A nonprofit that specializes in investigative journalism says it’s obtained copies of blacklists that lenders used during the housing boom to boycott thousands of appraisers who refused to inflate home values.

In a story examining the role of appraisals in the housing boom and bust, the Center for Public Integrity says it also found many appraisers who bowed to pressure from lenders to "hit the numbers." The practice "helped pump air into the housing bubble that led to widespread economic devastation," the story concludes.

Online mortgage lender Amerisave maintained a list of nearly 12,000 "ineligible" appraisers that was available on the company’s Web site until the Center inquired about it, the story said. Amerisave declined to comment for the story, "The Appraisal Bubble."

The story also details New York Attorney General Andrew Cuomo’s lawsuit against First American Corp., which claims First American’s appraisal management company, eAppraiseIT, allowed Washington Mutual to handpick appraisers and pressure them to change values that are too low to permit loans to close.

First American has denied the allegations and the lawsuit is still pending. But after Cuomo subpoenaed Fannie Mae and Freddie Mac, the mortgage financiers agreed to new rules governing appraisals of the loans they buy (see Inman News story).

The Home Valuation Code of Conduct, slated to take effect May 1, prohibits loan originators from pressuring appraisers, and gives appraisers the right to appeal decisions to remove them from lists of qualified appraisers. The code will also prohibit originators from ordering appraisals directly, requiring them to use other in-house staff or go through an appraisal management company.

A trade association representing appraisers, the Appraisal Institute, and many independent appraisers say the code will not solve the problems it seeks to address, because appraisal management companies — many of them subsidiaries of lenders — may pressure appraisers, the story said.

The Center for Public Integrity is a nonprofit digital news organization that conducts research and produces investigative stories on public policy issues. The story on appraisal practices was part of the Center’s Land Use Accountability Project, which details how land use issues play out at the local level.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription