When this market cools, a lot a lot will be in hot water!

Well Jim, let me be the first to comment on your post with a personal story.  Last year, my husband, an appraiser, lost one of his biggest appraisal accounts with a local lender because he could and would not hit numbers for the number 1 originator in the bank.  So, they decided not to use him anymore.  This happens all the time to honest appraisers.   It was a blow to our income when you add in the general slowdown of 2006.  He always said it was one deal for the loan officer but his license was on the line and he wasn't willing to lose it.  The point here is that someone else WAS willing to do the appraisals.  Well, the loan officer is no longer employed (who knows what happened, I'll never know), hubby is still in business and life goes on.  I agree totally with you there is a lot of fallout yet to come.

I have a good friend in Reno NV that has seen a major cooling off.  He purchased a total of 5 homes over the last 4 years in Reno/Sparks.  He can't even give them away now.  He is not struggling with the payments but still he would rather be rid of them.  5 years ago someone could buy any house in Reno and gain over $100K in equity in a year.  He says that it is not like that anymore.

I've seen more sellers "upside down" than ever before. Especially when they bought new construction and then unexpectedly had to move within a year or two. It's scary. Also, maxed out equity loans have been a real issue lately. Sometimes home equity appraisals are so out of touch with reality. So, if it tightens up a little bit, maybe these sellers (and buyers) would be better protected...and that's a good thing.

Where was all the wisdom in the lending industry for the last several years? Its not like this never happened before. Maybe the lenders shouldn't dump these people when things go bad; keep them around to teach the new people the dangers inherent in lax lending practices.