NEW YORK - The Appraisal Institute today praised New York Attorney General Andrew Cuomo for exposing the corrosive consequences of inflated appraisals on the home buying industry and confirmed its commitment to the independence of professional real estate appraisers.
"Caustic and corrosive, inflated appraisals eat away at the very foundation of the home buying process," said Terry Dunkin, MAI, SRA, president of the Appraisal Institute. "The actions by Attorney General Cuomo punctuate the need for an independent professional appraiser for the benefit all parties involved."
On November 1 Attorney General Cuomo filed suit against First American Corporation and subsidiary eAppraiseIT for colluding with Washington Mutual to use a list of preferred ?proven appraisers? who provided inflated appraisals on homes.
Appearing alongside Attorney General Cuomo at a November 7 press conference, Dunkin noted that many Appraisal Institute members have documented inappropriate pressure to make a deal work. As a result, the Appraisal Institute long has banged the drum for legislative and regulatory support for appraiser independence.
"The Appraisal Institute has a long record of working with Congress to explore solutions to mortgage-related fraud and has testified that pressure resulting in inflated appraisals amounted to a ticking time bomb for the housing industry and unfortunately we were right," noted Dunkin.
Dunkin explained that the overwhelming majority of professional and ethical appraisers stand up against the pressure to hit a certain number, but not without consequences.
"I know of and have seen the loss of business and the exclusionary lists or, blacklists, of appraisers who have been unjustly targeted for no other reason than they refuse to go along with a pre-determined value," he said.
Dunkin added that pressure is especially strong when appraisals are prepared for parties whose compensation is dependent upon getting people to the closing table to complete the deal.
"If the loan doesn?t close, loan originators and others working on a commission basis dont get paid," explained Dunkin. "And, too often, they will do whatever it takes to get paid. The result is that neighborhoods throughout the country have been devastated by mortgage-lending abuse," he continued.
Dunkin thanked Attorney General Cuomo for his efforts and also for endorsing the Appraisal Institute-supported legislation introduced last month by Rep. Paul Kanjorski (D-PA). The Escrow, Appraisal, and Mortgage Servicing Act of 2007 (H.R. 3837) includes provisions that ensure an independent appraisal process, strengthen regulatory authority over bad actors and recognize the importance of professional designations when selecting an appraiser. The bill has support from Representative Barney Frank (D-MA), Financial Services Committee Chair, and Congressmen Charlie Wilson (D-OH) and Paul Hodes (D-NH) as original co-sponsors of the measure.
"This bill will protect consumers and financial institutions by addressing shortcomings in the appraisal regulatory structure, while helping to ensure an independent appraisal process, one in which parties to a mortgage-lending transaction do not pressure appraisers to reach a predetermined value for a property," said Dunkin.
The Appraisal Institute is a global membership association of professional real estate appraisers, with 22,000 members and 92 chapters throughout the world. Organized in 1932, its mission is to support and advance its members as the choice for real estate solutions and uphold professional credentials, standards of professional practice and ethics consistent with the public good. Members of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA and SRA designations.