| One of the nation’s top-producing loan originators says that the appraisal process is broken and needs to be overhauled, while an appraisal industry veteran says appraisers are getting a bad rap and are just trying to mirror the market.
Melissa Cohn has been originating home loans since 1985. She is president of Manhattan Mortgage in New York and says she has been recognized among the country’s top mortgage originators since 1996 and was named the No. 1 originator in 2008 and 2007. But Cohn says the appraisal process is “totally broken.” She explained that, as a result of the Home Valuation Code of Conduct, originators now have to go through appraisal management companies “who charge a fee, try and find appraisers who will work for less money who are generally less experienced, who don’t necessarily know the area that they are appraising.” In an interview on CNBC, Cohn cited an example of an appraiser driving from three hours away to New York who don’t understand the difference between one street and another. She highlighted the difficulty of disputing an appraisal value, noting that “even if you have factual data showing that the appraisal is incorrect, 99 percent of the time the appraisers stand behind what they say, even if they are wrong and you can prove to them that they’re wrong.” Cohn says HVCC needs to be revised.
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photo of Melissa Cohn on CNBC
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John Brennan, a 20-year appraisal industry veteran who is director of appraisal issues for the Appraisal Foundation, says that seasoned and experienced appraisers are busy doing other work — leaving inexperienced appraisers to do the work.
Brennan noted that appraisers tend to be accused of over-valuing properties in an up market and coming in low during down markets.
“The appraisers aren’t intentionally being conservative because that would be doing an appraisal that is likely in violation of the uniform standards of professional appraisal practice,” Brennan said. “Their job is to try to mirror the market and be able to determine what the value should be based on typical buyers and sellers in the marketplace.”
