Judging from the audience's response at a special session on mortgage credit during the National Association of Realtors' Midyear Legislative Meetings in Washington, appraisals are still a big issue for front-line realty agents.
When a question was raised about appraisals, it drew a collective groan from Realtors who packed a ballroom at the Marriott Wardman Park Hotel. And when their leader, Ron Phipps, the president of Phipps Realty in Warwick, R.I., framed their problem, the crowd burst into applause.
Agents, of course, would like more customers -- so would lenders. But to hear them tell it, they're still losing far too many deals they've managed to cobble together in this difficult economic environment to faulty appraisals.
Appraisals "are a very raw nerve for us," Phipps said, noting that lenders sometimes require six, seven, eight, even nine "comparables" when three used to do just fine.
The NAR president said "those of us in the field" understand the reasons why the valuation process had to be re-engineered. But as it is now, he added, "the process no longer respects the ebb and flow" of the marketplace. "We need common sense, not just transparency," he said. "No one size always fits all; they're can't always be a direct match."
The panelists, who included David Stevens, the former FHA Commissioner who now is president of the Mortgage Bankers Association; Cara Heiden, co-president for Wells Fargo Home Mortgage, and Doug Jones, consumer sales and institutional mortgage services executive at Bank of America Home Loans, were largely sympathetic to the Realtors' plight. But they didn't offer any answers.
Steven said lenders "care" that houses are appraised correctly, just as Realtors do, so "we struggle with this collectively." But he pushed another button when he noted that it violates appraisal standards when someone who works in a distant territory is assigned to value a property in a market with which he is not familiar. That point drew another big cheer, an indication that "traveling" is still an issue.
Martin Eakes, chief executive officer of the Self-Help credit union in North Carolina and co-CEO of the Center for Responsible Lending, drew another round of applause when he suggested that banks, servicers and investors be barred from having any ownership interest in an appraisal or an appraisal management company.
"It's not just about the independence of the process," Eakes said, pointing out that owners make money every time they order and re-order an appraisal. "Common sense tells you that this is a conflict of interest."
