Shopping Cart
Welcome,   My Account

Appraisal Organizations Propose Solutions to Curb Mortgage Fraud Crisis at Senate Hearing

July 4, 2007 08:00 AM

WASHINGTON, DC -(July 4, 2007) – The Appraisal Institute, along with three partner appraisal organizations, told Congress today that a single standard for all lenders and brokers ordering real estate appraisals will help stop appraiser coercion, which was described as one of the leading contributors to mortgage fraud.

 "When appraisals are delivered, appraisers face pressure from various parties involved in mortgage transactions. They are told to doctor their appraisals or else never see work from those parties again," said Alan Hummel, SRA, chair of the Appraisal Institute's Government Relations Committee.

As proof, Hummel shared with the Senate Subcommittee on Housing, Transportation, and Community Development, an e-mail that he received from a broker client, who took issue with the appraisal mentioning a problem with a front porch. "The comment has to go," said the broker. "I can assure members of the Committee that the cost to cure the decaying front porch floor is substantially more than the cost of an area rug that might cover up the damage," said Hummel, who is an appraiser in Minneapolis, Minnesota.

Hummel identified systemic appraiser coercion, disparate oversight and regulation of mortgage brokers and mortgage lenders, and weak or nonexistent enforcement of real estate practitioners as the three primary issues contributing to mortgage fraud.

 "Mortgage fraud is an issue that can not be ignored," said Hummel. "It is time to elevate the practices of mortgage brokers, mortgage lenders and bankers and create a single standard for ordering appraisals. We need to aggressively enforce laws to punish bad actors."

Hummel, representing 30,000 real estate appraisers from the Appraisal Institute, American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and National Association of Independent Fee Appraisers, also recommended higher educational standards for all those involved in providing mortgage-related services.

In detailing appraiser coercion, Hummel presented an independent study conducted earlier this year by the October Research Corporation, which found that 90 percent of appraisers were pressured by mortgage brokers, lenders, realty agents, consumers and others to raise property valuations to enable deals to go through, doubling similar findings from three years ago.

In detailing appraiser coercion, Hummel presented an independent study conducted earlier this year by the October Research Corporation, which found that 90 percent of appraisers were pressured by mortgage brokers, lenders, realty agents, consumers and others to raise property valuations to enable deals to go through, doubling similar findings from three years ago.

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.
 

 

 
 

Back

 

Pop up content here.

Agree Disagree
close (X)