Inflated appraisals contributed significantly to the mortgage fraud that helped an overvalued real estate market implode three years ago. So why then would one of the local remedies to the foreclosure crisis include a suggestion that could encourage similarly unethical behavior?

It shouldn't. Pasco County should move to eliminate questions about private appraisal reports as the government and nonprofit agencies partner to acquire, rehabilitate and resell vacant housing stock around the county as part of the federal Neighborhood Stabilization program.

As Times staff writer Jodie Tillman reported, Pasco County's written requests to private appraisers include both the contract price and the value the appraisal must hit in order for the county to close on the transaction. The standard language in the county's request includes the notation that the federal program requires the sales price to be at least 1 percent less than the appraised value.

It is not illegal, but it is unethical despite protests to the contrary from some appraisers participating in the program. Other appraisers told Tillman they wouldn't take the work under the described circumstances.

The Uniform Standards of Professional Appraisal Practice is straightforward on the issue. It is unethical for appraisers to accept an assignment contingent on reporting a predetermined result or "a direction in assignment results that favors the cause of the client." Saying you need an appraisal at least 1 percent below a published amount certainly smacks of a directed assignment.

Worse, because the information is coming from a government agency, it includes an unwritten, but understood, authority that the activity is permissible.

The reason for the uniform standard is simple. Knowing the target amount of the loan to complete the transaction erodes objectivity from the formula. In this program, that can create the potential for the public to overpay for real estate in a distressed market.

Pasco's Community Development Division has been recognized widely for its handling of the county's $19.5 million share of the Neighborhood Stabilization effort. But, the federal program's initial rules required the purchase price to be at least 15 percent below the appraised value. And, the county's requests for appraisals didn't include the contracted purchase price.

The result was appraised values coming in too low for the county to complete the deals. The county inserted the new language in its requests upon the advice of its own real estate division. Overall, the county has acquired more than 200 homes under the program with the typical sales price at about 95 percent of the "as is" appraised value. Roughly 250 purchases were scuttled, some because of appraisal problems.

The county says the 1 percent rule is well known. True, but when included with the contracted price, it creates a bull's-eye for the appraisers to hit. To remove questions about objectivity, the county should put the blinders back on the private appraisers. It should eliminate the contracted price from the appraisal requests and let the professionals perform their duties accordingly.

It may slow down the process, but it also could curb the potential for paying too much for vacant fixer-uppers.