However, I think this article says it quite clear….a large bank which ordered over 260,000 appraisers is being accused of manipulating appraisal firms to inflate values for their profit. I can see how an appraiser might be intimidated by this.

However, I honestly can’t understand an appriaser being threated by a small mortgage brokerage. Sounds to me like the appriaser was willing to do whatever they could to just make the money.

Its interesting now that the —- has hit the fan the appraisers are actually saying “dont blame me they made me do it”.

Whats surprising to me is that of all of the areas in which lenders have exerted a bit of quality control in wholesale underwritting it has been in appraisal reviews. I would say that just about all appraisals go through a review of some sort. I would not even dare to try to push through a bogus appraisal. It would seem to me to be a waste of time and resources.

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/11/03/MN10T5DS5.DTL

Not that I’m saying all the blame rests on the brokers/lenders. Mill appraisal companies with pseudo trainees and one licensed appraiser signing for 20 drones with no ethics training have also done their damage. Hopefully with the new California OREA guidelines due to be in place by 2008, that will change. Hopefully.

I beg to differ about the appraiser and loan officer eventually regretting their deeds. If any of these banks, brokers, etc. really wanted the true market value of the “collateral” all they would have to do is employ / contract some real “review” appraisers.

The fact is that I was personally stricken off First Franklin’s and other review appraiser lists because I killed too many phony deals. Many of the appraisals I looked at were absolute jokes, i.e. dense population tract homes with 10 sales within the tract within the last 6 months and “appraisers” going 1.7 miles away for the first comparable (600 sq ft bigger too) to hit the “number”. Many of these appraisals were being done / signed by “AG” (AG is highest state designation)appraisers.

The CA state oversight agency – OREA is a toothless tiger. They exist to “preserve the public trust”. How do you preserve the public trust by handing out a $2500 fine, 16 hours additional education and necesitating supervisory signatures to a “skippy mill” appraiser that has blatently overvalued a property by 100k, misled the decision maker, and violated numerous USPAP standards. California, even has a “convicted” felon as part of its appraiser panel.

As much as I hate lawyers what we really need is for some shark to get a few of these “skippy mill” appraisers’ and scumbag brokers errors and omissions insurance to pay out some bucks to damaged investors. Errors and omissions insurance does not cover fraud.

“Well, your honor, I am not claiming that Mr. Skippy here committed fraud by overvaluing this choice piece of Compton real estate by using comparables from Beverly Hills, I’m just saying it was an error on his part, and therefore his policy needs to cover my clients loss”.

If a million dollar E & O policy is not enough money, then let the state DA send a few of the “skippy mill” boys to be traded in Folsom for a pack of cigs. If you want to move the herd you only have to shoot a couple and make public dispays.

Cheers

Socalappraiser

In response, eAppraiseIT?s President wrote: ?Bingo!? and explained that since the federal government enforced appraiser independence rules variably in different regions of the United States, and that ?it boils down to who has juice with whom at the regulatory level.?

As far as lawsuits go they are happening against brokers. Lawyers will take any case so long as the fees can be paid or there is a chance of winning. With today’s media placing blame on brokers, it would not be too hard to find a sympathetic jury..(here is recent one:Michael Sheneman and his son, Jeremie Sheneman(2 brokers), were sued by Jack Stilp, James Aters, Kris Hinton and James Turnbo III for mortgage fraud. Each of the Plaintiffs were looking for investment income to supplement their pensions and therefore purchased rental properties with the advice and assistance of the Shenemans.

According to media reports, after purchasing the South Bend, Indiana area investment properties, the plaintiffs learned that the price of the real estate was artificially inflated, that the properties were in need of repair- more so than had been disclosed) ?

Now, I am not saying that their lawsuit has any validity…however timing it everything and right now all the media can work in favor of these buyers…It is sad to this happening…it all goes back to greed(lots of it) and responsibility(very little of it).

This whole problem will be solved when lenders start to be concerned about the viability of repayment, and collateral, of the money they give out. Fortunately, this process is well under way, and lenders have been dramatically tightening their criteria for issuing loans. I am sure we will see the standards become MUCH tighter still before this downturn is over.

In short, the system will automatically correct itself as each lender gets severely burnt by their terrible lending practices of the housing boom. In fact, this growing change in lending behaviour will undoubdtedly last for generations, as this current downturn grows into a full-on housing depression. Sure, lending standards might become loose again in another 2 or 3 generations, but we will be fine until then.