Lowball appraisals used as comps distort property values

It's by far the hottest controversy in real estate this summer, and it could directly affect the value of your house — probably negatively — by tens of thousands of dollars. The issue concerns lowballed valuations and the new rules guiding appraisers in both price-depressed and rebounding markets. Complaints about lowballed appraisals — from builders, realty agents, consumers and mortgage companies — have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules into effect nationwide. Critics charge the new system is fostering the use of appraisers willing to work for low fees — sometimes 50 percent below previous standards — and who are willing to conduct home appraisals far outside their typical areas of activity.

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