Appraiser's Lawsuit Is Just the Beginning

The seedier side of the Mortgage Mess

Its become clear that one of the reasons so many of these loans ewent through was because of collusion between the lenders and the appraisers that valued houses with an eye to the laon passing muster.
How many weak loans approved through this collusion is unknown, but surely many lenders were pressuring appraisers to fudge their valuations.

New York state has just sued a professional appraisal law firm for giving into pressure from a major bank. Others are suing because they were told to comply with evaluations that made the loan go through or they would be frozen out of any new work.

According to Gary T. Crabtree, via Washington Post, principal appraiser for Affiliated Appraisers in Bakersfield, Calif., said in an interview that pressure to inflate values "has been endemic, industry-wide" and is a "significant contributing factor" in many mortgage fraud cases and foreclosures.

Every inflated appraisal during the boom years, said Crabtree, "became a comp [comparable sale] used in other appraisals" -- and the layers of over valuations spiraled out of control in some market areas.

The Washington Post article goes on say quote Susan M. Wachter, a professor at the Wharton School of the University of Pennsylvania, has estimated that appraisers helped inflate mortgage values by $135 billion in 2006, according to Valuation Review, an industry publication.

This is the kind of excess that always get washed out with great pain in the aftermath of a bubble. Its seems to me that the lenders have to help mitigate the problem they helped create, sometimes fraudulently. Let them take it on the chin along with the home owner by re- negotiating loans or accepting a lower payment and creating a lien on the house for the difference. This would allow the owner to stay in the home and the property to stay off the market. The lien could be recouped during better times

Thanks for Reading
Howard Bell

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