The Home Appraisal Numbers Game

Home appraisers Pam Crowley and Joyce Potts knew the roof was caving in on the housing industry four years ago, CBS News correspondent Sharyl Attkisson reports.

That's when they noticed their profession being turned on its head. Instead of letting them do their job and figure what a home was worth ... bankers and realtors started telling them what dollar number to hit.

"The appraiser is not to accept any orders where it's pre-determined what the value should be," said Crowley, a Florida certified real estate appraiser.

Most everyone wants a high appraisal: buyers pay less cash down; banks make more money on bigger sales. It's the appraiser who's supposed to be fiercely independent to keep things honest.

But more and more, appraisers have been told that, to get hired, they have to guarantee a high appraisal - sight unseen.

One lender emails appraisers, "I need at least $210,000." Another writes: "I want to know if we can hit a value of 280K."

Some lenders even send out blatant mass e-mails putting appraisers in a bidding war. To 77 appraisers for a home in Arizona: "whoever can provide the highest [appraisal] will receive the deal."

"We were blackmailed," Crowley said.

Those who don't play ball lose work.

Whoever can provide the highest will receive the deal. Those that are honest will get run out of business.

We didn't have to look far to see the fallout. Joyce Potts had just been called by a mortgage broker who wanted a high appraisal to refinance this tiny house in disrepair. The owners don't want to be identified.

Attkisson asked Potts: "What was the number they wanted you to appraise this house at?"

"Well, it started at $210, then he says, 'what about $175.' Then, 'how about $150. can you get $150?'" she said.

Potts turned down the job. But while we were there, another appraiser came by. He decided not to look at the house with CBS News cameras there.

Records are confidential, so CBS News doesn't know if he ended up appraising the property.

So many appraisers have felt pressured to give inflated home values, 10,000 of them signed a petition hoping to get federal regulators to act.

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Now under scrutiny, bankers and lenders are starting to adopt new rules to ensure independent, reliable appraisals.

"It's not in the lenders' best interest to have an inflated appraisal, to the extent to that was taking place, lenders want to see that corrected," said Steve O'Connor of the Mortgage Bankers Association.

The changes are too late for many, including Crowley who's lost her business, and the couple struggling to make inflated payments on a house that's not worth what they owe.

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    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.