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Serving Orange, Riverside
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since 1990

Proper quality control procedures must include systematic, random appraisal reviews.

Ethics are the cornerstone of our business philosophy.  Rely on us to give you an accurate, independent appraisal review.

When a market is trending downward, an inflated appraisal is both damaging to the lender and potentially devastating to the borrower.

The review of an appraisal by an independent third-party is important in a variety of instances.

With the reliance banks place on appraisals in making their lending decisions, the periodic review of a random selection of appraisals is mandatory to ensure proper lending oversight.

An appraisal review is also used to determine if a deficient - or even fraudulent - appraisal has been submitted.  For an appraiser intent on committing fraud, it is remarkably easy to disguise the over-inflation of a property value.

THE VALUE OF AN APPRAISAL REVIEW  Quality control throughout the lending process should be the paramount goal of every lender.  Lending standards are set primarily by the two behemoths of the secondary market, Fannie Mae and Freddie Mac, but they rely on the lenders themselves to maintain internal controls to ensure that these standards are being met.  The penalty for failing to meet these standards can be severe.

A worthwhile quality control program will include the systematic review of appraisals submitted for lending purposes.  The reviews should be done on a regular, rotating basis and should be entirely random in their selection of which appraisals are reviewed.  If deficiencies are noted in any appraiser's work, future appraisals submitted by that appraiser should also be reviewed to determine if the deficiency was unique or endemic to that appraiser's reports.  If the appraiser's report is proven to be substandard or, even worse, intentionally misleading, the lender should refuse to accept any additional appraisals and may wish to consider contacting the state licensing board.

The problem with over-inflated appraisals is widespread.  When the market was appreciating as dramatically as it was during the last up cycle, the market would eventually catch up in value to the over-inflated appraisal except in the most egregious cases.  When the market is in a downward trend, however, the aftermath of an over-inflated appraisal can be not only damaging to the lender but devastating to the borrower.  How much of the market's current downturn can be attributed to faulty appraisals is unknown, but it is believed to be significant.

There has been much discussion of late about the pressure applied to appraisers to "hit" values.  There is no question that this exists... and probably to a greater degree than anyone appreciates. Lenders and mortgage brokers only generate revenues when loans close, and if an appraiser is the one who prevents that loan from closing, the short-term loss of the revenues frequently overshadows the long-term benefit of loaning based on a property's true value.  This appraiser will often find that his future order volume from this client will diminish or disappear altogether in this scenario.

48-Hour is proud of the fact that we have never capitulated to lender or broker pressure.  We will always consider new data or correct occasional mistakes - sometimes resulting in an amended value - but we will never knowingly appraise a property for one dime more than the market evidence suggests.

It's called ethics, and it's the cornerstone of our company.  If you're serious about implementing a quality control procedure that includes the realistic review and assessment of the appraisals that are the basis for your lending decisions, then you'll want to use 48-Hour Inspection and Appraisal.

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