Appraisal problems with mortgages
Real estate appraisal problems
Appraisal practices came under fire as housing prices began to plummet during the recession. Observers determined that eager banks were too lenient with the price valuations. These evaluations combined with lax lending practices to help create a perfect storm.
Real estate appraisal problems
When mortgages based on erroneous valuations were offered to unqualified borrowers, it was just a matter of time before reality overtook the housing market. With high valuations and a booming market, banks pursued mortgage lending with vigor.
At the time, The Secretary of State in New York, Andrew Cuomo joined forces with other states to file an action against the appraisal industry. Cuomo insisted on immediate changes.
On of the most glaring changes was that banks are no longer permitted to request a specific appraiser. Today, banks request an appraisal through an independent third party service that randomly assigns the job to a pool of licensed appraisers. At first, this caused confusion because appraisers were valuating properties in areas where they were unfamiliar with values.
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