U.S. Sentencing Commission Should Require Appraisals
Posted by Jonathan J. Miller -Thursday, March 15, 2012, 6:00 AM
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The Appraisal Institute sends out a press release today recommending that the U.S. Sentencing Commission require appraisals instead of relying on tax assessment values in mortgage fraud cases.
In other words…
Tax Assessments Should Not Be Relied On For Determining Market Value
Speaking at a hearing in Washington, D.C., the Appraisal Institute today urged a federal judicial agency to require the use of real estate appraisals when calculating loss in mortgage fraud cases.
(The Commission is charged with the ongoing responsibilities of evaluating the effects of the sentencing guidelines on the criminal justice system, recommending to Congress appropriate modifications of substantive criminal law and sentencing procedures.)
Amazingly there are…
proposed amendments to the federal Mortgage Fraud Sentencing Guidelines because the amendments propose using tax assessments, and not real estate appraisals, to determine fair market value when the property in question has not been sold.
While I’m not on board with requiring the use of designated appraiser infused in this release even though they are often more qualified (I have always had a problem with mandating the use of a private organization by a government entity), the very idea of using a tax assessment as a basis for any type of value is a terrible mistake.
Assessment values vary significantly across the country:
- they usually do not include an interior inspection.
- they rely on public records data, which can be inaccurate.
- usually not correlated to market value (just take a look at NYC’s tax assessment method).
- increases can be subject to restrictions and phase-ins.
Simply put, tax assessment values are not usually the same as market value. If value is to be used as a basis for determining value, then the damages to the victim should be fair.
