On January, 16, 2009, we brought to you the valuation fight that is appraisals vs. broker price opinions (BPO). Today we bring you Round 2 – and this time it’s personal. Well, it’s not really personal but there is a clear difference of opinion.
Last week, the Appraisal Institute (AI) sent a letter to Treasury Secretary Geithner expressing concerns about the use of BPOs in the HAFA loan modification program. In the letter to Treasury, AI states that BPOs are likely to exacerbate mortgage fraud. Further, real estate agents who perform BPOs are not independent, not properly trained, have a bias towards quick results for a fee, and have little or no regard for the other parties of a short sale transaction (lenders, servicers, investors, property owners, etc).
Within days, the National Association of REALTORS (NAR) responded to AI comments in letters to Secretary Geithner and Housing and Urban Development (HUD) Secretary Donovan. In the letter, NAR recognizes the need for flexibility in any mortgage modification program and notes the importance of the appraisal for purchase money mortgage transactions. However, NAR believes an appraisal may not be the best tool for all real estate transactions. BPOs are widely accepted in the real estate industry and there is no evidence that their use results in mortgage fraud. NAR also argues that there is no evidence to support the idea that appraisers are more or less likely to engage in mortgage fraud than real estate agents.