Agent and Manager Pressure to Inflate Appraisal
Tomas is an MLO at a licensed mortgage lender in Springfield. His borrower, Aisha, has a signed purchase contract for $475,000 on a three-family in Holyoke; she is putting 10% down and needs a $427,500 loan. The appraisal ordered through the lender’s AMC comes in at $450,000. The real estate agent, who has sent Tomas six referrals this year, texts: “Use my appraiser; he always hits value. If you don’t get $475k, Aisha loses the house and I lose my commission.” Tomas’s branch manager says, “Just ask the AMC for a reconsideration of value and send the agent’s comps; don’t mention who sent them.” The agent’s comps are three sales from a neighboring town, all above $480,000, but none are three-family and one is a foreclosure. Aisha asks Tomas to “do whatever it takes” because she already gave notice at her apartment.
1. What appraisal independence and ethics issues are raised by the agent’s text and the manager’s instruction?
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The agent is asking Tomas to select or influence an appraiser based on a desired value, which violates appraisal independence under TILA §129E and 12 CFR 1026.42. Tomas cannot use an appraiser because the agent says he hits value, cannot tell the appraiser the needed value, and cannot condition payment or business on a value outcome. The manager’s instruction to send the agent’s comps without disclosing the source is also improper: it conceals the advocacy and may mislead the AMC. A reconsideration of value is allowed only through the lender’s AMC process and only for material errors or additional comparable data. The agent’s three sales are weak comps-different town, no three-family properties, and one foreclosure-so submitting them as support for $475,000 could be misleading. The six referrals do not create a RESPA kickback issue by themselves, but the agent’s pressure and the manager’s instruction create an ethics and compliance problem. Tomas should not follow the instruction.
2. How should Tomas respond to Aisha, the agent, and the branch manager?
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Tomas should tell Aisha the truth: the appraisal is $450,000, the loan-to-value at the contract price is too high, and he cannot guarantee a higher value. He can explain legitimate options: renegotiate the price, increase the down payment, challenge the appraisal through the AMC’s reconsideration process with actual comparable three-family sales, or cancel. He should not imply that doing whatever it takes will work. To the agent, he should state that he cannot influence the appraiser or select an appraiser based on value and that any ROV must go through the AMC with accurate, source-identified data. To the manager, he should decline the instruction to hide the source, escalate to compliance, and document the request. He should send only relevant, verified comps through the proper channel and keep a record. If the value remains $450,000, Aisha must decide whether to bring more cash or renegotiate; the lender should not pressure the appraiser.