Mike Kennedy, a real estate appraiser in Monroe, N.Y., was examining a suburban house a few years ago when he discovered five feet of water in the basement. The mortgage broker arranging the owner's refinancing asked him to pretend it was not there.
On May 1, a sweeping change took effect that was meant to reduce the conflicts of interest in home appraisals while safeguarding the independence of the people who do them.
Brokers and real estate agents can no longer order appraisals. Lenders now control the entire process.
The agents, maintaining that the changes are effectively blocking home sales by encouraging the use of inexperienced appraisers, are asking Washington to suspend the code until 2011. For their part, appraisers acknowledge that the change may have been well intentioned but contend that it has no teeth and is undermining the economics of their profession.
"We've been begging for years for enforcement of existing state and federal laws regulating appraising," said Mr. Kennedy, a leader in the appraisal community. "We thought we were finally going to get that. But the code is doing nothing except putting ethical appraisers out of business."
Financial change is one of the most contentious issues in Washington, and efforts to fix even widely acknowledged problems seem stalled. The attempt to change the appraisal system is an example of how difficult it can be to adopt changes that are good in theory and also work in practice — while simultaneously winning support from warring interest groups.
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