Inflated appraisals of residential properties have contributed to our recent housing problems. Appraisers who report unlikely high home values must carry much of the blame for today's mortgage and housing woes.

Only too often, appraisers feel they must "hit a value" given to them in order to make a mortgage application approval. The targeted worth is sometimes substantially more when compared to the real market value. The appraisers feel if they don't come up with the desired rate, they may be blackballed from future appraisal assignments.

This unethical practice has resulted in buyers paying too high a price for their home, creating major problems particularly when market values trend downward. It has also resulted in many families obtaining an unaffordable mortgage.

Real estate appraiser groups, including the Appraisal Institute, are actively addressing the problem by calling on Congress to write stricter laws, which would require states to investigate complaints against appraisers; the groups are demanding action to correct or minimize the issue.

One recent report shows that 24 states routinely fail to meet government guidelines that require criticism against appraisers to be investigated within one year. In some cases, complaints went unexamined for several years. The appraiser groups insist that the guidelines be more rigorously enforced and new laws be created where needed. Failing to weed-out criminal appraisers has contributed to the meltdown in the housing industry.

"The appraisal profession is ever-changing and dynamic," said Bill Garber, director of government and external relations for the Appraisal Institute, in an industry letter sent to the Senate Banking Committee. "As such, legislation governing the profession needs to adapt to the times in order to ensure the best interests of the public."

However, in another letter, the appraiser groups asked policymakers to be "extremely careful not to enact reforms that will drive competent and highly-qualified appraisers from the appraisal profession." The groups are concerned that certain proposals introduced in Congress could potentially require appraisers to carry a surety bond — something that insurance providers estimate would cost individual residential appraisers as much as $50,000 per year.

The appraisal organizations say these proposals would cripple the residential appraisal profession, while still failing to address the underlying issue of the lack of enforcement for existing laws and regulations.

Q: What's the current maximum amount for VA mortgages?

A: The amount a veteran can borrow with a no-down-payment home loan has been increased substantially — from a maximum of $417,000 to $729,000. Lenders can now use a locally-based approach in raising ceilings on its vet loans.

The new policy, effective immediately, is tied to the recently enacted Housing and Economic Recovery Act legislation. The law also improves VA's Specially Adapted Housing Program; it raises primary grants from $50,000 to $60,000 toward constructing a new home or modifying an existing home to meet adaptive needs of veterans, or active duty service members with certain service-connected disabilities.

VA home loans are available for veterans to purchase or construct single-family homes as well as for buying condominiums. There are now about 2.3 million existing VA home loans, more than 90 percent made without a down payment. For more information, visit the VA website: www.homeloans.va.gov/.

Q: Are home operating costs increasing?

A: It probably won't surprise many readers to learn that home-related costs are indeed rising. The median monthly housing cost has increased by 128 percent in the last 20 years, according to a study and report by the Department of Housing and Urban Development (HUD).

Average monthly housing costs for owners with a mortgage increased from $670 in 1985 to $1,521 in 2005. Payments for principal and interest on mortgages represented about two-thirds of owners' monthly housing costs.

The second-highest cost was utilities, with electricity as the largest expense. Gas heat finished as the next highest cost. For owners without mortgages, the highest housing expenses were utilities, followed by real estate taxes.

Q: Is home affordability increasing or decreasing?

A: Homes have been becoming more affordable over the past nine months, according to the Housing Opportunity Index (HOI), which is compiled by the National Association of Home Builders and Wells Fargo Mortgage. From April to June of this year, the HOI rose to 55 — meaning 55 percent of all new and existing homes sold were affordable to families earning the national median income of $61,500.

"A good sign in today's market is that home values in some parts of the country are remaining stable or edging up," said Frank Nothaft, chief economist for Freddie Mac. "Most areas in the West South Central region are experiencing price gains. Thirteen states registered price gains over the past year."

The median home sales price on a national scale during the last quarter was $215,000, the report noted. That's about 10 percent lower than last year.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2008 CREATORS SYNDICATE INC.