May 1st, 2007 9:00 PM by Ron Mastrodonato
Appraisers seek curbs on lender pressure
WASHINGTON – April 20, 2007 – The four biggest trade groups representing appraisers believe that inflated property valuations have been one of the main driving factors behind the surge in foreclosures by financially strapped borrowers.
Led by the Appraisal Institute, the organizations also argue that inflated appraisals are at the center of many mortgage fraud schemes and have called on federal regulators to come down harder on lenders that pressure appraisers to boost valuations in order to permit overpriced deals to proceed. In many instances, such lenders failed to require “firewalls” separating loan officers working on commission from appraisers tasked with assigning a value to the property being financed.
In a 2006 poll conducted by October Research Corp., 90 percent of the appraisers reported having been the victims of such forms of coercion as nonpayment of fees and outright threats, with many having lost business when they opted not to go along with the plan.
Source: Baltimore Sun (04/20/07)
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