Appraising the appraisers' role in the housing bust
Dozens of appraisers tell the center "that for years lenders across the United States have pushed them into inflating the value of homes to justify higher mortgages. ... In addition, the Center has obtained copies of lenders’ 'blacklists' containing the names of thousands of appraisers; some appraisers say lenders used those lists to exclude those who refused to inflate home values."
The Center also found many appraisers who say they bowed to lender pressure to “hit the numbers” in order to remain in business. These appraisers, along with the lenders who pressured them, helped pump air into the housing bubble that led to widespread economic devastation, according to dozens of appraisers, lenders, and others with intimate knowledge of home loan practices.
The Home Valuation Code of Conduct, which takes effect next month, is supposed to deal with such problems by, for instance, banning "loan origination staff from ordering appraisals directly" for mortgages Fannie Mae and Freddie Mac can purchase. But appraisers tell the center that this will do nothing but direct business to them through middlemen who can pressure them just as effectively as the lenders did.
So what's the solution? Weigh in.