A recent report by a loss mitigation company known as Interthinx, revealed valuation fraud actually increased by 46% in the 3rd Q of 2009, as compared to the same period in 2008. It’s clear mortgage brokers played no role in this increase or the fraud itself, because they were and are prohibited from any participation in the ordering of appraisals. Mr. Cuomo’s HVCC has now narrowed down the list of bad actors with the elimination of brokers from that list.

Glad I can help you (and hopefully others) understand the appraisals. I don’t have a problem explaining to people the process to people who want to learn. Too often lately I just see agents spew hateful comments and make generalizations based upon their dealings with a bad appraiser.

Baloney! No appraiser set a list price or wrote an agreement of sale or originiated a mortgage. Home prices went up because many more people were given credit to buy houses. It was a release of pent up demand. Prices went down because the banks stopped lending unless the government is insuring the loans, and the minimum criteria to get a loan has got so strick that it is near impossible for most people who would buy one to qualify for a mortgage. So, less buyers means sellers have to lower their prices to attract the few buyers out there. Couple that with the first round of foreclosures due to stupid no doc 110% mortgages, closely followed by foreclosures casused by loss of income or pay reduction from employment and this is how we arrive at today’s market.

So in order to fix the problem, or scape goat someone, the appraisers are now made to work for unregulated management companies for up to half their previous fees in an economy with ever rising prices and ever rising educational requirements are forcing them out of the industry. Will the HVCC correct all the wrongs that were done to the housing industry? No. Will the HVCC prevent a future occuance of the subprime lending market explosion? No. Will the HVCC create a new profit center for the lenders? Yes. Will the HVCC drastically reduce the number of appraisers? Yes. Will the HVCC impact the market value of homes? No.

So what does the HVCC accomplish for the industry? Well, it injects money into banks that own AMCs. It gives control of the Appraiser to AMC and banks. it removes many appraisers from the industry and opens the door to greater use of automated valuation models, (another profit center for the bank). If consumers are not happy with appraisers valuation, wait until computers that have never been to the home to see the upgrades, condition of the property or visited the neighborhood starts spitting out values.

I guess I can see how you do have to take more human factors into account than I may have thought about previously. What would you do in a scenario where you did your homework, came up with a price and gave xyz as a reason why it wasn’t worth what it was listed for. What if the buyer said to you – but I like xyz, in fact I love xyz and it’s the whole reason I want to buy this house.

Would that change your report? Just curious.

P.S. Thanks for the friendly “war” – I’m actually enjoying it as appraisals aren’t my strong suit, so I’m learning a lot more from your comments.

Yes it’s true, I am a number crunching machine. But I’m also human so it’s impossible for me to take all emotional factors out of the equation.

I’ll flip your last paragraph around at you – it’s not probable/possible for a Realtor to take a look at each buyer’s needs for a particular home. As much as we try to profile a buyer for each listing, sometimes it ends up being a person who we least expected.

I just don’t think that it’s probable/possible for an appraiser to take a look at each buyer’s need for a particular home. Your job is more based in the numbers and yes, too much emotional-sided thinking probably would run up the market in a heartbeat, but I wonder how much is possible for the appraisal side without compromising your core goal of finding a fair value for the home.

Fred – Good to see another AG write following appraisal news closely. I’m not for the HVCC, as it has severely damaged my bank account. But I’m not entirely sure this petition will have much effect. I’m guessing the bank-owned AMCs have a powerful voice.

By far the best HVCC compliant appraisal ordering service I’ve seen is Appraisal Firewall.

I know there’s no way we can take into account the worth of a home from each individual buyer’s perspective, but it does matter. The appraisal process removes all human thoughts about the property from the process and goes for facts and figures, but what if those facts and figures don’t apply to that person. I can’t see how it would ever be possible to change that, but it’s an interesting thought.