Appraisal Fraud is Getting Attention

Apparently a number of appraisers are feeling pressured to inflate how much a home or condo might be worth.

[SALEM, Ore. (CNN/Money) – Anyone who's ever bought or refinanced a home knows the sense of relief when the appraisal comes in with high marks. The appraisal tells bankers, brokers and, ultimately, investors whether a house is a sound investment.

But on Tuesday, the Appraisal Institute will tell Congress that its members are under increasing pressure from lenders, mortgage bankers and real estate agents to "hit their number" when appraising property.

Rather than come up with an independent estimate of a home's value, appraisers -- who are typically independent contractors -- say they are being told to base their estimate on a predetermined value.]

Snip…

[A puffed up appraisal can have serious consequences for a homeowner down the road.

"There are a lot of people who have refinanced for more than their homes are actually worth and they're effectively already upside down even without a real estate bubble bursting," said Callahan. Down the road if they have to sell or decide to refinance, a more accurate appraisal might show that they owe more than the house is worth.]