From the forums: A knotty VA problem

The great thing about MPA's discussion forum is that originators can bring their tough cases to their colleagues for advice. And forum user dbsdesk gave us a doozy a few days ago

The great thing about MPA's discussion forum is that originators can bring their tough cases to their colleagues for advice. And forum user dbsdesk gave us a doozy a few days ago:
 
I just got a call from an old friend who is also a Veteran in the process of buying a house in a rural area outside of my state somewhere in Northern Nevada in Zip Code 89429. He mentioned that the appraisal came in and a few things look odd, specifically, the appraiser changed the name of the city the property is in to the same city the comps. used are in and in reviewing the copy he faxed to me the appraiser's certificate shows his VA # and he mentions that he is a member of the National Association of Realtors (sounds like a possible issue of collusion?) Interestingly, the cities use the same Zip Code. I went online to do a quick search on the cities via city-data.com and pulled a profile via online title reports that I have access to as a mortgage officer since my company services most of the USA.

Comps given for the actual city the subject property is in are in the neighborhood of $20K to $40K below the seller's ask price but in the neighboring city, the comps used by the appraiser inflate the value by those amounts. He says the mortgage officer he is using was told by underwriting that the appraiser needs to correct the city, with no mention of correcting comps. The real estate agent replied back that both cities use the same zip code.

The appraisal looks on the face of it to be the appraiser's way of pumping up an area possibly 'on the other side of the tracks' and due to the length of years in the area, the appraiser very likely knows most of the top agents in the area. I asked my friend for the name of the agent & my online search shows the agent has similar (20+ years) of experience in the area as the appraiser.

It sounds 'fishy' to me, what should I tell my friend and has anyone using VA mortgages to buy property had this sort of situation?
I have never worked VA mortgages before so I'm asking for anyone's help on this because I was unable to find specific VA appraisal rules beyond the Tidewater provision and the right to dispute the appraisal (VA usually appraises lower than borrower's expectations.)
PS: Friend's escrow closes in another couple of weeks.

We're posting it here in hopes that some of you can give dbsdesk some advice on how to proceed. Any ideas? You can make your suggestions in the comments below, or on the original thread.