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Regulators are coming up with a proposal that will change some rules regarding appraisals as part of a settlement agreement between the Attorney General of New York, Fannie Mae, and the Office of Federal Housing Enterprise Oversight (OFHEO).  Although these “rules” will not become Federal Law, or Regulation, they will basically have the same effect.

Some highlights of issues that will negatively impact consumers are:

• Real Estate Brokers and Lenders will not be able to give an appraiser any old appraisals, helpful data, or any other estimate of what a home might be worth.
• Real Estate Brokers and Lenders will not be able to have any communication with the appraiser during the appraisal process.
• Consumers would not be allowed to request a new appraisal from the lender if they disagree with the appraiser’s opinion.

These are all ridiculous in my opinion! First of all appraisers are not infallible.  In fact, many times they miss great comparables and the ability to provide this “missed” data is crucial to the accurate appraisal process!  Second, and most importantly, a consumer can not question the authority of some appraiser?  This is total garbage!   There must be some kind of check and balance to prevent an incompetent appraiser from wreaking havoc upon a defenseless seller.  Can you smell lawsuit?

Who will the appraiser be accountable to?  If the mortgage broker, real estate broker, and seller can not speak to the appraiser there is going to be trouble in River City, with a capital T!

This is a complete over-reaction to the FRAUD of a few corrupt mortgage broker’s, real estate agents, and APPRAISERS! Yes, the appraiser was as much to blame on any of these transactions, if not more, than anyone else.  The appraiser’s excuse seems to be that they were pressured by the big bad real estate brokers and lenders. Bull!   So, rather than hold some bad appraisers accountable for their valuations, we want to tell everyone to just leave them alone and trust they are competent professionals.  I think it’s already been proven that some, in fact, are not!  If a qualified, professional appraiser believes one thing, it doesn’t matter how much pressure I’ve ever tried to exude, the valuation stayed the same. (In an effort for full disclosure, whenever an appraisal comes in low, and it affects a seller client of mine, I will go to the mat trying to persuade an appraiser to see our side of the story, and raise the valuation.)

It smells bad to me.  What do you think?