NEW YORK FILES SUIT AGAINST APPRAISERS ITS ABOUT TIME

By
Services for Real Estate Pros with The Auctionarium

New York's attorney general today sued a major real estate appraisal company for allegedly colluding with Washington Mutual to inflate the value of thousands of homes, the first strike in a widening investigation of allegedly fraudulent practices that contributed to nationwide troubles in the housing market.

 Here is a link to the actual complaint filed today.

 Its about time the crooked realtors, appraisers, mortgage brokers and lenders start getting nailed for their crimes against society.

Many reading this were stupid enough to think that real estate values never go down.

Yet one more reason to allow dynamic pricing to establish values and not some idiots "opinion" of value. 

I hope this is the first of many criminal lawsuits. 

Comments (3)

Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

In many fraudulent transactions, there are at least four parties to choose among to assign blame, any one of which could be completely innocent or guilty:

  • Real Estate Agent
  • Mortgage broker or lender
  • Appraiser
  • Principal

I'm involved in a short sale right now where the property value was inflated almost double its actual worth. You've got to scratch your head and wonder how in the world did it EVER appraise at that value?

There are so many new appraisers in this business who have no idea what they are doing. So I am happy to see the investigation into these matters continue.

sig

 

Nov 02, 2007 06:00 AM
Billy Burke
The Auctionarium - Altadena, CA
CAI - AARE

Hi Elizabeth:

Thank you for taking the time to comment on this serious issue.

We are currently working a short sale for two homes in Idaho just outside of Jackson Hole that were sold using a "pre-construction" appraised value of $1.3 to $1.5 million based on "comps" in another State & Market.

Our seller paid right at $1 million each for the homes and there are close to two hundred new houses for sale in the same development, all new, all beautiful, all priced $900,000.00 to $2-million with nothing selling.

At auction last September we had 8-registered bidders each with a $50,000.00 "hard money" deposit set the value at $660,000.00 each with the only contingency of sale is the lender having 30-days to accept or reject a "short sale".

There were two lenders who both ordered appraisals through the First American EappraiseIT system which is the same one indicted in New York and I really belive the lenders wanted to know the truth about value not some story.

The properties appraised at $1,355,000.00 and $1,360,000.00 from an "experienced" appraiser who stated that:

 

"...The Market is in an upward trend in Teton Valley..."
"...No time adjustment needed in the 9-month period..."
"...The current active listings and marketing times are all in balance..."

 When in fact there have been no sales in the subdivision since last February

The "comps" used were all $275,000.00 to $400,000.00 OVER listed price when there was an abundance of truly comparable new home inventory available for 30% to 40% less.

The appraiser actually got indignant after we called and asked him to explain these inconsistencies and if he really believed his own statements.

Its going to get a lot worse before it gets any better. 

Any comments? 

Nov 04, 2007 11:58 PM
Mary Strang
Viroqua, WI
Do you think... It amazes me that this happens. How about second mortgages, shame on lenders too for passing out so much money without thinking the market can go down.
Nov 18, 2007 12:23 AM