When an Appraisal Just Doesn't Add Up

Q: I applied to refinance my mortgage and was told that I would have to have a current appraisal. The lender contacted an appraiser to schedule a time. I paid the lender $349 upfront, which was charged to my credit card.

The appraiser arrived as scheduled but asked no questions during his visit. I thought this was odd. When I received a copy of the appraisal, I noted several glaring discrepancies. For instance, it said "no carport" when there is one and "only room for two cars to park" when there is designated RV parking and space for a car and a boat in the carport, and still room for three other vehicles. It also neglected to point out that an addition was built in 2004.

The appraisal value was about $40,000 less than I thought it should be. What legal recourse do I have? I have contacted the lender by telephone and e-mail, outlining in greater detail my concerns, but have not received even a phone call.

Appraising real estate is not a science; at best, it is an inexact art. But isn't it strange that all too often, the appraisal just happens to be for exactly the number that makes a deal work?

The appraisal community is taking a lot of heat from many sources. Recently, the Mortgage Bankers Association released a study that showed that in 2007, appraisals contributed to approximately 16 percent of U.S. mortgage-fraud cases.

In March, New York Attorney General Andrew M. Cuomo negotiated a settlement in which Fannie Mae and Freddie Mac committed that, effective Jan. 1, they would buy mortgages only from lenders that used independent appraisers.

Many appraisers are being accused of providing valuations as directed by the mortgage lender out of fear that they will no longer get business if they do not cooperate and produce an appraisal consistent with the amount that makes a loan possible.

There are, of course, many honest, hardworking appraisers, and I am not suggesting that yours was engaged in fraud.

But appraisers are human and can make mistakes, especially when they face deadline pressure. Typical errors include failure to consider the impact of the applicable zoning, extensive use of boilerplate statements that contradict facts included elsewhere in the report, use of nonrelevant comparables and, as happened in your situation, erroneous information about the property.

I was curious about how state governments handle complaints about appraisers and found an interesting Web site from the California Office of Real Estate Appraisers. The agency reports that, based on complaints from lenders, typical concerns include:

· Untimely delivery or nondelivery of the report.

· Unwillingness to correct errors in the report.