I spend two days last week getting my continuing education (C.E.). During the 16 hours of CE, there was a section on appraisals. Now I know that appraising is a contributing factor to this whole subprime and lending fallout....but it's not the predominant reason...just a CONTRIBUTING factor.
Having said that I found out that WAMU is being sued under a class action because of placing undo influence on their appraisers.
What's listed below are the code of ethics for real estate and appraisals, but what make this so amazing is the actual rules. The instructor, who by the way was awesome, gave us these rules. Specifically the rules stated that "anything that a realtor or lender does to influence the value" of an appraisal is considered unethical.
The literal translation is that even a mortgage company or a realtor saying....."the purchase price is $300,000, do you think that it'd appraise out for that amount" would violate this rule. Or having a lender state, hey....I need $300,000 on this in order to make the refi work. In both cases the realtor and lender are NOT giving directives, rather they are asking inquiring as to the reality of making the deal work. BUT IN BOTH CASES THIS IS CONSIDERED A VIOLATION and appraisers have been "reporting" people in our industry who do this.
See the rules below:
Ethical Rules E.n. 3-1
It is unethical to knowingly contribute to or participate in the development, preparation, use, or reporting of an analysis, opinion or conclusion.
Ethical Rules E.n. 3-3
It is unetichal to agree to provide or provide a service (appraisal, appraisal review, appraisal consulting, or real property consulting) that is contingent upon reporting a npredetermined analysis, opinion or conclusion.
Ethical Rules E.n. 3-4
It is unethical to agree to or accept compensation fo ran appraisal, appraisal review, or appraisal consulting assignment when such compensation is continguent on the analysis, opinion, or conclusion reached, the attainment of a stipulated result, or the occurrence of a subsequent event.
Common sense should be the prevailing thought here. If you have an appraiser that you have a relationship with then you are probably safe. I can't see that appraiser "reporting you" for the inquiry. However, the rules seem quite clear, and quite frankly are bothersome. The purpose of the inquiry is to see if the deal can be done, not to influence an appraiser. I understand the problem with I'm not going to pay you unless I get my value on this property. But the common inquiry is there to save everyone time and money
We need come some common sense in this industry, but it seems as if that is lacking. Tread lightly my friend....but as John Stossel would say....GIVE ME A BREAK!!!!! Where are you John? We need you....
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