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Transcript: Reappraising appraisers

Anchor Intro: You know, there are a lot of people who think that over-inflated appraisals had a lot to do with the housing bubble. Whether it did or not, there are proposals on the table now to change the way your house gets appraised. Bankrate.com has this report...

SOT: It's like putting a Band-aid on cancer. You're just changing the source of the pressure. You're not eliminating the pressure.

Voice over 1: Boone Smith is a licensed appraiser, and her job may be changing, thanks to new rules being proposed in the wake of the housing downturn.

Voice over 2: One target is the pressure appraisers often get from lenders and mortgage brokers to come up with a price that will support the loan they want to make.

SOT: "They would say, 'I've got this property I want to make a loan on...can you get to $300,000 on it. And if you can, I'll send you the order.'"

Voice over 3: So mortgage giants Fannie Mae and Freddie Mac have proposed a new code of conduct. One thing it does is keep lenders and mortgage brokers from paying appraisers, so they can't influence appraisals. Instead, the lender would pay an outside management company to hire appraisers. To some, no solution.

SOT: "The appraisal management company wants to continue getting assignments from the lender. So they're going to use appraisers that can best get their loans closed."

Voice over 4: In other words, this new layer, and maybe expense, doesn't solve the problem. One reason why some on both sides -- lenders and appraisers -- are arguing against the new rules.

Standup: Both sides are still appraising how your house will ultimately be valued. But it looks like some kind of change is imminent, which could make the process more fair, but could also make it more expensive. For Bankrate, I'm Kristin Arnold.

Bankrate.com's corrections policy
-- Posted: July 15, 2008
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