Reforms a Bitter Pill for Real Estate Appraisers; with Management Firms Controlling Work to Stamp out Collusion, Prices for Their Services Fall

By Turner, Kevin | The Florida Times Union, July 26, 2009 | Go to article overview

Reforms a Bitter Pill for Real Estate Appraisers; with Management Firms Controlling Work to Stamp out Collusion, Prices for Their Services Fall


Turner, Kevin, The Florida Times Union


Byline: KEVIN TURNER

Since May, it's been a lot harder to be a real estate appraiser, according to Paul Jarnutowski.

The problem hasn't been the recession, as much as a controversial new code of conduct adopted by the appraisal industry on May 1. Many real estate agents and mortgage brokers don't like the new code either. Many even claim the code has resulted in slowed-down appraisals to the point of constraining the housing market.

"My labor has gone from myself and three appraisers to myself and one other," said Jarnutowski, who owns Appraisers Plus on Beach Boulevard.

The Home Valuation Code of Conduct was intended to protect the consumer. It's a change in standards for mortgages that government-backed Fannie Mae and Freddie Mac will accept. It came about in reaction to widespread reports of collusion between realtors, mortgage brokers and appraisers that inflated house sales prices to astronomical levels during the real estate boom. Those inflated prices left many homeowners owing more on their mortgage than their home's worth, a condition known as being "under water."

The code, brainchild of the New York attorney general and officials with the Federal Housing Finance Agency, Fannie Mae and Freddie Mac, was intended to "improve the reliability of home appraisals," according to an agency news release.

"The code strikes a balance of assuring enhanced protections for appraisers, while maintaining lender ability to address unprofessional appraisal practices and to perform quality controls on appraisals received," said agency director James Lockhart in the release.

Realtors and brokers now have nothing to do with selecting appraisers. Generally, banks now contact appraisal management companies, which dole the work out to appraisers.

But the cure may have created its own disease, Realtors, appraisers and brokers say. And for buyers and sellers, it can mean waiting longer for appraisals to get done, critics say - which can lead to nullified contracts.

The standard applies only to mortgages held or backed by Fannie Mae or Freddie Mac - about two-thirds of mortgages - but the real estate industry is reacting as though it applies to all loans.

Furthermore, Jarnutowski said it has degraded valuations and punishes a profession that is licensed and certified and sworn to uphold standards, because a few broke the rules in years past. Also, many appraisers now are expected to perform appraisals more quickly and for less money, he said.

As Jarnutowski has seen much of his business go to management companies, appraisals that used to net him about $400 each now generate as little as $90 to $100 from a management company. Much of his direct business now comes from attorneys in divorce cases and from people protesting their property tax assessments, he said.

While critics of the code of conduct abound, its advocates say it protects against inflated appraisals that could be detrimental to consumers.

Realtor Andy Fletcher of Prudential Realty Network Mandarin/St. Johns said he's reserving judgment on the new code. He said appraisers now are working harder to do a careful job, and that could be what's led to lower appraisals.

"They're so used to appraisers rubber-stamping," Fletcher said. "What's changed is the process of how an appraiser is chosen. Now, no agent or loan officer has any contact with them. It's a new process. We're seeing changes in every aspect of real estate."

The National Association of Realtors has taken a stand against the code, saying 70 percent of its member Realtors say out-of-area appraisers have been used and that management companies are rushing the appraisals. And they said sales are being slowed by it. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Reforms a Bitter Pill for Real Estate Appraisers; with Management Firms Controlling Work to Stamp out Collusion, Prices for Their Services Fall
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.