Appraisal Fraud from the Appraiser's Perspective

Ease of entry was a key in the jump from 11,000+- in CA in 1990, to over 21,000 by 2007.

From Steve Smith

This comment is not made to defend the actions of any appraiser, or the appraisal industry itself, but to add some dimension of what was going on transactionally.

Sadly, appraisers were Conditioned to Anchor on Sales Price. This, even though their USPAP Certifications state that they do not do that.

Those who would not play the game of committing to being able to support the Sales Price, were routinely put on exclusionary lists at the larger mortgage banking firms or departments.

Some of the best appraisers went hungry during the boom. Some choose not to play the game as lender work is the greatest source of client pressures and the cheapest fees in the world of appraisal.

When Licensing of appraisers was eminent, in 1988, my personal choice was to get away from lender work as a way to make a living. At that time, appraisers were making $250 for a house report on FNMA forms.

Rather than work fast and cheap, cutting out the due diligence that compliance with good appraisal procedures requires; my choice was not to play the game.

Unfortunately, Licensing ushered in the world of businesses who taught the Prep Courses, cramming test answers into students who became licensed, with out really understanding much more than they had been told they could make huge money, knocking off 3+- reports per day.

Even Money Magazine included Appraisal as one of the best high paying jobs in the world for several years. This was largely due to their interviews with some that had gotten on the gravy train and who had no idea of their responsibilities or liabilities. No, of course, Money does not include appraisal..

Ease of entry was a key in the jump from 11,000+- in CA in 1990, to over 21,000 by 2007.

It is easy to create a fake appraisal using Templates in a Forms program with the majority of the Fields filled in, and the Adjustments automated.

Keen minds entered appraisal and hired Trainees, often by the dozens. Larger minds opened Appraisal Management Companies, and took their rake off the top, cracking open reports when they did not come in, and changing them, etc.

Nowhere along the way has it been shown that the appraiser was the originator of the bubble, but they certainly were the enablers, and many still do not know it.

Tags: appraisals, COnditioned to Anchor on Sales price, templates, USPAP
Posted in Eviction |