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John Stossel - - we need you here!!! GIVE ME A BREAK!

By
Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606

                                             

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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Comments (8)

Jerry LaRose - Orlando Fl Real Estate Expert
Orlando Realty Partners, Orlando Short Sale Specialists - Orlando, FL
Orlando Fl Real Estate Expert, Short Sale Expert
LArry,  Great post.  I tell ya I think the appraisal business is tough. Think about it. If you were an appraiser and you have a seller and buyer counting on your appraisal so the house sells, I see the pressure is to appraise the property at the contract price. After all, If the seller is willing to sell for said amount and the buyer is willing to buy at that price isn't that the appraised value? It's worth what a buyer is willing to pay. right? Just a thought. Thanks
Mar 06, 2008 11:18 PM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer
The last appraisal I had done I asked if I could follow up to see what the price arrived at.  I was told (in a stern manner) that I was NOT the client and he would NOT tell me.  OK OK I just asked :)  No pressure, just curiousity killing the cat!
Mar 06, 2008 11:26 PM
Joeann Fossland
Advantage Solutions Group - Tucson, AZ
Master Certified Coach to Motivated Agents

I wouldn't want to be an appraiser these days! Nice post!

Mar 06, 2008 11:33 PM
Sherry Connor
Myers Park Mortgage - Charlotte, NC

The purchase appraisal is usually not the issue.  It's the refi's.  When we order them thru a management service, the appraiser has no idea what the estimated value is.  Very troublesome when you get assigned an appraiser who doesn't have a clue about the area.   I have had appraisers from South Carolina get assigned to a property on Lake Norman (North Carolina)- Easily an hour and half away from the appraiser.  I am sorry, but that is a disservice to the customer! Make it all go away!

Mar 07, 2008 12:07 AM
Matthew Rosov
Amerisave Mortgage Corporation - Laurel, MD
Certified Mortgage Planning Specialist
GIVE ME A BREAK!!!!  - ok, ok - I'm not John :-(
Mar 07, 2008 12:49 AM
Richard Sweum
1st Security Bank - Everett, WA
Appraisers are in a tough spot...wouldn't want to be one.  When the new rules come into play for wholesale folks, it is going to be VERY interesting...no broker originated appraisals.  First Horizon on the retail side went to an appraiser pool a year ago, individual LO's have no idea who is going to get their order.  Not a bad idea in theory, but I talk to my appraiser every day...that relationship is key to my business and I never ask to push a value.  Each deal is unique and that requires discussion.
Mar 07, 2008 04:30 AM
Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital
Oh gosh, Larry!  I'm going to jail!  I went to a lender and bitched about an appraisal with specific things they screwed up on.  I better enroll in another ethics class - fast!  I thought that's what we were supposed to do to represent our clients.  
Mar 07, 2008 08:11 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Jerry....right on dude.

Renee...pretty stupid huh?

JoAnne, it is kind of a buzz kill isn't it?

Sherry, you're right about the delineation.

Matt...thanks for making me laugh

Rich...dude that's crazy to go to an apraiser pool, if you will.

Pat...if you need a cell mate just call, have done that as well myself.

Mar 07, 2008 02:50 PM