Harvey S. Jacobs, real estate lawyer in the Rockville office of Joseph, Greenwald & Laake, wrote the following in his Washington Post article - A common-sense way to mend the draconian appraisal process .
"If federal regulators are truly concerned about the quality and independence of home appraisals - a cornerstone of sound mortgage lending - why don't they simply prohibit appraisers from learning the contract price before they perform their assessment of a home's value?
Instead of this commonsense solution, regulators continue to come up with schemes that govern how appraisers are chosen - and which simultaneously drive up prices to consumers while cutting the income of appraisers.
On April 1, a new regulatory scheme called Appraiser Independence Requirements, will go into effect. This AIR replaces the much-maligned Home Valuation Code of Conduct but does little to improve it. Both AIR and HVCC were designed to ensure that the home valuation process conducted by appraisers is conducted in a strictly independent manner. Unfortunately, in practice AIR continues the legacy of HVCC, causing borrowers to pay more for their appraisals and appraisers to earn less for their work."
While the article does a very good job of chronicling the history of the HVCC, AMCs, and the AIR, I'm not so sure that his answer to the problem will solve all of the problems that he thinks it will.
For one thing, it assumes that all mortgage appraisals done for lenders result from sales. What about the gazillions of refinance appraisals for which there are no "contract prices"?
Without access to the contract, how would the appraiser be able to learn ALL of the terms, conditions, and concessions involved with the sale? Doesn't USPAP require appraisers to view and analyze the current contract?
Does the author REALLY think that the contract is the only place that appraisers would learn the sales price? Even IF the sales price were to be redacted from a contract, don't you think that the buyer, seller, agent or someone involved in the transaction would let that figure "slip"? Wouldn't it be BETTER to have something that actually documents the factual sales price?
What do YOU think of this author's fix to the "draconian appraisal process"?