Accurate appraisals are one of the fundamental components of the loan decision because a borrower's credit and willingness and ability to repay are only two of the three 'Cs' (credit, capacity and collateral) used by lenders to make lending decisions. In the event a borrower is unable to meet the payment obligations of a loan, the underlying property serves as the collateral for the obligation. Appraisal estimates are expected to be unbiased reports. With increased concerns about lending practices brought about by current market conditions and the rise in delinquencies, anti-predatory lending proposals with a focus on altering existing appraiser and appraisal standards are keen on legislators' minds. MBA is especially concerned that policy-makers will increase industry regulation where it already exists to ban coercion on appraisers to artificially inflate values and expose lenders to additional liability and expense.

In order to ensure appraisals are accurate and performed by independent appraisers, MBA believes:

• Lenders, real estate brokers, borrowers and appraisers are best served by ensuring that the existing principles of Uniform Standards of Professional Appraisal Practice (USPAP) are obeyed.
• Any new federal appraiser coercion law must include all of the principal parties to the real estate transaction (including real estate brokers, mortgage brokers, lenders and borrowers), and use objective, legally defined terms to describe pressure ("extort, bribe or coerce").
• More adequate funding of state appraisal boards is needed.
• Increased efforts to detect and deter fraudulent schemes are needed, including a national mortgage fraud database and the creation of a national valuation registry.

With increased scrutiny of lending practices brought about by current market conditions and the rise in delinquencies, some anti-predatory lending policy proposals also alter existing appraiser and appraisal standards. MBA is especially concerned that policy-makers will react to reports of appraiser coercion by increasing industry regulation (where it already exists to ban the practice) and expose lenders to additional liability and expense. MBA opposes all fraud that affects the mortgage industry, and it is important to understand that mortgage lending institutions do not benefit from inflated appraisals.