Code of Conduct for Appraisals

Any MBA student will tell you that businesses that follow their ethics policies tend to achieve greater success with regards employee satisfaction and honesty.  However, in the real estate market most borrowers are victims of faulty appraisals even though new codes of conducts have been established for this particular reason.

The Home Valuation Code of Conduct is the center of the controversy.  This code of conduct was designed to provide best practices for appraisal related inquiries.  The Home Valuation Code of Conduct was brought into legality on May 1 2009 and its main purpose was to reduce the chance of appraisal fraud and hinder pressure being placed on professional appraisers who were asked to inflate home prices.

For all the reasons why the housing market came to a crash, we can assume the lack of monitoring faulty appraisals was one of the main reasons why people got stuck with inflated homes.  Mortgage brokers, real estate agents, and homeowners who are now considering to refinance their homes are feeling the effects of the new code of conduct for appraisals.  In the past, mortgage brokers and lenders were able to choose their own appraiser to evaluate the home in question, but now it must go through a national management company who chooses the best available appraiser.  Communication between the real estate agent and the appraiser is now not necessary.

Proponents of the new code of conduct ague that due to the increase in foreclosures and short sales having a national management company monitor appraisals is needed.  Brokers, lenders, and real estate agents argue that the new code of conduct has give these national management companies with too much power.  Regardless, a change was needed and when change is made, majority of the people in the real estate and lending business will tend to disagree.