WASHINGTON – As part of its on-going efforts to curb predatory lending, the Department of Housing and Urban Development announced its risk-based appraiser monitoring system – Appraiser Watch – is now fully operational. Using Appraiser Watch, HUD's FHA will be better able to identify appraisers who either knowingly or unintentionally place homeowners at risk for losing their homes to foreclosure because of inflated valuations. The new system, which relies on historical risk factors to help identify appraisers whose work will be reviewed by FHA staff, was first proposed in the Federal Register as a Notice of Proposed Rulemaking in July 2002. Based on comments it received, FHA has determined that Appraiser Watch should be a tool that identifies questionably performing appraisers, rather than act as one that automatically triggers an appraiser's sanction and removal. Included among the risk factors the new system uses are an appraiser's association with mortgages with high default rates, and a high volume of appraisals on mortgage programs more likely to have high default rates, such as rehabilitation loans, loans for multi-unit and real estate-owned properties. Under a former appraiser monitoring system used by FHA, the agency reviewed more than 30,000 appraisals from Oct. 1997 – Sept. 2001. These reviews eventually led to 30 appraisers being removed from the FHA Appraiser Roster for poor performance. In comparison, as a result of using Appraiser Watch from Oct. 2001 through Sept. 2002, FHA identified about 1,900 appraisals for review, and 97 appraisers were removed.