Success! Spring appraisal was higher

Rona, your ethical sense is usually pretty good in my book. I'm shocked by this post:

Our appraiser, at any rate, was open to working with us to get us closer to where we needed to be, once he knew what that amount was, so long as the number could be supported by the comps. Hopefully other appraisers will likewise be willing to work with borrowers to the extent ethically possible, now that lenders aren't allowed to take on that role.

The entire point of recent reforms was to stop appraisers from "hitting the number." It doesn't matter whether the number is supported by comps or not; the judgment is supposed to be independent, and given without any sense of obligation to "work with" anyone at all.

Now someone has found a backdoor to evade the law, and you say, "yay?"

I feel for the woman's need to get a good appraisal so she could snag great refi opportunities, but this looks suspiciously like lobbying for a biased appraisal. Am I misunderstanding? Isn't this what appraisers are NOT supposed to do?
If you want to do it that way, and the loans are non-securitized, assuming the bank thinks it's a decent risk, then it seems like the bank should be in charge of assessing the RISKS involved with new loans beyond just the appraiser. Perhaps the bank should have been the flexible party, saying, "You've lived in the home for five years, had the same job for eight, and your kids are involved with school... you're a low risk (albeit underwater) refi." And with prices as volatile as they've been, it seems like the appraisals are relatively worthless after just a few months. The appraiser can't predict the future any better than the bank can. This borrower might be fine today and find herself 50K underwater next month. I don't know. I guess instability just makes folks feel like their either getting cheated or like they should take the chance to cheat someone else!

with the passage of HVCC this is not suppose to happen

A little jaw boning gets you a 10% valuation adjustment... Appraisals are highly subjective nonsense and should be treated as such.

Let’s see, Marcus is “shocked” that a consumer wanted a new appraisal based on “new comps that post-dated the effective date of the previous appraisal”. Why? Are changes in appraised value only valid when data supports a downward trend?

Would a judge who overturns his decision based on new evidence be forsaking his independence and merely pandering to the innocent?

I think that there is always some sway and momentum in a market, and I think that appraisers are aware that their evaluations can wreck deals and refinances so they might be trying to keep business lines open by keeping deals alive.

Are they crooked umpires or just guys wanting to stay in business? As long as they slap penalties on guys who really screw up and there is an acceptable range of professional judgment, this is part of the deal in a profession where times are a bit turbulent. My house's zillow estimate dropped over $100k (just over 20%) in like four months.

Some of this is the nature of the market, including perhaps, a little nudges one way or the other. Those nudges can be tolerated because they can mask it in this whole turbulent time.

Today's turbulence is veiling a lot of bad stuff. People are fragging employees, throwing people overboard and using the economy as the reason. Raum Emmanuel said "A Crisis is a Terrible Thing to Waste". All kinds of corrupt stuff is going on turing turbulent times. Right now the President has issued financial Martial Law and he's got his goons out there and shaping the plumbing where all his pals can get a taste, kind of like what he learned from Tony Rezko.

Willie, kindly reread. I said, I'm shocked by Rona's post. I'm certainly not shocked that a consumer would want to fudge any number necessary to gain a favorable result. That's what got us into this mess in the first place.

Your analogy of a judge is not well chosen. A judge does not randomly reconsider any new evidence a plaintiff wants to submit after a verdict is rendered. Nor, more importantly, does he do so after a campaign contributor collars him in the elevator with a plea for reconsideration. The point of the HVCC was to remove all levers of pressure from appraisers; Rona's post seems to celebrate finding a new way to twist arms.

Several years ago, we were having an appraisal done for a family estate sale and the guy came out and flatly asked, do we want it to be high, low or fair!

A house is valuated by an appraiser based on similar sales (jargon term: comps). Those similar sales are higher in the spring and lower in the winter here in New England. That’s how it is.
I have a client who didn’t want to take “no” for an answer, so she waited for better comps and justified her loan based on those true and real comps. This is not a trial. This is market-watching. The appraiser did nothing wrong in either valuation of this home.

Willie, look at the text that Marcus put in bold: "Our appraiser, at any rate, was open to working with us to get us closer to where we needed to be, once he knew what that amount was..."

It's one thing to ask for a new appraisal because there are new comps to consider. It's far more questionable when the appraiser is also presented with a target where the buyer "needs to be."

I think that there is always some sway and momentum in a market, and I think that appraisers are aware that their evaluations can wreck deals and refinances so they might be trying to keep business lines open by keeping deals alive.

Are they crooked umpires or just guys wanting to stay in business? As long as they slap penalties on guys who really screw up and there is an acceptable range of professional judgment, this is part of the deal in a profession where times are a bit turbulent. My house's zillow estimate dropped over $100k (just over 20%) in like four months.

Some of this is the nature of the market, including perhaps, a little nudges one way or the other. Those nudges can be tolerated because they can mask it in this whole turbulent time.

Today's turbulence is veiling a lot of bad stuff. People are fragging employees, throwing people overboard and using the economy as the reason. Raum Emmanuel said "A Crisis is a Terrible Thing to Waste". All kinds of corrupt stuff is going on turing turbulent times. Right now the President has issued financial Martial Law and he's got his goons out there and shaping the plumbing where all his pals can get a taste, kind of like what he learned in Chicago from convicted felon Tony Rezko.

Rona, your correspondent did not simply call the appraiser with an armful of all the recent comps and ask for an objective second look. They provided a target number plus a selection of comps that backed it up.

Two studies in 2006 and 2007 showed that the vast majority of appraisers--up to 90%--felt pressured to hit a number. Appraising a home is a somewhat subjective process, and it is usually hard to prove that a specific number is flat-out too high or fabricated. That's why providing a target has a huge influence on the result, and is so corrupting of the process. HVCC was designed to insulate appraisers from any party that had an interest in the transaction. Buyers, in cahoots with their lenders, have now found away around the regulation.

Yay.

My father used to say two things about real estate:

First, the three most important things were: location, location, and location (and not necessarily in that particular order).

Second, that the value of a house is the amount that someone is willing to pay for it.

In today's market, I would imagine that for the same house, people would be willing to pay within a 20% range because some people would pay more than others.

As your friendly out of State managing Broker, I feel that we're all reading much too much into this. I can see no evil intentions on Rona or her client's part. I know that many consumers have been badly burned by the entire Real Estate Industry between 2002 and 2007 (myself included when purchasing an out of my local area investment property), but having a home reappraised due to increased selling prices where one lives doesn't mean we're going back to getting "flexible" appraisals.

Just because the consumer mentioned a "number" doesn't translate into the appraiser feeling any pressure to hit it. The information is all there in black and white. She was just calling his attention to new information and requesting a new appraisal based upon new comps. In addition, she is only a one time transaction and has no leverage with the appraiser.

Keep in mind that upon reading the written word, vs. having a two way conversation, there is always the possibility not coming across as clearly or as completely as we intended - either due to time constraints or making her story way too long. I think Rona and her client’s intention was to keep the subject short and to the point.

In addition, she is only a one time transaction and has no leverage with the appraiser.

Come on.

"I can tell you that our lender is planning to use us as an example for his other borrowers whose deals have been threatened by low appraisals."

Nothing to see here, move along, no big deal, til the financial system collapses. Then exclaim, "Hoocoodanode?"

Huh. When our house purchase was recently appraised, after the new rules, we were told in no uncertain terms that the appraiser was NOT allowed to know the number, that it was ILLEGAL for him to be given a number to "hit".

Anna, the HVCC specifically states:

Home Valuation Code of Conduct

I. No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner including but not limited to:

6) providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower,

So, yes, what the borrower and lender did was flat-out wrong. However, we are talking about the United States here, fast becoming an extremely corrupt nation, soon with the low standard of living to match. I predict no one will enforce the HVCC.