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When Machines Take Over The Earth, Or At Least The Appraisals

This recent editorial Tough action needed to stop the deceit [KC Star] [1] illustrates how far gone the appraisal industry is. Betrayal of public trust is something that you can’t undo very easily. The sad thing is that its not an easy fix.

Although we are responsible for the lion’s share of the problems, don’t heap it all on the appraisers because thats incredibly simplistic. Its like telling someone who is overweight “Well, just eat right.”

Here’s a recap of the problems with the appraisal industry today:

We’re the only profession where you are begged to be dishonest.

AVM’s have already replaced appraisers in home equity lending and there is talk about testing it for first mortgages. However, AVM’s are well-known to be inaccurate and are not the panacea for responsible lending.

It doesn’t have to be this way. In some ways, a correction of the housing market will remove much of the fly-by-night elements of the lending industry.

The solution? Its not as the editorial suggests: Curbing the problem will require a change of culture within the industry itself, as well as a tougher regulatory climate and stricter licensing laws. Also needed: more rapid response by professional boards to complaints. These suggestions are simply window dressing and demonstrates the lack of understanding as to the real issues (which is one of the problems of righting this ship):

Until these two issues are dealt with directly, there will be no change in the status quo and eventually, the profession, as it relates to lending, will be obsolete. This will not be because of competition from technology, but because of the lack of trust by the lending community.

Lets rebuild ourselves into an industry of appraisers and lose the “form-filler” moniker.