Projo 7 to 7 News Blog

S. Keith White Jr., owner of White Appraisal Co. in Warwick, said he does work for many of the banks who write mortgages in Rhode Island. "None of them have contacted me and said, hey, under this program, we want to do something."

Roch said that many lenders might use automated valuation models rather than traditional appraisals when refinancing or restructuring mortgages under the Obama plan.

One reason for that would be cost. An automated valuation typically costs $50 to $100, according to White, while an appraisal, which takes several hours of work by a licensed appraiser, costs $250 to $350 for a typical single-family house.

Another reason is that mortgages carried out under the Obama plan involved homeowners who don't have enough equity to qualify for a standard mortgage, so bankers would be making the loan regardless of whether the value of the house met normal thresholds.

"They will use AVMs, I'm sure," said White. "I think it'll be a mixture. I think there'll be times when they just flat out don't need an appraisal."

White said it's possible that other areas of Obama's economic stimulus plans, including an as-yet unapproved mortgage provision, may prove more profitable to appraisers than the plans that already are in place.

The mortgage provision, known as "cram down," would allow bankruptcy court judges to alter the terms of mortgages so that borrowers can avoid foreclosure. White said that appraisers hope judges would rely on appraisals to guide them in the cram down process. He said industry representatives are pushing for an amendment to require appraisals in legislation pending before Congress.

White also said that the "shovel-ready" stimulus, under which states would get money for transportation projects that are ready to go could spark work for appraisers.
Anytime the state takes land, from tiny slices to entire parcels, the state is required to pay the owner fair market value for the land. And it's appraisers who determine fair market value.