Back a couple of years ago, when the market was roaring, seemingly without end, here in Chicago and in other parts of the country, many appraisers may have felt some pressure to increase their appraised values - sometimes substantially - to make sure the loan went through. One such appraiser in California, Jennifer Wertz, refused - and has now filed a lawsuit against one of the country's largest mortgage lenders, Washington Mutual.
Last May, when Wertz was completing one appraisal, she was asked by her manager to change her opinion on the market stability for the neighborhood in which the subject property was from "declining" to "stable." She disagreed, providing basis for her opinion. When she refused to change the appraisal, she became effectively blacklisted by her employer from doing appraisals for WaMu loans.
In blogs and online forums across the country, many other appraisers are echoing Wertz's sentiments. Bakersfield CA appraiser Gary T. Crabtree identifies inflated appraised values as a "significant contributing factor" in many cases involving mortgage fraud, short sale, and foreclosure.
Here in Chicago, I have heard one end of irate phone conversations from other Realtors with banks, and some appraisers, upset that their loans did not appraise at the purchase price. We have all heard stories of real estate agents attempting to manipulate current list price to get a property to appraise at an over-market value - in some cases, with cash back going to the buyer. Others provide comps to appraisers they meet for a property appraisal, to substantiate the contract sales price.
Legislation currently being considered in Congress would considerably increase penalties for intereferance with an appraisal, or for anyone who offers inducements or punishments to appraisers for not stating a particular value and market conditions.
Any of this going on where you are? Are the times changing?
See our post today at BlogChicagoHomes.com for more detail, as well as a link to an article by Chicago Tribune Reporter Kenneth R. Harney in yesterday's paper.
DEAN & DEAN'S TEAM CHICAGO
Dean, this really doesn't surprise me. A lot of appraisers are starting to get blacklisted by lenders, especially here in California since we got hit as a declining market statewide. All lenders reduced their loan-to-values by 5%. I hope that she wins the lawsuit!
She is doing the right thing. Even if she is not attempting to do mortgage fraud that would be a form of it. Georgia has one of the highest rates for mortgage fraud and they are arresting all parties to the deal. Your career is worth more that a quick buck. There is always another home or price can be reduced to make the deal go through
I would like to know the result of this suit.
The appraisers are going to take a lot of heat, and hopefully some good stuff will come out of this lawsuit, and the down market that will stablize the future real estate market.