Sunday, June 28, 2009
"Appraisals are becoming one of the biggest obstacles for Americans trying to sell their homes, refinance their mortgages or tap into home-equity credit lines. ... Now, some people in the mortgage business--and some borrowers--say the pendulum has swung too far the other way. ... Lenders burned by huge losses from defaults are now pressing appraisers to be more conservative. And appraising itself is more difficult with home prices fluctuating rapidly and transactions few and far between in some markets; sale prices from a few months back may no longer reliably indicate the value of nearby homes. ... In some cases, lenders are requiring that appraisals be based on sales closed within the past three months rather than the prior six-month norm, appraisers said. Some lenders are also asking for comparisons with at least one sale in the past 30 days. ... Fannie and Freddie agreed to the code last year after New York Attorney General Andrew Cuomo accused them of failing to ensure that appraisers were shielded from pressure to inflate their estimates", James Hagerty and Ruth Simon at the WSJ, 9 June 2009, link: http://online.wsj.com/article/SB124450388959795613.html.
I think the Home Valuation Code of Conduct will change little in the appraisal world. CPAs have had ethical standards for decades. So?
Yves Smith (YS) has a related 24 June 2009 post at her Naked Capitalism, link: http://www.nakedcapitalism.com/2009/06/low-appraisals-blamed-for-keeping.html. YS attacks the Bloomberg story for "industry-cheerleading". The WSJ also does this.