A Dallas-based housing group is devising a data base to help prevent banks from dropping community reinvestment projects in Texas simply because an appraiser inaccurately estimates a property's value.
Officials at the Center for Housing Resources said they are assembling an on-line data base of local property appraisers with experience or training in low- and moderate-income lending. These specialists would be less likely to undervalue a property in poorer communities, the group said.
The data base, initially including about 40 companies, should become available next week, according to Karen Meunier, housing development specialist at the center. It will include appraisers' names, contact information, types of property specialized in, and certifications held.
The recently revised Community Reinvestment Act rules base much of a bank's grade on the number and dollar amounts of loans it makes in its community.
But appraisers sometimes underestimate the future value of newly renovated properties in poor neighborhoods, causing some banks to reconsider making the loans.
That can keep rundown buildings from being renovated and limit a bank's opportunities to make low- and moderate-income loans. As a result, meeting CRA goals becomes tougher.
"I've heard many times where appraisers say, 'I wouldn't want to live in this area. Who else would?'" said Pat Gaynor, compliance officer at Northern Trust Bank in Dallas. "Then they make an appraisal that may be too low. The buyer or lender may not get the true value of the property."
Ms. Meunier's group joined with the Dallas Affordable Housing Coalition and the North Texas Chapter of the Appraisal Institute to help head off such judgments. Having heard complaints from both sides, the groups sponsored a half-day seminar last month to help banks and appraisers hammer out their differences.
Texas Commerce Bank compliance officer Linda M. Heim, a speaker at the seminar, said appraisers often misjudge value because they don't make proper comparisons.
"They may not realize that this is an area where 10 different properties are being rehabilitated," Ms. Heim said, "and that would affect the price."
Other bankers said appraisers' personal bias against some low-income areas is also a factor.
One appraiser, who attended the seminar but didn't want to be named, doubted whether these efforts would make a difference in determining property values.
Regulatory pressure on banks to make low- and moderate-income loans is so intense, he said, that institutions are rarely in a position to give up on a project even if an appraiser undervalues the property.
But Ms. Gaynor of Northern Trust said low- and moderate-income property appraisers who don't get training could lose customers. Bankers with access to the data base could avoid them altogether, she said.