Can Regulation De-bias Appraisers?

35 Pages Posted: 21 Dec 2014 Last revised: 23 Apr 2019

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Brent W. Ambrose

Pennsylvania State University

Vincent Yao

Georgia State University - J. Mack Robinson College of Business

Date Written: April 21, 2019


This paper examines the effect of a regulatory action (the Home Valuation Code of Conduct) that was designed to reduce the incidence of inflated collateral valuations. We identify the impact of the regulation using a difference-in-difference identification strategy. Our baseline results confirm that the regulation reduced inflated valuations in refinance transactions by 16% in the large lender sample, compared to small lenders and a placebo sample. The effect is most significant in low-liquidity and low-distress markets, but not in other markets. We find that the regulation had a significant impact on loan to value ratio and interest rate, and it also led to a significant increase in defaults but a decrease in prepayments.

Keywords: mortgages, valuation, financial crisis, regulations, appraisal bias

JEL Classification: G21, G28, K11, L85, R31

Suggested Citation

Agarwal, Sumit and Ambrose, Brent W. and Yao, Vincent, Can Regulation De-bias Appraisers? (April 21, 2019). Journal of Financial Intermediation, Forthcoming, Available at SSRN: or

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
8118 9025 (Phone)


Brent W. Ambrose (Contact Author)

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)

Vincent Yao

Georgia State University - J. Mack Robinson College of Business ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

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