Appraisal Fraud Adds to Foreclosures.

Washington -- The National Community Reinvestment Coalition is calling for legislation to clean up the appraisal process after seeing more and more "predatory" loans with inflated appraisals that its special rescue fund can't restructure.

NCRC president John Taylor said the problem of undo influence on appraisers from lenders and real estate agents is widespread.

"We think the solution relies on Congress enacting anti-predatory lending legislation that would create more independence for appraisers, more arms-length transactions," he said.

NCRC issued a report last week that documents problems its local organizations are seeing in their communities, including referrals to its National Anti-Predatory Lending Consumer Rescue Fund.

In the past year, the rescue fund has received 750 loan referrals and about one-third involve problematic appraisals, including "upside-down" mortgages, according to NCRC executive vice president David Berenbaum.

In some cases, the loans can be refinanced if the securitizer will agree to take a hit.

"But frankly, in the majority of cases, we are not able to restructure the loan because of the overvaluation involved," Mr. Berenbaum said. "It is frustrating for us. We have a good record at working through problem loans."