Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. John looks forward to the day when appraisers are not seen as a nuisance, and its sooner than you think.
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is,
on Thursdays on Mondays, one of the smartest guys I know. …Jonathan Miller
The new year started on the right note. On Monday, the Attorney General of Colorado, which has had the highest foreclosure rate in the nation for eight consecutive months, proposed legislation [Denver Bus Jrn] that would:
- Prohibit mortgage brokers from coercing or intimidating an appraiser in order to obtain an artificially inflated appraisal
- Prohibit anyone else involved in the process from improperly attempting to influence the appraiser
- Prohibit the appraiser from knowingly submitting a false appraisal
Of course state licensing and ethics rules have never permitted the appraiser from knowingly submitting a false appraisal, though in reality there is little “teeth” in the enforcement.
The first conviction for appraiser coercion would be a misdemeanor, while a second conviction would result in a felony. Though I have no idea the mechanism the state intends on using to “prohibit” such coercion and intimidation, it’s a start, and it brings the issue front and center.
It is truly dj vu all over again. Nearly 20 years ago appraiser fraud was accused of almost single-handedly bringing down the S & L industry in the US. With foreclosure rates on the rise again, I expect to see more attention paid to the role of the appraiser this coming year.
Then maybe just maybe appraisers will be hired for their professional expertise, and not solely on the basis of the lowest fee and quickest turn time.