Fall out from Predatory Appraisals

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  • 55% of appraisers say they have been uncomfortably pressured to overstate property value
  • 99% of appraisers believe that other appraisers sometimes go along with these requests.
    - 2003 Appraisal Intelligence: National Appraisal Survey produced by October Research Corporation

Current Impact of Predatory Appraisals

These statistics clearly demonstrate the reality of predatory appraisals in the marketplace. When Predatory Appraisals are used as the property value basis for a lending decision, the outcome is be the same for brokers, lenders, investors and borrowers - everyone loses.

In many cases as a trained underwriter, one could easily see with the adjustments to the comparables, that the appraiser was adjusting value instead of independently finding value.

The caveat is that lenders wanted the loans and politely overlooked any flaws with files, especially at the end of the month.  Depending on where you were relative to goal, managers would approve exceptions with expectation it would get through quality control. 

If the loan failed quality control, there was always the Scratch and Dent Department.  It was taboo to challenge brokers on the quality of documents submitted in a loan file, even if the preponderance of the evidence showed they were compromised.

As I often think back, I would probably had a best seller had I chronicled my observations and experience, while working for one of the largest lenders as both a Loan Underwriter and Account Manager.

Lots of money and fraudulent files were flying around and no one cared.  We had mortgage shops that specialized in arranging loans in for seniors and people in low-income neighborhoods and to immigrants, who understood our tolerance and pimped it to the max.

This is why we have a national mortgage, lending and money crisis today.  My mother would say, "What you do in the dark will eventually come to the light".  I'm not pleased to say, but her wisdom has proven true again!

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