When you throw rocks for a living, you expect to have some thrown back at you. What's less common is to have a rock gently returned in thoughtful padding with helpful instructions on how to improve your aim.
That is what happened after a column last month when I lobbed a few gibbers at the unhealthy relationship that sometimes exists between real estate valuers and developers - relationships that result in overly generous valuations, relationships that might include the gift of the odd Mercedes to a valuer, relationships that end up costing investors many millions of dollars.
Near the core of many a failed investment is a dodgy valuation. Sometimes the valuation comes about as an innocent mistake, sometimes circumstances move quickly to change a valuation - and sometimes the valuation was plain wrong. That's why I would like to see greater distance put between valuers and property developers so that scandals like the Australian Capital Reserve collapse might become less common.
In response to that column, I received a most enlightening letter from Brendon Hulcombe, chief executive officer of Herron Todd White, Australia's biggest firm of valuers. Not only did he agree with the need to distance developers from valuers, but he wants to insulate valuers from the unhealthy influence of some lenders.
Brendon's letter exposes another whole area of concern for investors. He writes:
"We are concerned with the alarmingly prevalent practice of property valuers being pressured by lenders into writing higher than market valuations (so the individual lenders can 'get their deals through' so they can get their bonuses). The pressure on valuers can be intense - and we don't in anyway see why a valuer should capitulate - but the point is they shouldn't be put under such pressure in the first place.
"Put simply, it is easier for the individual lender to have their 'deals' approved by getting a higher valuation then it is for them to get the credit function of their bank to approve it on a higher Loan to Value ratio.
"Some lending institutions have fundamentally flawed processes and frameworks in place that invite abuse from the lender to choose the valuer they are 'comfortable' with - not the valuation firm that acts as the true eyes and ears of the credit function of the lending institution, acting without fear (of the work drying up if they don't give the 'right' amount) or favour (ie. the Friday afternoon 'client relationship drinks', tickets to sporting matches etc) for the lending institution."
That's a very strong allegation to make against lending institutions. As the credit crunch runs its course, it is such institutions that will feel the most pain - along with people who made the mistake of investing in them.
This is far from being just an Australian problem. Mr Hulcombe outlines proposals in the US to specifically bar mortgage brokers ordering valuations as part of strict valuation independence rules.
Mr Hulcombe says there are moves afoot for something similar here.
"I belong to an industry group consisting of Australia's largest valuation firms and our industry representative, the Australian Property Institute (API). We have raised our concern of the practice of property valuers being pressured by lenders with the Australian Prudential Regulation Authority (APRA).
"As a result, our industry group is currently looking at establishing a harassment hotline for valuers similar to that being adopted in the US, and so are looking for support from Australian regulators."
And that's why the idea might run into trouble. Australia's regulators have been painfully slow in making any effort to clean up the dodgy end of the property market. I wish the valuers well – but I'm not holding my breath about any of our buck-passing regulators rushing to achieve something.
Just look at how long it is taking to do anything about the minority of mortgage brokers who sully that occupation's name and cause financial hardship.