Nobody Likes Appraisal Fraud

I’ve been getting some “hate mail” from people who obviously have a vested interest in getting a message out that the appraisers did nothing wrong. This is the equivalent of saying the rating agencies did nothing wrong rating securities AAA when they were worthless.

The simple facts are that the “lender” had no skin in the game so there was no actual underwriting and no risk. SO the usual appraisal verification was skipped. AND the appraisal process was flipped on its head. Instead of using the lowest appraisal possible so as to decrease their risk of non-payment, they pushed the appraiser to come up with the “right” number so they could close the deal which meant overvaluing the property.

This behavior increased the risk but resulted in the same fees to the “lender” for impersonating a Lender. The incentive was to close the deal without regard to repayment through borrower performance or selling the property.

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