California Passes Law Forbiding Appraisers to Hit Price Targets
One of the biggest gripes appraisers have is when they are pressured to hit a price target by mortgage brokers or others involved in the sale of a home. Back in July we covered how 90 percent of appraisers felt at different times that they were pressured to hit a target when completing an appraisal at some stage.
Now California has outlawed the price targeting practice via a state law and has put sanctions in to stop this abuse of appraisers. Saying that it is abuse is pretty accurate. The practice was so widespread that even the most honest appraisers felt the pressure and had to make serious judgments whether to maintain their objectivity and integrity or put food on their table.
And since every appraisal done could put their license and livelihood on the line, appraisers have had a rough go of it over the past few years. Hopefully this legislation in California can take the pressure off of appraisers in California and let them do their job in an ethical and secure environment going forward.
SB 223 is the first California or federal law that explicitly forbids persons involved in a real estate transaction from pressuring an appraiser to ‘hit’ a target value. The bill punishes violators with license suspension or revocation and with potential civil action. “I expect SB 223 to act as both a deterrent and a mechanism for punishing those who violate its provisions,” concluded Machado.
SB 223 was supported by several industry groups and consumer advocacy organizations, including the Appraisal Institute, the American Society of Appraisers, the California Mortgage Bankers Association, Countrywide, the California Association of Mortgage Brokers, the Fair Lending Alliance, and the Greenlining Institute. via California Chronicle
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Comment by Mike on 11 October 2007:
Here is another one of those useless laws that has hardly any enforceable merit.
Why do appraisers need a law to stop them from being pressured!!!
If they cant ethically hit a value then they should not do it. Why do they need a useless law to cry on? Appraisers are suppose to be licensed professional that should be able to self regulate a simple decision to write an appraisal that they feel pressured to do. I am tired of our government micro-regulating every little issue that can be handled by the industry or us Americans!
This is just another example of the trade off in power that has occurred in our country.
What ever happened to the “Invisible hand” principle our country was founded on?
It seems more like its been slapping us in the face and making us say who’s our daddy.
Who’s your daddy???
Comment by Bill on 31 October 2007:
You must not be a loan officer or an appraiser. This law is meant to prevent the shopping of appraisals by loan officers among several appraisers until they find one whose ethics can be bought. At that point there are legal repercussions against both the appraiser and the loan officer that are stipulated by this law.