleman. Additionally, many lenders will not accept an appraisal that was done by another's banks appraisal company which forces the customer to pay for a second appraisal if they decide to go to a different bank if rates get better and they have locked their rate at a particular bank. If Washington Mutual is to blame for this, it makes absolutley no sense for lenders to now control the appraisal process which they now do. Borrowers are now subject to more red tape in the loan process which creates a much longer time to complete a transaction. The customer suffers as an intereest rate cannot be locked due to the uncertain and sometimes very lenghthy turn around times that are now common. Do not blame loan brokers as they sell a product provided by wholesale lenders; who in turn provide a product provided by the banks (Chase) and major lenders (Countrywide); who in turn provide a product provided by Wall Street – the investment banks (Bear Stearns) and the hedge funds. These are the guys to go after not the little guy. Bear Stearns got exactly what they deserved and more should of gotten the same. Realtors, Mortgage Brokers and Appraisers provide a service for the customers benefit and should be allowed to continue doing that with out all these insane regulations.

As a Mortgage Banker for a very large national lender, I can assure you that HVCC is impacting the consumer directly. I will be the first to admit that issues there were with the previous process of appraisals, but the pendulum has swung too far the other way. Appraisers now have absolutely no accountability on the value they put on the appraisal. We are seeing values cut by 50% from their purchase price in a market that has only experienced a 20% decline. People who do not understand the industry make ignorant comments on the validity of HVCC or they are the ones pushing the legislation. Face it the key is accountability…..and if the appraiser can put any value they choose without recourse it is done only cover their butt and it prevents good hard woking people from taking advantage of these historic rates.

In the end, when values come in low the end user gets hurt and so does their neighborhood. Policies need to be fair, balanced, and moderate.

My re-fi appraisal was ok — a tad more than my tax appraisal. But how the appraiser got there was disturbing. The appraiser spent less than 15 minutes in my 3500 sq ft house(per tax rolls which matched a thorough appraisal I had done in 2007). He used an electronic measuring device, and by not taking the time to accurately measure the home, came up with 4200 square feet. Then he applied a price per square foot figure far below the market for my neighborhood to come up with his view of the valuation.

So yes, I ended up with a fair appraisal but the numbers used were really screwed up.

How many deals fell out for low appraisals before HVCC?

Oh that is right, NAR doesn't have those statistics. They just don't like the loss of ability to influence appraisals so they will gin up some stats and yell like there is a fire.

The appraiser works for the bank. Not the buyer, seller or brokers. If the banks want REOs or short sales used, that is their peregotative. In a declining market with leveraged assets, conservative appraisals are warranted.

You don't need appraisers, real estate agents, mortgage broker and lawyers to buy/sell a house.

It's really simple, they all vested interest in making the sales go through so there will always be conflict of interest. Greed will always get in the way of being fair and doing the right thing.

Appraisers use a formula based on comparable sales to appraise a home, this can be done with a simple program and since computers don't live in the neighborhood, they will be fair.

You don't need real estate agents to sell your home. Only thing they do that's of any value is list your property in MLS. Real estate agents are relics of past generation who's business model is slowly becoming obsolete. There are services available online that if allowed to evolve beyond current real estate paradigm, can create a fair and sustainable market place. In fact true market valuation and eventual equilibrium will be sooner achieved if the real estate market is allowed to correct itself.

All mortgage brokers do is fill out forms and tweak some numbers to get the loan, and they are not looking out for consumer. If they did then they and banks would have turned away many unqualified buyers and maybe, just maybe this economic fallout might have been averted. Again, there are many resources online that can help average Joe get a reasonable mortgage.

The point is that parties that are crying fowl are those that are losing whatever control or profit they had and want to do whatever they can to get back to the bubble state. If that happens, we the consumers will bare the burden and pay the penalty once again.

I am a mortgage fraud investigator in San Diego, Ca -an area decimated by fraud and poor quality appraisals. The HVCC is well intended, but fails. The most experienced appraisers are leaving and going elsewhere because they are refusing to work 12 hours per day for $125. The only appraisers performing appraisals for conforming loans are predominantly inexperienced appraisers -hence the problems we are seeing. The fraud element is more active now that it was on April 30, the problem is the appraisals done now are predominantly inaccurate and the appraisers are cutting corners.

I was refinancing my penthouse condominium and the appraiser pulled a recent sale of the same tier unit, 30 floors below mine and also a short-sale, smaller square footage unit in the same building and called them "comparable" I'm no real estate expert but even the lender thought those were a bit extreme to use as comps. and requested a new appraisal–at my expense. The new appraisal came it close to what I expected.

I was in real estate sales and move to loans after a few years and in my experience everybody in the industry is to blame for the whole mess, Appraisers, loan officers, brokers, lenders accommodated each other to close deals fast and make their profits. Lenders AE's actually coaches the brokers and loan officers how to get around red flags and the brokers communicate this down to the appraisers so they can write a report that will be acceptable to the underwriters of the lender….the HVCC will correct some of the problems…as far as comparables are concern you can't ignore the foreclosures and short sales, whether you like it or not that's a main factor on determining prices and necessary to reflect current values….

I refinanced, and the out-of-town appraisor took 12 mins from outside to inside to see my ~2000sqft house. I had a random local real estate agent put my market value over 4% higher. Yes I was dis-satisfied that an out-of-towner doesn't really know my area.

Buyers will pay what it's worth. If a property is listed well under value, that property will usualy have multiple offers and go to the highest and best. Short sale and REO are not unrealistic values they are the reality and reflect what buyers are paying in this market. No house is ever worth what the owner thinks it's worth bottom line.

I'm a 20 year expirenced appraiser in Calif. and I won't work for the bank owned appraisal management companies. I refuse to take a pay cut and give my profit to the AMC & banks. I'm not alone, most of the expirenced appraisers I know in Calif won't work for the low fees the AMC offer. Everyone in a purchase transaction is feelling the bite of the inexpirenced appraiser from out of the area. Thus creating the problem we are in.

I refinanced in May and the appraisal was right on.

Gary Staller, Medford, Or

Something does have to change.I just attempted to refi, and my house was appraised 120,000 less then what it should of been. Two of the same models just sold on the same street in the last two months. Rather then that, the appraiser took homes across town in areas i wouldn't live, thanks for that worthless appraisal

I have been denied three refi loans because of lowball appraisals. Yes, our local market is down about 20%, but the refi I asked for was well within the local market.Countrywide simply does not want to loan money and is using HVCC as an excuse not to. BTW, their " financial customer service reps" simply are not interested in helping homeowners .

We were approved for $1.65M contruction loan. Bank withdrew monthly payments for construction loan for over a year while the home was being built and when it came time to roll into Perm loan the bank did another appraisal and house came in at $1.65M. During the construction the bank was purchased by another bank and they required a new appraisal by their appraisal and then 6 weeks after the previous appraisal it coincidently comes in $150K less than prior appraisal and the bank. And then on top of that the bank says they will not modify our original construction loan and changed terms from the original 80% LTV to only 70%. We have now been forced into a 2nd mortgage with another lender in order to have the financing to pay the construction loan. It has been a horrible experience. It has been a mess.

I have been a real estate appraiser for 37 years. I starting in the industry when it was a profession not a job. The SRA or Senior Residential Appraiser designation took 5 years to finish courses, get peer review and complete a demonstration report, not to mention that a college degree was necessary to start.

With State certification the bar was lowered not raised. A professional designation was not to be given any consideration in the appraiser selection by the lender.

The problem with the lower appraisals today in many but not all cases is due to inexperienced appraiser's who will work for half the normal market fee for an AMC.

The AMC's make their money by taking it from the appraiser's fee. They demand quick turn around and low fees and just add more hurdles to the process. I have reviewed 3 appraisals this week which were terrible because the inexperienced appraisers don't know the market and they don't have the jusgement that comes with years of market experience.

My son in law is a doctor and was first in his class. The joke is what do you call the person who was last in the class… answer ..Doctor…Which one do you want. The one with best credentials and most experience or the one who will do it the quickest and cheapest.
The AMC's only care about quick and cheap not experience.

The best way to solve this problem is locally not nationally. Let the lender pick the local appraiser based on experience and market knowledge.

The government needs to enforce the laws it currently has instead of making new ones. The problem with lending is that unethical lenders don't get caught. The ethical lenders can't compete because they are following the rules. As far as appraisals go, if you buy a loaf of bread at the store, can you tell me that it will be the same price at the grocery store as at the convenience store? What percent of variation will you see? 5%, 10%, 50 %? How can you tell me that an appraiser can determine within $100 what a $400,000 house is worth? Is it worth $420,000? is it worth $380,000? Wouldn't that depend on how desperate the seller is to sell and how perfectly that house fits into that family? Would you pay a little more for a house right next door to your favorite day care? Would you pay a bit less for one that fits your needs but maybe you don't like the color of the paint? Appraisers should indicate whether or not the purchase price is within market range, and whether or not the house fits investor guidelines not an exact dollar amount.

Everyone likes to cry, agents, bankers and appraisers. HVCC is stupid. The old method is designed for high values. The solution: Create a national database of appraisers, not by name, but by location of appraiser allow them to accept appraisals ONLY within a reasonable area around them, no name is provided until contracted – instead average turn times (easy to do if appraisal is uploaded via the database), and length of time doing appraisals in the area. Problem solved – easy to do, fees go back down, lenders do not have "the power", and you dont have appraisers living in Riverside, CA doing appraisal in LA California (which is happening everyday now)

a fair market value is what the seller agrees to sell at and what a buyer agrees to buy at….. let the market work the way it should…. buyer and seller … the natural course of things

The article is somewhat incomplete. The HVCC is targeted to mortage brokers, and Appraisers. Not Banks. I know several appraisers at Wells Fargo that are there due to the steady flow, Minimum underwriting standards, and also due to 50 cents on the dollar crank out 3-4 appraisals per day. The Banks that are exempt from the HVCC also own most of the Appraisal Management Companies (AMC's). The AMCs assign business to appraisers based on price, and speed. Of course quality is not sacrificed. Most importantly, the HVCC rule is based on a lawsuit settlement, not on debate or rational thought. It was also mandated, not voted on, by people who do not have to live with the decision made. As an appraiser for the last 23 years I find it amusing that anyone believes the HVCC is good for anyone other than the banks and their AMCs.

I think HVCC is a good idea. It keeps pressure off of the appraiser. The problom, however, is that appraisal management companies have taken over. Before, an appraiser was on an approved list with a lender. If that approved appraiser has been doing assignments for a particular lender and has been in good standing for years with that lender, then the lender should use HVCC and go straight to that apprasier not go through a middle man like a management company. The management company charges the lender more than the appraiser ever will and they tend to find appraisers that are inexperienced that will take a lower fee. So now the lender is paying more for the appraisal report and using probably an inexperienced appraiser. Most management companies are only looking for appraisers that take low fees and those are usually the inexperienced ones. When I was getting approved with lenders in the 90's, most wanted at least 5 years experience, insurance, work samples, insurance and they would review a good percentage of my work in the beginning and keep reviewing a portion as time went on. If an appraiser could pass that kind of scrutiny then most lickly he/she is a good appraiser and stays on the approved list. If that is the case the lender should be able to go straight to that appraiser. However, the lenders started letting the mortgage broker find their own appraiser and that is where the problem began. Take the mortgage broker and realtors out of the picture, order the appraisal directly from a quality appraiser on the approved list, review his/her work and there will be no problems or very little. Just don't use a management company. They basically just get the report from the appraiser and e-mail to the lender, then charge for the e-mail.

I am a licensed appraiser.
If someone pays $100K to purchase a home, then that is evidence that the home is worth $100K. Period. The fact that others in the past may have overpayed, leading to distressed finances and sales, is not relevant.

This is a real problem. Many regular non-distressed homeowners are holding on to their homes and not entering the market because of the correction, simply waiting on a rebound. Unfortunately that means 50 % or more of the properties up for sale are short sales or foreclosures. These properties are in horrible shape, many with structural damage, some have been vandilized, and most are just completely neglected.

I'm now in position where I need to move for a job and they are using these homes as comparables because there are so many of them. Our home has been nicely upkept and is one of the best on the block. The foreclosure two doors down actually had a Sunday open house on a day it was raining and you could see water running down the walls and the carpets were soaked. How can these properties be comparables. Give me a break.

Granted there were abuses in the past, but there has to be some accounting for the extraordinary economic situation we are currently in to protect those of us who didn't make the initial mistakes. Drive by appraisals and consideration of foreclosures and short-sales should be out until some sort of correction occurs.

dear fellow americans, i have been a certified appraiser for the past 5 years in which i have done work for mortgage brokers, banks and now amc's. in theory the HVCC is a good idea and i will admit i am no longer recieving pressure from lenders to reach a value that works for them. as in the past i would be threatened that if a certain value was not reached i would recieve no future work from them. as that was fine with me b/c i chose to do no future business with them including the order with a predetermined value from the begining. the problem that i and many other appraisers that i know are facing today is that the threat is coming from the AMC's who are getting the same pressure that i had once recieved and they are just passing the pain. in my opinion, one fix would be to penalize the lender/broker making the threat(assuming that it can be documented).

as far as trying to come in low on value, this is a bunch of B.S. in most markets where sales have slowed greatly and few "true comparable" homes are sold the appraisers hands are tied by the lender with their current guidelines that the comps should be within 1 mile and 6 months and i have seen as low as 2 months in some situations depending on the local market. as far as out of town appraisers, i agree that there should be some limit b/c there is no way for an appraiser to be well educated about every market within a 2 hour drive. to define a market as small as 1 county may not produce enough business to make economical sense for an appraiser to be in business. in the end it is up to the appraiser to prove his knowledge of the area and if he lacks it, to prove that he/she has taken the necessary steps to familarize theirselve with the market to produce credible results.

please rember that market value determined by an appraiser is their opinion of market value based upon that date. i personally have realtors, lenders and home owners argue with me that the other homes in their area are being sold higher and when i do my research as to which homes they maybe refering, i usually find that they have not sold yet or were withdrawn from the market for various reasons. please remember when you list your house you can ask what ever price that you may feel its worth but at the end of the day my job is to determine what a typical buyer and a typical seller would expect to pay/sell their home with reasonable market exposure time allowed. with this in mind, i personally believe that a good realtor is worth the 6% they charge and the majority of the deals that i find that fall through are do to poor jobs by realtors that dont advise their buyer what to pay for the home. all realtors have the same access to the sold/active inventory that i use to determine my comps. infact we use their system.

in the end, if you dont agree with an appraisers opinion of value, provide your lender with homes that you feel should be considered in the report and ask the appraiser to respond as why or why not they were used and if that doesnt work… order another appraiser. only FHA appraisals stick with the home for 6 months not traditional loans.

keep this in mind as well, more and more lenders are ordering 2nd appraisals if they feel a value is inflated and in some instances they will lower the value that want to lend by adjusting the loan to value ratios.

one last thing, some complained earlier about an appraiser that just did a driveby appraisal and cost her the loan, sorry to say but we dont chose what type of appraisal to perform. the lender tells us. the say that we have is that if we feel a credible result can not be determined by a driveby we can request a full inspection.

Realtors have had it too easy for too long. I'm sick and tired of them complaining now that the days of easy money are behind them. A trained monkey could be a realtor (and frankly, some of the appear to be just that). I'm very pleased that the real estate industry is being shaken up. It can only be good for buyers and sellers to have equitable pricing in front of them rather than artificial pricing inflated by the rules and regulations of the NAR.

no, I do not believe the appraisal was not a fair representative of my very private nieghborhood. The comparables were of a nieghborhood that was near a highway. You could not pay me to live there. High turnover, renters. Only a local would know that.

As a retired real estate broker and having an appraisal completed on my property about 21/2 months ago from an ouut of town appraiser I can say that i lost $10,000 in value due to the resession but overall i would say the appraisal was very near the real market value for my area but did not take into consideration that a traditional market time for this area is 6 months to a year.
The whole real estate industry is going threw changes and only time will tell if and when values will stabalize in any given town or city. It is just two early to know and both individuals and Realtors will just have to do the best they can.
If blame must be placed it should go first to the oil industry that drove fuel prices so high that many people had to choose between going to work and making their mortgage payments. When that occured the banks should have created loan modifications to compinsate in the short term but instead found ways to increase lending costs to cover losses sustained by forclosure.
As far as I can tell, the banks are still doing the same thing. Increasing loan fees etc.

I would like to see reform extend to realtors. As a mortgage banker, I feel a majority of the realtors are in it just for the "closed sale". They don't care about what happens to this house or the client after the transaction closes. All they want is to get their commission. And it's typically 5-10x more that mine. If I have to turn down a client becuase the borrower doesn't qualify… or it just doesn't make sense for them to be a home owner.. how come the realtor is the one that is saying "I know someone that can get this done for us. We should have used him from the start". Is a realtor really out for the buyer or seller's best interest? I think it SUCKS that values have fallen as far as they have. My home included. Yes, in many areas to unrealistic undervalued levels, but everybody had their part in this disaster. From the lender thinking a 100% LTV as a great risk because values only go up! To borrower's overextending themselves and now expecting a hand out. To appraisers looking for the next apprasaisal order and wanting to make their referral sources happy and on to greedy realtors who speculated WAY to much themselves. This real estate recovery is gonna be LONG and Prolonged. We aren't even half way thru it in my opinion. The industry chose to play the game and those that worked in it. Everyone wanted to be a realtor. EZ MONEY. It is what it is. If all you have is distressed properties for sale to use as comparables because that's what the market is.. then how can a "REALTOR CRY FOWL". How can a realtor or mortgage broker think that picking the appraiser or trying to gain influence over the appraiser is good for this recovery?

I am a realtor and have sold homes in the 80's when interest rates were in the 18% to 19% range. I have never had an issue with an appraiser. Most appraisers know that the best comparables come from the area that the subject property is. Most Realtors I know that are truly professional work very hard with all parties in a transaction.

If a Realtor has done her job right….when the listing is taken she or he has shown the seller the comparables in the area the house is and pricing it for the market should not be that big of an issues. the issues happen when the house is under water, the seller becomes unreasonable regarding the valuse or the seller is not motivated to sell. When that happens the realtor has to decide if the listing is worth the time.

Two points…..first…..I find it very hard to believe that any Realtor threaten a appraiser. If that actually happen there is a "Code of Ethics" that all realtors adhere to and you should contact NAR or the state board and report the Realtor. Believe me they will take that complaint serious. In fact…..you should have posted their name and company in this thread. If your not willing to do that….then your story is not credible.

Second…..I totally disagree with any appraiser using foreclosures or short sells as part of their comps to establish value. Why would any
home owner…..and this includes the lending institution owners and banks…allow such a comparable. I am a home owner. I want my investment to show a higher value 5, 7 or 10 years from now than when I bought it. Everyone sooner or later becomes a home owner and believe me I have never met an owner that wanted his property value to go down….and this includes appraisers that own homes. So we need to get real here. Appraise the house with true comps…not comps created because some lost their property due to financial trouble.

So lets here from all you people that own homes……do you want your property values to be reflective of a foreclosure market that drives values down…..or do you want your investment to be relective of a "real" selling market?

The realtors and banks are the ones setting the market. I have appraised far too many homes that were listed so low that it seemed like they were racing to see who could be the lowest listing. In most cases the REO sales are just as nice, if not nicer than non-REO sales. The principle of substitution comes in to play. Why is someone paying more for one house than they would for another house that is equally nice for less??

We purchased a second home for weekends. The appraisal came in 25% below market value. It took the appraiser 3 attempts to find the property because he was so unfamilar with the area. We gave up and used a home equity loan. That appraiser valued our home at $791,000 and I know for a fact that we could never get more than $650,000. So yes, I think there is a problem with the new regulations.

Finally appraisers can give an honest number without the influence of the sword of damacles over their head. So long to the threats of meeting the number, or no more work. The system is now where it ought to be, if we bow to this straw man , boogie man trying to be laid at the feet of the appraisers we will go back to the bubbles of the past. This is what brought down the system, shame, shame on congress if they fall for this line.Put the buyers in the homes they can afford, with proper down payments and we will prosper.Quit crying and start doing your job, not looking for the easy way out….Finally appraisers can hold their head high…keep it up…

Most of these posts focus on blaming one profession or the other. As the appraising & lending industries struggle on how best to lend on property they are taking an overly cautious stance. They don't know how to handle an open market of sellers & buyers whereby those parties haggle towards a price. So these industries are overly conservative from fear of getting stuck. Fair enough. But what about the buyers & sellers who cannot move on with their lives & plans. Not all buyers have the cash to make up the difference. So then, it's the buyers & sellers who are hurt the most, not the Realtors, lenders, appraisers, etc…. Some how the pendulum needs to find a more fair middle ground. It's not like buyers make a purchase without shopping & haggling. They go for the best deal.

To the poster:

"Sorry to double-post, one more thing … the HVCC is designed to protect the loans that are guaranteed by Fannie Mae or Freddie Mac, which have access to taxpayer money, and that’s what it’s doing. It’s very important that we keep HVCC in place to protect our money from additional mortgage fraud.

If you don’t like it, get a loan that is not government-guaranteed, if you can. If that’s not for you, just pay cash: you can pay as high a price as you want with your own money, but not with mine."

The HVCC does not apply to FHA loans which are now basically government insured subprime (3.5% down, marginal buyers). Still feeling smug about the government protecting your money?

I think the change makes eminent sense. After all, the party who puts their money at risk should choses the appraiser. What skin do realtors have in the game? Their commission. If realtors don't like it, then they should co-sign on the loan, or lend their own money to the borrower.

Now if we could get the credit rating agencies to be paid by the buyers of Financial instruments (bonds, CDOs, CDWs, etc.) instead of the issuers of financial instruments, that would be real progress in preventing the next financial meltdown.

Since, should the homeowner default on the loan, the bank is likely to end up selling the property as a foreclosure/short sale, I can't for the life of me see why the value of such sales is not highly relevant to the bank deciding to make the loan.

I agree with comment below. If you are so sure the property is worth more, put up the difference in cash.

(MM, Los Angels, CA.: July 21, 2009 7:23 pm) Ha ha ha! You crack me up.

1) Banks were stupid and took it on the chin. That's as it should be. Those who are fronting the cash, and putting it at risk, would be wise to want an accurate appraisal. That's in their best interest. If they're stupid they lose their money…which is what happened (sort of).

2) I expect the bank to look out for its interests, the real estate agent and mortgage broker to look out for their interests. I, as a buyer, will look out for my own best interests and trust none of the above.

3) Most Realtors and mortgage brokers are in it mainly for themselves and clearly, as the evidence shows, do not have buyer's best interests in mind. Making sure you get a toxic loan for an overpriced home is not doing buyers any favors. Please.

There was plenty of blame to go around for this mess, and the WAMU case illustrates only one of the failings of a rotten system. Banks, brokers, agents, appraisers, ratings agencies, regulators, and politicians all had a hand in making this mess. I didn't say the HVCC was good, only that it was a step in the right direction. We've got a long way to go, however.

It seems as though I touched a nerve. Sorry if I hurt your feelings. Your defense of real estate agents was very touching.

The HVCC is a reaction to ONE LENDER, Wa MU . There are always going to be issues withappraisals but to assume mortgage brokers and real estate agents are going to pressure the appraiser to come in higher than warranted does the appraisal industry a disservice. Further, using out of area appraisers is ridiculous as there is no way one of those could know the area. There could be a different tract three houses away from the subject and they shouldn't be used as comps. Few out of area appraisers are going to know the difference, even if they drive the properties.

Appraisers with 30 years experience are being paid 1/2 of their former fees because the AMC gets 1/2 and they are pressured to come in fast no matter what. The whole thing stinks

The HVCC may not be perfect but it does what should have been done years ago. Take the pressure off the appraisers and let them do their jobs–INDEPENDENTLY. Had we implemented a process like this we would have not had the overblown run-up of home prices and this massive meltdown that has left the taxpayers holding the bag.

I have friends who are appraisers and they like HVCC because it gives them protection from agents and loan officers trying to influence the value.
And when I asked them about “crossing county lines” while doing appraisals for management companies they just laughed. Appraisers by law have to have enough information about the local market to fulfill an appraisal request or they have to decline the assignment.

Everyone benefits when appraisers are free to appraise without fear. Unless we get true values on homes our real estate market will never recover. That’s why this HVCC needs to be permanent.

The whole mess why this came about that WAMU had someone in there pocket and was no doubt swaying things how they wanted..

An INDEPENDENT third party who is free to appraise with no fear of either side and is in no ones pocket is absolutley the right thing..

The reality is that we need for home values to stabalize. Deflation in the housing market will continue to hurt the overall economy.

My wife recently refinanced, and I believe it was just after this new rule went into effect. Our placed was still valued higher than what we paid a year and a half ago.
Real estate agents are upset because they aren't making as much money. Their complaints haev nothing to do with the good of the consumer. Accurate valuations are needed, nothing more.

I recently purchased an investment property. The first appraisal came in 60K under purchase price. I ordered another one that same week from a different lended and that one came back right at purchase price. First one had some hack appraiser from out of the area, next one a local person who did his job. I had to pay for two appraisals.

The problem with out of town appraisers is they are not familiar with the neighborhoods to know whether a recently sold house is a valid comparable or not. Location, location, location, and only someone familiar with the neighborhood can make these fine distinctions.

Getting as independent and objective of an appraisal is great, but they need to be done properly by someone intimately familiar with the area.

the appraisal I got was LOWER by more than $100,000.to like condo's in the same building,
same floor, same sq. footage Figure that out!!!

I am so sick of realtors blaming everything on the appraiser. I've been an appraiser for 7 years and do the job to the best of my ability. Although appraisal management agencies are taking half of our fees, I still do the job as good as I can. Getting paid less doesn't mean I'm going to use worse comparable sales on the report as a form of vindication. The fact of the matter is that values have plummeted due to the severe foreclosure crisis making most of the comparable sales available to the appraiser FORECLOSURES.

I can't count how many times a realtor has priced a house for a heck of a lot more than the highest recent comparable sale and then blame the appraiser when it doesn't come in at least at the sales price. Who were the ones pushing sales prices during the real estate boom? REALTORS. I have a realtor threaten to get my license revoked unless I used comps she wanted me to use that were MILES away. So if you want someone to blame for this mess, blame realtors. Don't blame us. We're just doing our jobs for next to nothing now.

State Appraisal Boards need to receive complaints in order for anything to happen to these AMC appraisers. If there is a crappy appraisal done by a crappy appraiser, send the report into the appraisal or licensing board in your state. they are waiting for them!

It is funny how the blame game is rolling on with this real estate collapse. First, mortgage brokers where fully responsible for putting the world in a tailspin. After the full scope of the problem began surfacing, Wall Street, hedge funds, Appraisers, Naked Swaps and even Lenders started to receive, and rightfully so, their share of blame. I have been a Loan Officer for Seven years and no one discipline that is solely responsible.
Mortgage Broker Licensing was a positive step. Roughly two-thirds of mortgage brokers in my state are no longer operating as a Broker. The people left are the ones that operated honorably in the face of overwhelming pressure from every Bank Representative pushing their companies’ openly reckless loan product. Each visit brought reduced qualifying guidelines and increased loan to value limits. The only problem is once they reached 100% loan to value with no documentation, there was nowhere to compete. In every anti broker replies that purports immoral and underhanded actions by brokers, I can recall actual lenders that would outline how to fix a problem loan by engaging in and even educating on how to subvert the system.
Appraisers, Realtors and Mortgage Brokers all operate under a licensing guide. Let everyone do their job and if the Lenders are concerned about the properties they are loaning on, read the appraisals and check it against current market data instead of checking the value page and pushing it along. Overregulation and under regulation each will and has negatively impacted the real estate market. The new appraisal regulations is doing nothing positive for the market as a whole and making it more expensive for those ready to make the move and buy.

Funny how the real estate lobby never complained when the "pendulum" was on the other extreme. It is clear, therefore, that they are not concerned about the correct appraisal as long as it it is high enough to suit their interests.

Why is a local appraiser needed? So they can appraise it such that their own home value does not suffer?

Cuomo has got it right – this is the only way home values will come down to economic reality – in line with rents in the local areas – and as quickly as possible, which is what America needs to start rocking again.

Nobody is asking the buyer to not buy at even double the appraised value. Pay up the extra in your own cash if you think the house is worth so much. This way, the entire world does not risk a depression and pay the price for your house.

I really don't get why removing conflict of interests is a problem.

The HVCC may not be perfect but it does what should have been done years ago. Take the pressure off the appraisers and let them do their jobs–INDEPENDENTLY. Had we implemented a process like this we would have not had the overblown run-up of home prices and this massive meltdown that has left the taxpayers holding the bag.

I have friends who are appraisers and they like HVCC because it gives them protection from agents and loan officers trying to influence the value.
And when I asked them about "crossing county lines" while doing appraisals for management companies they just laughed. Appraisers by law have to have enough information about the local market to fulfill an appraisal request or they have to decline the assignment.

Everyone benefits when appraisers are free to appraise without fear. Unless we get true values on homes our real estate market will never recover. That's why this HVCC needs to be permanent.

Appraisal way under on new home that was just finished at $790K but only appraised for $605K. Had to order a second appraisal and it came in at $725K.

We lost a refinance opportunity becasue two tattoo females did a drive by appraisal and no it was unfair. It is a brand new house in a neighborhood where they are still building. Our loss is also the economy's loss. I bet I could not convince the county to lower my taxes based on the appraisal that came in 20,000 than the house was bought for two years ago. If they do lower my taxes based on the appraisal it is better than a refinance.

Actually, I'm glad this is finally coming up. I went to refinance my house to restructure my out of control credit card debt. I knew I had the equity in the house and I had a few different approved loans. I had the appraisal done, which came in about $10,000.00 below my guess. This just pushed me out of the refinance ability in my situation. Two months later both of my neighbors, RIGHT next door on either side and almost exact same home, sold for near $30,000.00 more than my appraisal. According to Fannie Mae rules I could not have another appraisal for 6 months much less afford another appraisal. It was too late by then as my credit tanked, I lost control of payments, and have since filed for bankruptcy. Homes have since been selling in that same price range, higher than I had even estimated in my original request.

"Another oft-heard lament is that the out-of-town appraisers pull up any old comparable, including foreclosures and short-sales, thus distorting home values."

This quote is not bellyaching on the part of the realtors. Short sales and foreclosures are, more frequently than not, do not represent the "true" comparable value of nearby real estate. These are sales usually made under distress, where the seller will take whatever is offered, even if it is way below market. Buyers usually purchase foreclosures at a considerable discount to non-distressed prop, because of the expenses involved in bringing them up to marketable standards.

This is not to say the guidelines aren't a step in the right direction. For too long, an appraisal was meaningless, conforming to whatever the lender desired. But two steps should be taken. One, removal of the middlemen. There cut is squeezing severely the income of seasoned and experienced appraisers who do the actual work. Two, make a much more concerted effort to hire appraisers who are knowledgeable about the specific area.

Appraisals that use today's market conditions are unrealistically low. I live in the Chicago area, just far enough away to not be directly affected the shennanigans of Cook County government. Our home was appraised at $650,000 for our last refinance in 2002. Today, Zillow asserts that the house is worth only $383,000. While I know that Zillow is about as accurate as a shotgun blast on a barn wall at 100 yards, the fact remains that foreclosures, short sales, and other distressed sale values have unrealistically depressed housing values in this area. If this house were to be appraised using the new standards, its value would come out very low – so low that the fact is that the hard money that went into this house exceeds the Zillow valuation by almost $100,000, and that is after having resided in what had been a growing and desireable area for over fifteen years.

In the meantime, the assessor is using pre-crash values to assess us (thus ignoring the depressed market almost completely), and we are being taxed on a basis that results in increases in real estate taxes – for us, a $500 increase last year to the current $11,500 annual bill we have to pay. Because this is Illinois, when the depressed market finally catches up to the assessor's valuations the taxpayer will not get any relief. That is because the taxing bodies feeding at the property tax trough are guaranteed to get at least as much as they did the year before, plus a cost of living type increase, and the way that gets accomplished is by increasing the multiplier that is applied to the assessed value to get the final tax bill. That nonsense has resulted in a friend's house going down in appraised value, yet the actual tax bill say a $1,200 increase (from $6000 to about $7200) because a heavy thumb was applied to the multiplier in order to provide the 17 taxing entities the amounts they claimed they needed from our local property taxes. And, in the middle of all of this, our local highschool district wants the property tax payers to approve a tax increase referendum to build a badly needed new high school. The referendum has failed five times now, but they just keep coming like the Everready Bunny, completely oblivious to the inequities in our existing real estate tax system.

Personally, we are completely fed up with the tax situation here, and wish we could get the hell out of here. But we can't because there is next to no market for the house. Bringing in appraisers that are required to use deflated values and factors that unrealistically depress values is not going to help matters at all. I am not suggesting that we go back to the era of grossly inflated – no, actually fraudulent – appraisals that ran rampant as lenders were fueling the housing as a piggybank boom. I am saying that going to the other extreme, particularly after the first runaway practice contributed mightily to the current mess, is rubbing salt into the wound, even to those people like us who have no mortgage, but are effectively trapped because of the depressed real estate market. Appraisers were schysters, and perhaps their just reward should be their complete elimination now. Reap as ye shall sow – what credibility to they have to offer anyway?

I bought a foreclosed house last year.

The house sat on the market for almost a year, and I ultimately paid 35% less than the amount the bank had loaned to the previous "owner" just 18 months earlier.

If this house was worth more than what I paid for it, another buyer would have come along in that year and paid more for it. It's just whimpering sour grapes to somehow suggest that a foreclosure or short sale that reflects declining values is not a fair market price.

This is just another manifestation of that "real estate only goes up" mantra that has been decisively proven a bold-faced lie. When values drop, the only difference between a REO/short sale and retail sale by an owner is that the bank is making an unemotional business decision that more quickly reflects the reality of the market.

Sorry to double-post, one more thing … the HVCC is designed to protect the loans that are guaranteed by Fannie Mae or Freddie Mac, which have access to taxpayer money, and that's what it's doing. It's very important that we keep HVCC in place to protect our money from additional mortgage fraud.

If you don't like it, get a loan that is not government-guaranteed, if you can. If that's not for you, just pay cash: you can pay as high a price as you want with your own money, but not with mine.

I am a real estate appraiser, on the commercial side. This law has been in affect since I have been in the business. To suggest that a mortgage broker or real estate agent should hire the appraiser is absurb. We (in the commerical side) have dealt with loan officers trying to push numbers for years. Of couse, somtimes you may lose a client because you are unwilling to move your number, but thats the difference between a number pushing appraiser and a honest appraiser who only has his/her word to lean on. A mortgage broker is going to hire a friend/collegue who may even get a kick back once the loan has closed. Its in the banks best interst not to allow this to happen. If they (bank) end up stuck with the house, the fluffed appraisal will be evident.

Look. The appraisers who think they are doing a good service and all those who want to great a villain have lost their understanding of "What's Value?".

Its a basic concept which it has been lost. Land is not made, it is limited. So therefore it has value. Land also has value because we build on it based on its use. It also has value based on how it is used. Finally, location location location.

Here is the issue: These are all broken concepts. NONE of these homes can be built for the same cost as homes are being sold. Plain and simple.

The appraisals are a lie in the opposite direction. Simple Simon Stuff.

2 + 2 does not equal -3

Sorry folks its still 4. This will destroy the United States of America because there is no other industry to drive our engine. The milk has all left except Real Estate. Without Real Estate leading us out, the new industries will be dead. No money no new monetary engines.

Classic Economy 101

First off, when the values were coming back high, nobody complained a bit. The appraisers knew this was bound to happen. When your comparables are continually increasing in value, a simple (upward) market conditions adjustment is warranted. Now, with values decreasing month after month, a downward adjustment needs to be applied, to a sale which is likely already lower. To ask the question to a buyer "do you think the house is worth it" makes little sense. Emotional attachment is involved at that point considering the person has already made an offer which was accepted. Its the appraisers job to value the property at current market conditions. That is not to say a year from now that house wont be worth more, but it could also be worth less. To suggest appraisers are under valuing properties is a very scary thought, one which we should have already learned from. Who knows where we will be as year from now. The (non-biased) value the appraiser placed on that home is good for that day. Real estate is an ever changing entity. Who knows, wait a day and a sale may have closed which could help justify the sale price. Remember, this can always work adversly. Dont blame the appraiser, blame the market (or the people who bought homes they couldnt afford).

I am a mortgage broker. In the good old days, if I have a feeling that a property wouldn't appraise close to a desired value, I could call my appraiser and have him look into sales comparables around the area to see if there was a remote chance that the desired value could be hit. Of course, he could not guarantee it. He still needed to see the property in person to determine the accurate size as well as, most importantly, the condition so that he could account properly for any adjustments so that he could derive an accurate value. What was nice, especially in rural areas where comps are hard to come by at times, was that if our target wasn't even remotely close to being hit on an appraisal, I would be informed immediately up front. This saved my borrowers anywhere from $350-$750 depending on the appraisal that would otherwise have been thrown away for nothing.

This policy benefits no one. Especially not consumers. Hundreds of dollars are thrown away because appraisers don't communicate up front that there is no way they can get the value. Once an appraiser gets an order and realizes that the desired value is higher than he can appraise it for, he will still do the appraisal because he already has the order and knows that he will get paid. Best yet, the mortgage broker cannot even contact the appraiser regarding this, so he doesn't have to take any heat or answer to anyone. He gets paid at the expense of the consumer, end of story.

This also puts the relationship between the client and the broker at risk because of this. It is difficult to plan accordingly for the client when you cannot get accurate information up front.

While I do believe that in previous years appraisal values were consistenly inflated by appraisers, brokers, lenders, and others, given the extremely tight credit market that we are in inflated appraisals stand zero chance of getting past underwriting in today's enviroment. Even before the HVCC was put into effect, lenders had issued several control mechanisms to make sure that appraisals were accurate in the first place. Ask any real estate professional and they'll tell you that it is "next to impossible" to try and send in an inflated appraisal to the bank and get it to slide. Lenders are now faced with much more stringent buyback policies on bad loans, another reason for them to have an accurate appraisal. Given these mechanisms that were in place already, the HVCC is a waste of time and is not needed. It only makes everyones job more difficult and potentially wastes consumers money. This is only going to hurt the housing market, not help it.

We need to fight the HVCC!!

WKB, Are you an idiot?! You want the lenders to be in charge of the appraisals because it's their money they are lending right? The original issue with WAMU and the appriser that made Cuomo think he was saving the world with this stupid HVCC system is the fact that WAMU "PRESSURED" the appraiser to INFLATE the value (as they were doing with most appraisers) and the appraiser refused. Because of the appraisers refusal WAMU didn't pay her and she sued WAMU for non payment based on not hitting "the number" that WAMU wanted. That was what helped destroy the market, that and the LENDERS creating loan products that were sending borrowers to their early grave when the loans adjusted. The LENDERS were shoving these loans down everybodys throats by making the other loan products unaffordable in terms of rates. 30 yr fixed rates loans were not attractive nor feasiable during the heyday of the market, so consumers were getting loan products that would turn out toxic. Now you wnat the lenders to have even more control since they did such a great job before? Wow, Brillant! Don't you get it? Now the lenders are PRESSURING the HVCC managenet companies and appraisers to DEFLATE the values of the properties and consumers are getting the short end of the stick again on purchases and refinances. By the way, guess who ownes 90% of the HVCC management companies? Did you say the lenders, well give that idiot a cigar. Did you know that the consumers are being charged sometimes DOUBLE of what appraisals were prior to HVCC? This system is not a benefit to the consumer at all, with appraisers getting half or less of what the appraisal cost is, in addition to the other half being split by the management compnay and the lender which in turn ownes the management compnay. You say brokers and agenets are only concerned oin getting the deal closed. They are only making a small commission to closing a deal, the banks are making a KILLING by lending the money at large margins and charging tremendous fees for their terrible service. the agnets and brokers are on the consumers side. If you go to the bank and get a loan from a bank employee, whose loyality does this bank employee have in mind? not the consumer, the employee doesn't care if you get a loan or not. The employee will not fight for you, they will wait for another consumer to come along, don't forget they work for the bank NOT you. The agent or broker work for YOU the consumenr and in most cases are just like you. They are homeowners and family peeople and they have YOUR best interest in mind. They are for all intents and purposes YOUR employee, not the banks!. Appraisers, brokers and agents are on the consimeurs side. The bnaks have only one loyality and it's not to you the consumer it's to themselves. They will do what is their best interest.

I would appreciate it if the news/media would report all of the facts. First of all this whole HVCC came into play because a lender's, WaMu, "in house" appraisal management company was influencing appraisal values. It wasn't born by the real estate brokers, mortgage brokers, third party etc. So what was the result/fix. Someone decides that instead of actually coming up with an alternative that actully make sense, we should create a system where a third party (HVCC) orders appraisals, which the HVCC is unregulated by the way, and pay them money to spin a wheel and pick an appraiser from who knows where to get the job done. Oh by the way, lets pay the HVCC, which does a horrible job of actually checking the quality of appraisals which they are being paid to do, almost the same amount of money as the appraiser who is suppose to go out and appraise a property at half the cost. If you want a reason for why you are getting horrible appraisals, there it is. All the good appraisers have kept off the lists and we are stuck with appraisers who couldn't get clients and need to be spoon fed business.

While a system of checks and balances is a good thing, having a system drawn up so quickly and without any sort of real logistical input from the industry has been a disaster. The HVCC needs to be stopped until it can be worked out, otherwise expect to keep paying more money for less quality and it may keep a foot on the neck of our real estate recovery.

First, the problem Mr. Cuomo discovered with WAMU is that they owned and controlled their appraisam management company or AMC and this created problems. Only a politician would "solve" a problem with a solution that was the problem. The problem was the AMC company and now we have more of them. It's like telling an alcoholic "we will get you to quit drinking by having you drink more." Absurd!

I'm a loan officer, yes HVCC is a pain, yes sometimes (not very often) you get crazy values, but the reporter is right, the old system caused much of the problem. By old system, I mean we (the lender) would tell the appraiser the value we needed, and they would more often then not get it…so yes the HVCC costs me a few lost deals, but common sense says you don't have the lender grinding the appraiser for value

The same game started to get us into the mess is now being used after the banks got more money to make the game work in the opposite direction. Banks are making/stealing the money in a different fashion but using losses to put on their books at the customer's expense. The appraised value model and the "walk aways" are both being used to manipulate the market in the opposite direction. Everyone knows it and a new Boston Tea Party is playing out.

What ever the rules are the banks don't play. How is it my home is worth less than what I paid for it 12 years ago and I didn't use it as an ATM? It's things like this which tell us all there is a monetary hacker again at foot in the opposite direction.

Even if you purchased the product, bought the land, and built my home today it would still cost 35% to build than to buy. I find it strange, I find it blistering for all those who supported either party or any congress.

Change is coming, but I bet it will not be the change congress wanted and real soon I suspect. People are tired of it.

Banks are being paid to lose. THINK ABOUT IT. Banks are being paid to lose.

I can do appraisals day in and day out, pocket my $300 each and put food on the table–good food at that! Since my performance doesn't matter there's no use in me spending more time trying to make it work for the lender and borrower. The real problem isn't out of town appraisers; it is that there are so many short sales and foreclosures. If that's what I have mostly to set a value, that's the easy way to go. I have to go with what the market is today (mostly shorts and foreclosures), not what it was before or what it will be. Am I supposed to base the value on the only 1 real non-distressed sale that occured 2 months ago? The whole real estate market is imploding and may not come back for a decade. Since the government is "fixing" everything else, they should "fix" the appraisals to an average of the last 3 years' market value, not today's. But that would be more work for me, so I'm fine with it just going on as it is. Unless everyone gives up on refi's and the appraisal orders stop coming to me. Maybe the government SHOULD change this program before the public gives up…

Finally some sanity in the real estate market. Homes need to come down another 50% and I'll be happy. 12 years ago I was in the market and looking at 15 year old piles of crap for 80 grand. No way. I bought a mobile home for cash and have been stashing silver and gold, guns and ammo ever since. The US will collapse with Obama in charge.

As a mortgage broker, I find the whole idea of letting the lender control anything but the underwriting process a bit self serving. Let's face it, underwriter's have appraisal guidelines to follow; use similar size homes that have sold recently in close proximity to the subject. Because area is the most important attribute, an appraiser is allowed to go further out in time to stay close to the subject. Appraisers have the Marshall and Swift guide to help determine adjustments so making them for time, amenities, distance etc is all relatively easy and acceptable.

The real problem is that underwriters either didn't or weren't allowed to actually UNDERWRITE a loan application. Banks, brokerages and lenders all needed as many deals as possible to fund to keep the profit machine humming and to keep Wall Street happy. Unhappy Wall Street equals unhappy stock price. Underwriters were/are bonused on company profits/loans funded and other metrics of funded deals. Asking for a review appraisal/desk appraisal back in the heyday meant delays which couldn't be tolerated with our quarterly profit reporting mentality so it never got done.

Now every appraiser that was in business for him/herself 4-5 years ago is signed up with every AMC possible so what has really changed? The good guys are getting less profits and the bad guys are getting a steady stream of business. There's no doubt HVCC is more expensive for the borrower due to higher fees and longer lock periods not to mention the appraisal's lack of portability but it sure wans't the broker, realtor or appraiser that made the final decision to lend on a piece of property. It's the bank's job to underwrite the deal and they didn't. The same bank that now controls the appraisal process and is profiting from it. If that isn't the fox clearly in the hen house, I don't know what is.

Thinking of buying … as a buyer, I would prefer a LOW appraisal so I don't get shafted on the sales price, loan, and interest like so many people did from 1998 – 2007.

The new attitude is intended to protect the lenders and buyers from the plague of sellers, realtors, and brokers who are still trying to fleece us to the greatest extent possible.

We need to consider auctions, bank-owned properties, foreclosures, and short sales in appraisals: these ARE the 'real' prices, as they are the least subject to manipulation, especially if they are 'open outcry' auctions. Welcome back to capitalism.

Food, clothing, and shelter are our most basic needs, and shelter costs a LOT. Most people benefit from CHEAPER housing. That's what this country needs, and we're finally getting it.

The new appraisal system fairly reflects the true values of homes.

fair price is willing seller, willing buyer. Not up to the lender to determine the price. With this new rule, the lender dept. can get quick-back from the appr. who want the business.

A market economy is an economy based on the division of labor in which the prices of goods and services are determined in a free price system set by supply and demand. This being said isnt the price or value what an individual is willing to pay? I completely understand a bank protecting their interests and wanting a fair appraisal but they obviously do not know what is good for them. By lowering the prices in neigborhoods where they already have a portfolio of loans, they just are furthering to contribute to the decline and will force more individuals into short sales and foreclosures.

Appraisals done by those unfamiliar with the local market are PROHIBITED by minimum appraisal standards (the USPAP). Those appraisers are violating the USPAP and thus violating the HVCC. No matter what the value they came in with, their report is NOT HVCC compliant. Yet, there's absolutely no enforcement in effect.

1. I agree that the lender must select the appraiser.

2. However, the appraiser must be a local or familiar with the local R.E. market. CAN NOT use out of area appraiser.

3. The comp. sales must be within 5-10 miles radius of the selling property.

One more thing. Home prices were never inflated by Appraised Values. Home prices accelerated because of stuipd, stuipd, stupid loans called sub-primes and option arms. The true value of a home is based purely on what typical people in that particular neighborhood make to pay the mortgage.

I re financed my current home and after the appraisal came in about what I expected given the market they did a field review and lowered it 200K. Different comps same house. Making beleive that the appraisel process is rational or numeric is silly. Others have been given appraisals that were then given a wholesale discount for market conditions-30% off the top, isn't that double counting when each of the comps was sold in mcurrent market conditions. Isn't their a difference in value when someone is forced to sell versus when they are in a strong financial position.

You (Posted By WKB, Fairfax, VA: July 21, 2009 6:28 pm ) are absolutely right and I agree with you 100%

Carla, I have been in the lending and title industry for 19 years and I have never seen anything as ignorant as this HVCC mess. They charge the borrower $450 for an appraisal where the appraiser is only charging $200 and driving across three county lines to do an appraisal in areas they know nothing about. The HVCC is skimming $200 to $250 per appraisal from the consumer. How is this protecting the consumer or the lender? This is government intervention at it's finest. FHA used to use a similar system back before the mid 90's and they became the laziest individuals in the industry to work with because they didn't have to maintain relationships. These licensed appraisers that you claim were too cozy with the lenders were scrutinized on every appraisal they turned in, with the knowledge that their licenses could be revoked or they could be blacklisted from the major lenders at any time for a bad appraisal. I am sure there were unscrupulous appraisers as well as loan officers and underwriters, but don't throw the baby out with the bathwater. This system is not the answer.
If I told you that you would have to do your job for 1/2 of what you are currently making and drive halfway across your state to do it, would you stay in your job and if you did, would you put the same effort into it? Doubtful. This HVCC system is going to drive the good guys out of the appraisal industry and what will remain are people who will work for cheap and do the sloppiest work they can for the money. One other thing, you may want to start praying that you don't have a couple of foreclosures in your neighborhood while trying to sell your home. As a rule, you just lost 20 to 25% of the value of your home because lenders are getting desperate to get them off of their balance sheets with very few qulified buyers out there. Also, good luck trying to get your central appraisal district to consider foreclosures when lowering your value for tax basis, because my experience tells me that they won't. Regards.

The reason for this whole mess is 100% stated income with a 520 credit score, and no assets. Those loans are LONG gone, and hopefully never come back. The horse is out of the barn, no reason to close the door now. But now all of those really smart Democrats (Dodd and Frank) now want to make money for there new friends (AMC's). Since their boys at Freddie and Fannie are out of a job. These same idiots (Dodd and Frank) who said there is no problem with Freddie and Fannie (2004), now want to get in bed with the AMC's so they can get some campaign cash from someone who is still in business. Just get these idiots out of our way so we can get the economy and housing market stable again, and realize some people never should own a home. And the new buyers have a job, assets, and good credit, the way it was for the past 50 years. The three c's of lending.

We all need to start suing these third parties for breach of contract and failure to exercise due diligence.

After 23 years as a mortgage broker I must say the HVCC is a joke. We now have the least qualified appraisers who are willing to work for $150.00 of the $350.00 appraisal fee doing appraisals. If Fannie Mae was really concerned about the quality of the appraisers, they should go back to issuing ID numbers to the individual appraiser so that they can track the appraisers work like HUD. Most of the older qualified appraisers that are honest and have some sense of integrity will not do work for the HVCC companies. Pretty soon Mr. Cuomo is going to be dealing with red-lining complaints again. After all these years there is only one factor that makes for a good loan; the capacity to actually repay the loan( INCOME).

When 2 parties agree to sell something that is the real value of the item. No appraiser can change a value of something when it has an agreed upon price. What ever happened to a free market? The HVCC is costing homebuyer moeny higher higher cost appraisals and more often than not multiple appraisals. This is not doing what it was intended to do.

Cuomo clearly has one objective, to be president. He is a typical bureaucrat that has no practical experience and will undermine any fundamental recovery. His actions (HVCC) will only contribute further demise to the real estate market and a national recovery. Homeowners will be unable to reduce their mortgage interest expense, improve their properties, thus contractors and suppliers won’t be hired and tax revenue to pay for this escalating debt won’t be collected. Look out America it’s going to get much worse.

I work with a lender as a sales rep and I have seen countless appraisals come in way below with what was expected. That said when New York Attorney General Andrew Cuomo set forth on his mission to separate the lender and others involved with the transaction from having any communication with the appraisal firm this was because of what Washington Mutual was doing with their own appraisal firm. That said now we have even larger lenders owning their own AMC (appraisal management company). So now they make more money because they get the appraisal money upfront whether your loan closes or not and they are still in bed but now with themselves. Nothing has been solved and even more importantly the consumer is the one who is out because they could not get an appraiser to look at the value before moving ahead with the loan and are out the $400 or so. There is a fix and someone needs to look at another way because this one simply is not working.

To those who say Realtors are upset that appraisals are coming in low because that assumes the sales price will then be lowered and their commission would also be lower. Here's the thing, say a valuation comes in $25,000 lower than an offer/sale price of $250,000. Assuming a typical 3% commission rate for each of the agents (seller's agent and buyer's agent), and that the new sale price is $225,000, that would mean the agents receive $750 less that they would have at the original offer/sale price of $250,000. Looking at the larger picture, they would still be receiving a $6750 gross commission. Not bad.

The bigger issue as I understand it is not so much about the amount of the commission; rather, it's about losing the sale altogether. If an appraisal comes in 10% below the agreed upon offer/sales price (which, let me assure you, is almost always significantly below the original ASKING PRICE these days in most markets), besides the fact that I would be quite surprised by that large of a gap between the appraisal and offer price, a seller in that situation is likely not willing to drop the price ANOTHER 10% to match the appraisal, unless they are desperate. Using the previously mentioned example, if they hold firm at $250,000 as a sale price, that typically means the buyer would have to come up with another $25,000, in addition to any down payment they previously planned to make. If not, they would probably not be able to secure financing and would lose the opportunity to buy the house. That's how they lose the sale.

Even still, granted, nobody wants to lose a few hundred dollars on a sale, but I doubt that many agents are moaning about that – at least not as much as they would about losing multiple sales altogether, simply because appraisers are keeping valuations artificially low out of speculation and fear of future loss of value, and intimidation by the banks that hire them, who have a vested interest in making sure the house is valued as low as possible.

It's a complex issue to be sure, and not as clear cut as it would be nice to believe. There are many at fault, no doubt, and while we like to paint the easiest target as the villain, you've got to look at the big picture. Just my two cents…

The HVCC has come in and taken control over the appraisal business. Appraisers now get dictated to on how to write an appraisal and are told how much they are going to get paid. This is not a free market industry. They have been clipped simply so that lenders can continue to lend without responsibility. When the next problem hits the lenders will say it is the fault of the Appraisal Management companies. And if you read the whole article you will see this all began with a relationship between WAMU and their Appraisal management company. Exactly what started it has become law. We should let the appraisers do their job and expect the large lending institutions to be responsible for the loans that they pool and sell to investors. HVCC is wrong, as close to communism I have ever seen, and is allows for skimming, lazy appraisals, unknowledgeable appraisals, and all the problems that people are reporting.

I sold my house in April. 35 showings in 2.5 weeks. 3 offers in the first 10 days, one at 305 and two at 310 – full asking price. The appraiser would not come above 295. They used short sales, when they stated short had no impact on existing home prices, and the adjustments to comps were scattered and ridiculous.

I am an accountant/auditor. I can tell when people are playing with numbers to get to a desired result. And I can say with certainty after talking to the appraiser, that they were playing with numbers to get to their mandated result.

The appraisers were apparently under orders to get the home to 15% LTV as the buyers only had 10% to put towards downpayment. Most homes sell at 80% of value in a short sale, so the banks decided to cut their losses at the expense of the sellers and the market's recovery.

The new appraisal requirements are absurd. They are nothing more than a massive government handout to a select group of very large corporations at the expense of the general public.

Warning to Pres. Obama…you may be trying hard to help the housing sector but the big banks are trying even harder to PRETEND they are following your initiatives.

In reality, they are making up reasons to decline the majority of loans that are submitted. For example, underwriters check borrower income against IRS records now. This sounds good but, they decline loans routinely for minor tax preparation errors that had nothing to do with qualifying.

I was just declined because I have a couple horses and show a small loss on a Schedule F. My income is plenty for the loan…I was turned down strictly because I filed a Schedule F with a small loss. This makes no sense, it is not written anywhere, but it is happening to everyone these days.

The lender should be in charge of the appraisal, after all it is the lender's money that is being loaned out to buy the home, which is collateral for the loan. Real estate agents and mortgage brokers should never have been in charge of selecting the appraiser, since that presents an obvious conflict of interest. The agent and broker benefit only if the sale goes through, period, so they will chose appraisers that make that happen (i.e., the rubber stamp). If Realtors and mortgage brokers are so upset about the appraisers that the lenders choose, those Realtors and brokers can loan their own money out and take the lending risks themselves. I think they would be singing a different tune if their own money was on the line. HVCC may not be perfect, but it is a step in the right direction.

So let me get this straight? Seriously? Who to blame for the car wreck? Depends on where you stand I guess. This legislation was a result of a fight between Wa/Mu and Cuomo. The result ironically, is that HVCC is nothing more than a NEW cozy relationship between incompetant AMC's and Banks. That the cost to the consumer has gone up is a fact. The cost to society is that any recovery we had on the horizon just had a wet blanket thrown on it. If I were a licensed appraiser I would be angry too. Professional license and conduct enforcement are to be dealt with in a different manner than this in a free market. HVCC is a punative settlement that is having a negative effect for everybody. Also, the medicine to correct all of the evils of the real estate bust were corrected when Stated Income loans disappeared. Verify income and ability to pay and you will avoid anothe bubble. It's that simple. Stop killing the patient with radiation.

I dont think a foreclosure or short sale should be used as a comparable home value. The names alone indicate that they are not. A home's value should not be based on another home; where the owner could not continue to make payments thus going into foreclosure or short sale. It should be based on homes within the exact same categories.

for years the real estate agents and mortgage brokers would "push" the appraisers to get them the value they needed in order to close the deal. Now the appraisers are gun shy and going with the lowest value they can reasonably prove, who can blame them. I have been in the mortgage / real estate business for over 15 years and I can count on 1 hand the number of realtors that have the buyers / sellers best interests in mind.

The fundamental problem is that there is the sales price, which reflects a free market arbitration between the buyer and the seller, and the appraisal, which is an opinion of a third party that may be selectively based on facts. There is no way to organize this process 'fairly'. Clearly, all stakeholders benefitted from rising appraisals, that's why we had them. But that led to disaster. There is no entity that can tell you the fair price of your house, and you have no right to any price whatsoever.

Perhaps we should implement a valuation based on replacement cost of the improvements, the land value, and then an extra 'demand' value, which could be positive or negative, depending on other desirable features of the property.

I am currently living this problem right now – the appraiser, unfamiliar with my area, miscounted amenities in my house, used old run down homes and manufactured homes as comps that were from 30 miles away. I have been given no avenue to challenge the appraisal despite the fact that I personally found several higher quality comparables. I realize home values are down, but I could sell instantly at the price the appraiser provided.

Not only are the appraisal at LEAST 30% more, they are taking at least TWICE as long to complete. I waited 24 days from the time my appraisal was ordered to get it back. So now the banks make more by charging more for a 45 day lock(or extensions). Why don't we just go after the few bad appraisers who created the problem, instead of punishing everyone. This is kind of like my childs kindegarten class where everyone gets punished for a few kids who keep talking, is that where we really are as a society?

No wonder I can not get a refi, the bank takes so long to get to my loan that they state the home value dropped in the time. Then I have to get a reappraisal, and wait another 6-8 weeks, and given the same response that prices have dropped again and need a new appraisal. Does anyone else see a MAJOR problem with this?

They inflated the price of homes to their benefit and now the homes are going back to where a normal family can afford one. They were greedy and lack compasion for the buyers of homes, we will never go back to were the homes were a few years ago but now maybe the young couples can dream of home ownership in the future. The realtors are only thinking of themselfs and always did.

We have seen some pretty low appraisals using comps that were not good comps, and ignoring the better comps. But that also happened before this HVCC issue. The issue is the new rule doesn't make sense. If Fannie/Freddie are going to be the backstop for these loans they should help dictate how appraisals are completed, but not in a way where appraisers are used in areas they are not qualified to appraise. The long and the short is that this is another reactionary rule on a very long list of them implemented years too late and now is detrimental to the current situation.

I agree with Angie! For years I worked in the appraisal field and regularly heard from the banks *I need this value*. Well, I gave them an honest market value and sometimes I got rehired by the bank, sometimes not, but I knew at the end of the day I was doing an honest valuation. Are there shifty appraisers out there? Of course!

Real estate brokers/agents/realtors SHOULD NOT be telling their clients what their houses are worth. Only licensed appraisers determine market rate house values. Are there crooked appraisers out there! Of course! This is one of the many reasons why I left the industry! That and the appraisers never stand up for themselves, unlike the bankers, realtors, insurance guys…..

It never fails to crack me up to think that realtors and broker have CONTROL over an appraiser. Where is WAMU today? OUT OF BUSINESS. The HVCC was put in place for one reason and one reason only and that was to slow down the flow of loans to Fannie and Freddie. It is obvious that they only want vanilla, vanilla, and that is why beating up the appraisals is the ONLY way to slow down their bleeding. Less loans, less risk, THEY SURVIVE THE STORM. My own story? I had a SOLID appraisal, even had a comparable next door, sold EXACTLY for what my subject appraised for. The 2nd appraisal? Comparables 3 miles away. I mean seriously, if anyone thinks that APPRAISALS caused the housing mess, I want some of their kool aid!!!! Pretty simple who to blame……….THE PEOPLE WHO WERE BUYING THe MORTGAGE SECURITIES CRAP! And who told Fannie and Freddie to buy CONFORMING loans with 520 credit scores? Mr. Frank and Mr. Dodd. GET A CLUE people! you are being hoodwinked and you don't even know it!

Just had an out of state person (Montana) do an appraisal on a home in Wyoming. Came in more than 20% under expectations. And, no, the expected amount was not unrealistic. This is pure stupidity. You really do need to use people familiar with local market value.

Hey, what comes around, goes around… There is no sense in over-inflating housing values…again!

I would think that the best way to establish the current market value for anything is what ever a willing buyer is willing to pay and a willing seller it willing to take. I have seen appraisals come in much lower than what people are willing to pay. I do not think we should have banks, or goverment setting the prices, but they are. And I think that is what the Real Estate industy is complaining about when they say they had a "deal" fall through. It was not because it was not worth it, it is just the BANK would not lend that much, and that is not MARKET VALUE. That is Bank Value. So I say let the market work the values out the way they have for ever buy establising what something is worth between will buyers and seller, period.

I agree that something needed to be done but this new programs is not helping homeowners or potential homeowners. An appraisal that would normally cost my clients $350.00 was quoted at $625.00 though the appraiser only gets less than 1/2 of that. All we've done is put another entity with their hand in the pot. Appraisals are lower quality and higher for clients. Again an out of area person was sent up here to the foothills where we have acreage and not the suburban tracks. The actual appraisal came in higher than i anticipated but was chewed up and lowered by $100,000 by the very lender it was ordered through. It's a joke and clients are paying for it. Lender's know they've got the clients because these appraisals are being accepted by other lenders. So if a client has to move their loan they pay for another appraisal. I agree that there needs to be change but I guarantee this is not the answer. It was not fully thought out and the borrowers and the economy are paying for it. I've been a loan officer for 20 years now and no I didn't participate in the subprime or negative amortization loans. What needs to happen in this industry is strickter licensing. A person in the state of California can work at the local burger stand one day and be a loan agent the next with no background and really no training. Now all those people that got into it for the quick buck are in the loan modification programs. Scammers will always find a way.

An appraisal is "an opinion of market value." It is one of many factors a lender will look at when deciding whether or not to make a loan. For those of you who feel the appraisal was too low, read the definition of "market value" in the report. An appraisal is not the highest value you can put on a property but must meet the following criteria a. Buyer and seller are typically motivated;
b. Both parties are well informed or well advised, and each acting in what he considers his own best interest;
c. A reasonable time is allowed for exposure in the open market;
d. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
e. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
If you think your dollar figure is not right, it may not meet the definition of market value.

No, I did not get a fair shake at my appraisal. Bought 4.5 years ago for $305k with 40k down. Added 40k improvements. Appraisal came in at $275k for a 255k refinance. Lame. Sales data was so old that there weren't really any good comps and I know my house is at least 50% better than other houses of same model. But this appraiser had no clue what my neighborhood was like. This whole situation really sucks…Maybe that is what it is worth now. Regardless it sucks. We have two kids now and need more space but pretty soon we will be under water and stuck. We make 150k+ a year but are stuck in this house indefinately. It is VERY frustrating.

I just ran into this problem last week. I had hired a builder that gave me a huge discount to build a new home due to needing work. He was 80k less than 2 other builders. When the appraisal came back it was lower than what the builder could do it for. It was based off of comps that had sold in the last 12mos. The problem is most people who build new houses arent going to sell them in less than a year. What a mess it makes no sense to me. No wonder lending is frozen. A person with good credit, money in the bank and money to put down cannot get financing to build a new house at a discont.

Value's are all over the place, there is no such thing as a 'fair appraisal' these days! The market is all over the place. On one block you'll have a home valued at 419K, and on the next block, another home with the exact same square footage, build out, EVERYTHING will come in at a value of 340K. They need to quit asking their 'advisors' and start asking the people that deal with this on the front lines: the loan officers, the realtors, and the appraisers. Not a bunch of people that are higher ups in NAR or NAHB, but the little guy that deals with this all day long everyday. We've got loan officers and realtors who are dying to get food on their tables. This whole thing is beyond ridiculous at this point. And what the heck does Cuomo know about what is happening in Texas or Florida, or even Georgia for that matter?! And we've got people that have excellent credit, money to put down and they can't get a home? I mean how is that benefiting anyone? We should be shoving these people into a home, not turning them down.

Actually, this type of correction is really needed.

Of course, agents would be against this sort of fair play.

As a Mortgage Broker/Loan officer, the biggest complaint I hear from other Loan Officers is "It looks like the appraiser they sent out has never appraised a home before".
We(Loan Officers)know that the appraisers working for the appraisal management company are being paid HALF of what a real appraiser charges, even though the appraisal fee to the AMC has gone up. These "Faux Appraisers" have no interest in doing as good job because now,at the end of the day Quality No Longer Counts. Go through the motions, get paid, do the next one. All with no accountability.
For anyone reading this just think, Would you take a job(with on accountability), be paid half of what you are worth and go the extra mile to put out a quality product?
This will hurt a lot of folks for a while – until the politicians hear enough complaints.
Jack McKenzie – San Diego, CA

One major problem is the appraisal management firms are taking 10% to 50% of the appraisal fee which is causing the cost of an appraisal to sky rocket and/or the APM's are using a bidding process awarding the appraisal order to the lowest bid instead of the most qualified appraiser and taking the rest of the fee for themselves when doing nothing more than sending out an order form. The HVCC while well intentioned is a bust and is doing more harm than good and it needs to be re-written.

HVCC is an example of the pendulum swinging too far in the other direction to the detriment of the cause. It is and will continue to have a negative effect on the validity and accuracy of home appraisals. Many appraisal management companies are partially owned by the banks after all Mr. Cuomo. The competant, licensed, professional, seasoned appraisers are retiring and the incompetant bottom feeders love it becasue they get spoon fed deals and are paid at the door with no regard as to the quality of their report. I am a mortgage broker. I have proof that this is the case. Why do you think property values have dropped 18% nationally in the last quarter? Why do you think Fannie Mae needs to raise the LTV limit to 125% on their HARP refis? Thank HVCC..

Absolutely not! I live in a very old neighborhood with very few resales, people move here to live here 15 to 20 years, but now you throw in 4 shortsales and now that is the value of the entire neighborhood, that is a joke. And if I read the artlicle correctly, wasn't this new policy to keep LENDERS from controlling the appraisal process, but then it states the Lender choses the Appraisal firm? Something wrong with that law!

I had an appraisal done a year ago by an appraiser I know and trust (I'm in the business). I thought it was fair BUT I chose the appraiser because I live in an area of Chicago that could very well be undervalued. Chicago is famous for neighborhoods that change just by crossing the street. Someone from a far-flung suburb wouldn't understand the 'pockets' of good areas in the city and how different thy may be from the surrounding neighborhoods, particularly in regards to foreclosure rates that affect values.

Additionally, in my neighborhood, values are down because the only ones selling are those who have to, either to stave off foreclosure or because of some other unavoidable life change. Those who can wait this out are doing so. That doesn't mean necessarily my home has lost value.

I think our industry was in desperate need of more regulation – I got sick of having to compete with amateurs and crooks who would do anything for a buck – but let's not throw the baby out with the bathwater.

Industry lobbyists have overplayed their position here. They are unfairly antogonistic to ANY change. I am a realtor and have not experienced a serious undervaluation but I have experienced delays blamed on the appraisal management company. I also have experienced mortgage brokers trying to get this quashed because it reduces their control over the appraiser [hey I thought that was good]. The industry will probably be sending me a lynch mob after reading this post…

In an attempt to refinance my home, I needed a new appraisal. The appraiser was not from the area and included comparables in different school districts and "on the other side of the tracks." I was expecting an appraisal below my original purchase price, but the appraisal was exceeding below. As a result, I would now be required to pay PMI resulting in a higher monthly payment. When I inquired to this items the appraisal company said, "A wide range of area was reviewed for comparables, there is no data to suggest that one area is superior to another for properties that are similar in size, age, quality and other similar features". That sure seems to fly in the face of the old real estate adage, location, location, location….

The new rules are not the problem. You have the same bunch of incompetent appriasers putting values on properties. They raised the bar on new people becomming MIA certifed appraisers, but they grandfathered in the old bunch. Retest all licensed appraisers and don't listen to anything said by incompetent Realtors.

I just experienced this. My mortgage lender hired an appraiser from out of town and the appraisal came in well below expected. The appraisal company used comps that were, in my opinion not even close to my house, but after much arguing I was basically told "live with it". I agree that the pendulum has swung in the complete opposite direction.

So let me get this straight… Realtors, who were benefiting from the 'rubber stamp' appraisals which contributed to the inflated housing market, and complaining that the rubber stamping has stopped?

The answer to your question is, No.

This sounds like a lot of people that make their money off of sales are mad that we are finally using a system that is honorable to determine home values. Realtors are upset the values are lower? Of course they are, that means they make less money. We need to stop depending on the NAR for accurate information regarding home values and sales. They have too many conflicts of interests to be trusted.

The HVCC law that was passed is stopping many transactions further holding back a market stablization. Ask who owns the AMC's and you will find that the major lenders own them. They are making money off of transactions by charging more and paying less. Vital information relevant to the transaction is being missed and there is no way to include it in appraisal.