“They would get on the phone and scream at me to inflate values.”

Here’s a nice little article discussing appraisal pressure, from the Virginia Pilot:

For several years in the mid-2000s, Fincham said, his company, FM & Associates, did steady business with a Virginia Beach mortgage brokerage but faced escalating pressure to deliver inflated appraisals.

“They would get on the phone and scream at me to inflate values,” he said. “They said, ‘If you keep coming in low, we’re not going to work with you anymore.’ ” Finally, the brokerage delivered on the threat, cutting off business with Fincham’s company.

“They said, ‘You’re not hitting the numbers we need you to hit,’ ” Fincham said.

The National Association of Mortgage Brokers have a different take:

Mortgage brokers, on the other hand, put the onus back on appraisers.
“The appraisers have to step up here and take the high ground,” said Marc Savitt, president of the National Association of Mortgage Brokers. “I understand a lot of them have been threatened with loss of business and so forth. I’m not saying it didn’t happen.

“If they get pressured, they need to report it to the appropriate regulator. That’s the first thing. The second thing is, if they do commit fraud, then they have to understand there’s consequences for that, and just because somebody tried to influence or pressure them, that’s not an excuse for committing fraud.”

So evidently, it’s the appraisers fault for being pressured. Who knew?

It would have been nice to see these articles four years ago, when it might have made a difference. But still, better late than never. The key going forward is enforcement of appraisal pressure provisions. As Bill Garber says in the article, “Enforcement is key. It’s going to be incumbent upon the regulatory agencies to keep this issue on the front burner.”

  1. George L. Corcoran

    NAR: it’s the appraisers fault for being pressured. Yet, the Realtors are innocent??… What happen to questionable BPO??? Title XI FIRREA needs to be enforced while State Law need stronger rules & regulations since Realtors are going outside their field as an expert.
    Title XI FIRREA needs to be recognized while State Law need stronger rules & regulations since Realtors are going outside their field as an expert.
    If we are in a financial crisis, then Realtor should not be performing BPO except for the opportunity to list a property. Family Attorney(s) are using BPO as instruments for the court to report value in bankruptcy, divorces and successions. These opinions of Market Value will ultimately be used by the Court both Federal & State plus the IRS for attorneys and accountants basis when reporting to IRS. Therefore, they are federally related transaction that fall under XI FIRREA. Technically BPO create a liability to the Realtor/Broker that is outside their liability insurance because the Realtor/Broker is performing a task that should meet USPAP as per FIRREA since a Certified or Licensed Appraiser is actually required in these manners. NAR/Realtor/Broker removed any mention of USPAP from the rules and regulations.
    It’s the Realtor/Broker fault for allowing themselves to being pressured. Just because the Client tried to influence or pressure the Realtor/Broker, that’s not an excuse for committing fraud. Realtor/Brokers knew that these reports are being used for purposes other than securing a Listing. Many BPO are being submitted to attorneys with the knowledge that the Scope of Work and Intended Users are relied upon by third parties; therefore, this is no excuse for allowing themselves to being pressured. The IRS will hold Appraisers, Realtor/Brokers, Attorneys, and Accountant accountable for Interest & Penalties for the difference in the basis that has not been reported from under-valuation. Bankers request BPO with full knowledge that their reports were being used for financial purposes and not securing a listing. Any purpose that falls outside the securing of a Listing from a Realtor/Broker by the BPO which a third party relies upon is not protected by E & O Policies; therefore, each state is responsible for the protection of public for allowing the Realtor/Broker to act in this manner within each state territory.
    I invite your reply.
    George L. Corcoran
    Realtor 0000047902-ACT
    Cannizzaro Realty

  2. Helen

    I am a Certified Residential Appraiser, who recently took the real estate salesperson class to get my real estate license. I was shocked to find that not only don’t they teach anything about valuing a house, they give misinformation. Agents giving BPO’s to lenders for them to base risk on loans is ludicrous, suicidal and should be a federal crime.