Apppraisers Were in on the Scam Too - Don’t Let Them Fool You

[Moe Bedard]

An article came out yesterday in the San Francisco Gate that addressed how appraisers were “pressured” to inflate values on properties they appraised. What, did brokers hold guns to their heads to force them to over state property values? HELL NO!

Appraiser were in on the scam and just as guilty and greedy as everyone else.

These cats were doing 4-5 appraisals a day making on average $400 a pop. Yes, it adds up quick. $2,000 a day, $10,000 a week, $40,000 a month. Half a $million a year! That’s some big money and not too bad for a little number cruncher and paper pusher.

Congress needs to put some regulations on these little whipping boys that are off to the side saying, “He made me do it!” That’s complete BS.

Brokers get thrown under the bus, yet again:

“In a nationwide survey released early this year, 90 percent of 1,200 appraisers said they had felt “uncomfortable pressure” to adjust property values. Mortgage brokers were named as the most common culprits, followed by real estate agents, consumers, lenders and appraisal management companies. The increase in pressure was dramatic compared with that found in a similar survey in 2003, when 55 percent of appraisers reported feeling pressured.”

[6wolverines]

It's a funny thing......our appraisal is inflated, almost to the penny, by the amount needed to pay the origination/closing costs and the amount we needed to cash out to pay some bills.

I've read about the appraisers who feared they would not get future business if they did not crack under the pressure put on them by unscrupulous brokers to "up the ante" and inflate the home values. Did they not think, for one minute, of what they were doing to homeowners? Any decent, honest business person would have turned their back and said, "I don't WANT your future business anyway if I have to lie, cheat and destroy people's futures to get it"!!!!

I keep thinking and hoping the old adage is true....WHAT COMES AROUND, GOES AROUND.

Char

[MlcMBjnn]

"It's a funny thing......our appraisal is inflated, almost to the penny, by the amount needed to pay the origination/closing costs and the amount we needed to cash out to pay some bills."

This also happened to me on a refinance - the appraisal was written to cover the amount I was refinancing for. At that time, however, it wasn't "inflated" because the actual value of the house was much higher - basically the LO/Broker said "how much cash do you want." It is entirely possible at the time your appraisal was done that the comps justified the amount particularly if you are in one of the bubble states. Of course, as we all know, the bottom then dropped out of the real estate market.

Another way to look at it is - if they hadn't appraised for that amount, there would have been no or less cash out.

[6wolverines]

Yeah....I know there would have been less cash out......but the broker got more than we did with the cash out on our refinance......The broker took over $6000.00..........Barf!!

[gigi in fla]

On our first loan the appraiser inflated the square footage by 228 sq. ft. and $25,000.00. We did not know this until we went to refinance. On the refinance, that appraiser did the same thing, this time by 82 sq. ft. and $7,000.00. Both times left us upside-down. We looked at the first appraisal and matched it with the scond one and there was the discrepancy. Guess what? Appraisers have Errors and Omissions policies, and you can file a claim against them for their "inflated" square footage and values. You write a letter to the appraiser, ask for a copy of their errors and omissions policy and send it by certified mail. In the State of Florida, they have 30 days to provide you with their insurance info. Sometimes, they add their insurance information at the end of the appraisal. We settled with the second appraiser out of court. The first one is playng hardball and we added them to our lawsuit. Without the inflated appraisal, there is no loan and no chance for the broker and lender to screw you. I blame the appraisers, all this nonsense about being "pressured" is B.S.

Gigi

[colahhh08]

When we bought our house we thought it was kind of strange that the appraisal came in at 608k, price we paid 609k. After our forensic doc review it looks as though the comps in the area were more like 580k. So like you stated gigi no inflated appraisal, no loan!! Gee I wonder why he couldnt squeak another grand out somewhere.

[gigi in fla]

You can do something about the appraisal - we did! First, find out who regulates appraisers in California. Here in Florida it's the Department of Business and Financial Services. File a complaint with your appripriate agency regarding the appraisal. Next, send a certified letter to the appraiser and ask them for a copy of their E & O policy (Errors and Omissions policy). They have thirty (30) days from receipt of the letter to provide you with a copy of their policy. Next, file a claim against their E & O policy for the inflated appraisal.

We just received the State's findings against the appraiser and they found they violated numerous Florida Statutes and USPAP rules (body which governs appraisers). They filed and served an Administrative Complaint against the appraiser. We are waiting for the hearing.

As to our claim against the appraiser's E & O policy, we filed suit and there is a hearing in mid-April on that. Because the State confirmed what we already knew, they really have no defense. They tried to say the appraisal was for the lender and therefore, the lender has a loss not us. Not true! We had the home appraised BEFORE we even applied for the loan and in fact, this appraiser had checked a prior home for us and told us the owner was asking too much and the deal fell through. Had they done the same thing with our present home we would not have gone through the hell we have been through! In fact, the appraiser is the one who e-mailed us the listing for this home, so their argument that the lender was the client and not us is totally false.

I believe everyone who has been victimized by over-inflated appraisals should take the time and fight for their rights, otherwise, these people will continue to take advantage. It starts with the appraisal - without it, there is no loan and chance for corrupt brokers and lenders to take advatnage of borrowers.

Good luck to you!

Gigi

[lecia11]

I always wondered about the appraisers. How is it that they come in right at the asking price? What gives?

[JWfam]

Our appraisal came in at 240,000 when they had it done before closing - about a year later when we sought modification help, they had it appraised for 180,000! Ridiculous.

[Melissa]

I believe the "I was pressured" excuse is total BS. My father and brother are both real estate appraisers. Both of them have talked about mortgage brokers and Realtors who griped and wheedled for higher values when their appraisals came in lower than what the borrower needed, and in most cases they didn't get further business from those lenders. But their appraisal business somehow managed to stay busy. They didn't cave to pressure, and they didn't starve or go out of business. The appraisers claiming they were pressured into doing it were all too willing to go along with the inflated values when it looked like the gravy train was here to stay. They don't get to cry foul now.