Are Appraisers Being Fair?

I don't pretend to know the intricacies of being an appraiser, but I continue to hear unsettling stories from borrowers about their appraisals on a daily basis. Appraisers that use bankrupt homes as comparables instead of making an effort to find non-bankrupt homes a few streets down or appraisers that value a home and then automatically apply an artificial 20% cut to that value.

This week a borrower told me their home was appraised at 40% less than it was just 12 months ago. Another showed me the comparables that were used and it was clear from even a layman's eye that these homes weren't anywhere in the same ballpark. Still another showed me how an appraiser used three comparables that were all much smaller and much older, then instead of taking the average of the three they just took the lowest one. How can that be? What's worse, many borrowers have said that the mortgage companies have a take it or leave it policy. The appraiser's word is final and indisputable. Should one individual wield that much power in the process without any checks or balances? Two or three years ago, many appraisers were throwing out any figure the lender wanted, now they're cutting values like it's a half off sale at K-Mart. Why can't we settle on a reasonable middle ground?

While President Obama talks about lowering mortgage costs, I can't help but feel that he's completely missing the mark. The fees I've seen since the subprime crash have been reasonable. This is not a shot at appraisers. I understand some of the difficulties they face. I understand that foreclosed homes are sometimes all they have. But it's the diminishing appraisals that are making it so difficult for people to sell or refinance their homes. That's what needs to be addressed.