Shocker: real estate appraisers pressured to inflate valuations

Well, duh.

Real estate appraisers, whose jobs are dependent on referrals from realtors and mortgage brokers, are pressured to assess homes at inflated values.
Loan brokers are now routinely "dialing for values," [appraiser Alan] Hummel said. "They call up appraisers and say, we've got this sale at $335,000 at such and such an address. Can you get to that number?" If an appraiser answers yes, he or she gets the assignment. If not, the appraiser is bypassed.

Worse yet, Hummel said, when an appraiser comes back with a market value estimate that is lower than the sales contract price, the appraiser may not get paid for the work, and may be blackballed by the mortgage broker or real estate agent.
The winners? Realtors who take 6% on inflated deals. Sellers who cash out at inflated prices. Buyers who get undisclosed cash-back deals.

The losers? Lenders stupid enough to lend 90%, 95%, or 100% of an inflated price and end up foreclosing on a deeply underwater house.

I don't want to point fingers, but Countrywide (CFC) did this, with no questions asked, for Casey Serin, an unemployed 24-year-old who lied about his income and who took cash back from the seller based on the appraiser-inflated price.

The chickens are coming home to roost. The roosters are shorting CFC.

1 comment:

Anonymous said...

RE: Casey Serin:

Some similarly business-minded folks from the old country also run into tough times, due to their own innovative ideas for creating wealth, just like Casey:

Uzbekistani immigrants await discussion of entrepreneurial methods

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