Miami real estate news and information

Why Appraisals are coming in OVER or UNDER Contract Price

Written by contributing author, Philip Spool, ASA                              … part of a 4 part series…

“Why Appraisals and Contract Prices Don’t Mesh ..  Current Appraisal Dilemma“:
“Those appraisers that are still in business are very concerned about either being sued by the lender of a loan that went into default or concerned
that the lender, buyer or seller would file a complaint with the Division of Real Estate citing that the appraisal was not supported for the high loan that was made, even though the lender was willing to give 100% loans, NINJA loans (no income, no job, no assets), or for any other reason.

Lenders required the appraisers to have errors and omissions (E & O) insurance and this was the easy way for the lender to recoup money lost in a default, by suing the appraiser for an unsupported high value. Ironically, virtually none of the mortgage brokers were sued.

A complaint against the mortgage broker had to be filed with the Division of Financial Services and not the Division of Real Estate.  Besides, mortgage brokers did not have E & O insurance.

The appraiser is now very concerned with the possibility of a loan going into default.  In addition, the new Dodds Frank bill passed by congress last year makes it mandatory for lenders and AMCs to turn in an appraiser to the state regulatory agency, in Florida it is the Florida Real Estate Appraisal Board,  if they believe the appraiser prepared a faulty appraisal report, for whatever reason.

In 2009 and 2010, there were approximately 2,000 complaints filed against appraisers.  In 2011, there were approximately 1,000 complaints filed.  It is unknown how many appraisers were sued during this time period as statistics are not kept on lawsuits and most settle before they go to trial.”

Phil  Spool has been appraising in Miami-Dade County since 1973, is a state-certified general appraiser, is vice president of the Greater Miami Chapter of the American Society of Appraisers and has published numerous articles in Working RE Magazine, a national appraisal journal, and . He can be reached at [email protected]   The Restivo Team at EWM Realtors, Vicki and Alexandra, can be reached at 305 793-1365  and 305 632-0164 and [email protected].



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