Pushed appraisal

A pushed appraisal is an appraisal the home value has been falsely inflated in order to meet a value needed by the mortgage company to secure financing. There are many negative side affects of a pushed appraisal that can affect you for a long period of time.

Pushed appraisals have been an increasingly growing problem over the past decade or so. Many consumers have gotten into real financial trouble because there house's appraised value was inflated, and now they owe more on their mortgage than what their home is worth. Therefore, they are unable to sell their home because they can not get enough to pay off their mortgage.

The most widely publicized case of inflated appraisals involved Ameriquest Mortgage. Although they may have been the biggest culprit there are many smaller companies that have been found to participate in the same shenanigans.

Inflated values are often seen in illegal home flipping schemes. Although flipping a house for profit is perfectly legal, there are people who flip homes illegally using inflated values that decieve the lender into lending more money than the home is worth.

Inflated values or pushed appraisals also create problems when the borrower is trying to refinance.

The point of using an appraiser is for the lender to get an independent evaluation of their home. Most lenders have blacklists of appraisers they will not accept appraisals from. Be sure to ask your mortgage specialist to make sure the appraiser you're using is not blacklisted from your lender.

Appraisals are designed to protect lenders and homeowners alike from overextending themselves when taking out a home loan. When the appraisals are pushed, or inflated, borrowers can wind up owing more than their home's value, even if prices don't fall.

Pushed appraisals can also lead to an increase in foreclosure rates which in turn tends to devalue other homes in the area, sometimes lender will not even lend in those areas if the rate gets too high..

Due to pushed appraisals, many lenders are requiring a thorough review of an appraisal report. Usually an automated valuation model or AVM is required at a minimum. Many times a field review, desk review or complete 2nd appraisal is required to be performed by a different appraiser.

» DISCLAIMER: The information contained in this article on 'Pushed appraisal' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.