Appraisal Assault Part 2

I’m shocked (note sarcasm intended) that my prior post on the assault on the appraisal process didn’t deter the realtors. It also appears that Diana Olick is setting herself up as their chief flack. Here’s what she had to say today.

I want to thank everyone for the emails into the RealtyCheck@cnbc.comregarding the Home Valuation Code of Conduct.

Hundreds of mortgage industry representatives, from small and large shops, sent in stories of botched appraisals, of allegedly negligent appraisal management companies, and of lost deals that are so necessary to recovery in this fragile housing market.

Very very few of you argued the opposing side.

I don’t have enough space here to post every response, but I took note of a particular sentence in a research note from Credit Suisse analyst Dan Oppenheim. He was reporting on today’s New Home Sales report from the Dept. of Commerce:

We see low appraisals as a key issue we think will disrupt closings and hurt pricing for some time given the more stringent appraisal guidelines enacted last month. This will likely mean that many orders signed in recent months may not result in closings.

I’m staying on this of course, as I happen to know there will be a huge push on Capitol Hill in the coming months to change the HVCC. Thanks again for your emails and reports.

I don’t know who’s reading her blog but the comments I’ve received have been pretty much along the lines of don’t let the system get corrupted again. A couple of other blogs a lot bigger than mine have also picked up on the story. Here’s a link to what Clusterstock had to say. Also Barry Ritholtz has been on the case. He did a little digging and came up with this letter outlining the planned legislative assault on the appraisal process, but I especially liked what he had to say yesterday about the situation:

That is outrageous. (Referring to the NAR statement that faulty appraisals were stalling the recovery)

Consider:  The NAR remained notably silent during the appraisal corruption during the boom; Home sales based on loans to people who couldn’t afford them that drove prices higher were fair basis for appraisal comparables — but when these same homes are sold — inevitably through forclosure auctions,  REOs or distressed sales — they should be ignored? Only up, not down?

Even worse, they seem to be calling for a return to “local” (i.e., friendlier) appraisals — like the good ole’ days. You remember the “friendlier” era of corrupt appraisals that were rife during the credit bubble?

Am I reading this correctly? It looks like code for USE APPRAISERS (i.e., CORRUPTIBLE) WHOM YOU KNOW.

I thought I was inured to the idiocy of the NAR and the fetid stank of corruption that their press releases come with, but even I am astonished by the filth emanating from their offices today.  Shame on you  . . .

The realtors have a lot of friends in Congress and since we seem to be headed back to the good old days when politicians in exchange for a few bucks let industry write their own regulation, I suspect that the odds are pretty good that the days of honest appraisals are dead.

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