Minneapolis Real Estate’s last blog post..Search Downtown Minneapolis Real Estate Condos and Lofts

Second – oversight seems to be the “overarching” message here – we need it! Society – or at least a fairly dominant portion of it – has a tendancy – much like water – to seek out the lowest levels. We need but look at the history books to provide numerous examples of this.

There are direct and indirect causes for inflating values. The direct approach is to demand the appraiser increase value, and if they don’t tell them you are taking them off the approved list of appraisers if they do not comply. This rarely happens but does in rare occasions.

In most cases, they stay on the list and are not selected. Or simply demand a reduction in fee, turn time and provide target estimates of value. Then over time again, you whittle down the list until you have what you are looking for.

As consumers we try to provide good fast and cheap, yet we know that in most cases we get what we pay for. The emphasis of the AMC’s to obtain fast cheap work and not be concerned if it is dependable. Because they have not legal obligation to the borrower. only their pocket books.

One problems in the past is these AMC’s or mortgage brokers don’t have a stake in the loan defaulting. That is to say, once the loan is sold to the secondary market the broker is no longer responsible for the quality of the report. While portfolio banks or in-house lenders are concerned with the quality… that is one reason many of the smaller banks are in good shape regardless of the larger banks.

The second problem can be illustrated by my conversation with two appraisers last week in Mass… One was doing reports at $350.00 with some work coming in, another was doing appraisals for $95.00 … and the AMC was charging $500.00 to the borrower. Is this fair to the borrower, or homeowner, is it reasonable to believe that the quality of work received from each appraiser is of the same quality? Are their corners being cut by the first appraiser… oh yeah… lots of them rules not being met. But as he indicated … the client wants good fast and cheap and that is what they going to get.

Appraisers like him are basically saying the heck with the borrower, the heck with the secondary market, the heck with the taxpayers supporting the bailout. I need to pay my mortgage. In part I don’t blame him or appraisers like him that are trying to survive.

Part of the problem is that local boards are not regulating their appraisers. Either because the laws are unenforceable, there is sympathy with fellow appraisers, they are only concerned with minimum standards and lastly because those that are responsible for making sure regulators do their job are simply … not doing their job.

Been on this merry go round for 30 years … it will be another 10 years before this loop hole is fixed