Property appraisers the real culprits ?

[C......N......C]

The property appraisers made sure all the homes met the asked for loan amount so that the homes could be financed. Are the property appraisers the real culprits in the mortgage mess?

[OmahaBlueDog]

1. Appraisal standards must be reexamined as a result of this debacle

A big part of the problem is that, while theoretically independent, most knew that if they didn't say what the broker wanted to hear, they'd simply get another appraiser.

[C......N......C]

2. Since appraisals were the key to financing,

could you blame them for the whole mess?

[OmahaBlueDog]

7. No. Ultimately, the underwriters sign off on the loans

Think Enron. Is Arthur Andersen to blame for the whole thing by their failure to provide meaningful audit results? No. Did their failure to provide proper oversight contribute. Yes.

[w4rma]

3. No. The ones who got away with all the money are the real culprits. (nt)

[Common Sense Party]

10. Everybody got away with some of the money.

The appraisers got tons of appraisal fees--both legitimate and under-the-table--for pumping up values.

The lenders got huge origination fees and bonuses.

The bankers got huge bonuses for "reducing" the risk of their balance sheet by securitizing the subprime mortgages.

The insurers got big commissions for selling and trading their hinky credit default swaps.

The homeowners got to pull big chunks of phantom equity out of their overinflated home values, and many spent it on vacations or cars, etc.

The politicians who encouraged all the massive lending, and who didn't look too closely at the uber-complex derivatives the bankers and Wall Street guys were using to give the impression that all was well, got boatloads of campaign contributions from the banks and the Wall Street firms.

[dkf]

14. Yup. Many people contributed.

Complicity ran through everyone it came in contact with.

[Common Sense Party]

15. Complicity, duplicity, or plain old stupidity. It was a massive, systemic pooch-screw.

On a global level.

[CoffeeCat]

4. There are so many people who had a hand...

...in this.

Without each person playing their role--this mess wouldn't have happened.

You needed greedy real-estate agents who would talk people into buying more home than they
could afford--and show them more expensive homes.

You needed mortgage brokers who were willing to push the creative financing on homebuyers.
Many mortgage brokers positioned these loans as sophisticated financing that allowed smart
people to own more house than they could afford.

You needed banks who were willing to look the other way while all of this was happening.

You needed additional bank employees who were willing to roll the bad loans into a bundle
of loans--and then sell these packaged loans to unsuspecting finance companies.

Then you needed the insurance giant who were willing to sell credit-default swaps on these
bad loans. These insurance companies sold 'insurance' on these bad loans--often with thousands
of people buying insurance on one bundle of these toxic assets.

And even though people don't like it when the homeowners are blamed, let's face it---you needed
homeowners to take out these mortgages. One could argue that these homeowners were stupid or
greedy or ignorant. Whatever they were---they were used by banks and insurance companies to
make billions.

(my head hurts now).

[C......N......C]

8. But of all these people, aren't the appraisers certified

and supposed to hold the public trust in their hands as opposed to everyone else involved that are sales people?

[FrenchieCat]

5. I'm sure they are part of it.....

but it goes back to having no one watching the hen house. The banks accepted the appraisals, no
questions asked.

[Common Sense Party]

6. There are MANY people who share the blame in this fiasco.

Yes, appraisers are culpable for their part.

Realtors are culpable, to some extent, for showing homes WAY beyond people's means and pretending that home values ALWAYS go up.

Lenders and mortgage brokers were guilty of lending to people who were not creditworthy, and coming up with ridiculously risky subprime nonsense like interest-only adjustable ARMs and Ninja loans, etc.

The American consumer was culpable, demanding more house than he could afford, turning his house into an ATM, and not reading the fine print-plus believing all the liars who said that this system could never break down.

Plus there's the politicians, the ratings agencies, the Wall Street fatcats, the overmortgaged banks, etc.

Not too many groups of people were sinless in this mess...the one notable exception being the honest U.S. taxpayer who lived within his means, didn't go deep in debt, and now is going to have to pay the tax bill to bail out all the other liars, cheats and imbeciles who helped cause this.

[Sarah Ibarruri]

9. I guess property appraisers in the U.S. are held to no standards whatsoever, nor their work

checked for accuracy, quality or honesty.

[Common Sense Party]

11. I confess I don't know much about them, but I'm not sure to which

regulatory agency or body they are responsible. In our area, it seems like the appraisers would go along with whatever the realtor asked for.

[Sarah Ibarruri]

12. Down here in Miami they're a frikkin' joke. They even debate with people how much

they should appraise the property for. Can you believe it?

[C......N......C]

13. I guess that if regulation would start, that they might be a good place to start.

I personally knew two households that bought $500,000 houses with the NINJA criteria. It seemed crazy to me at the time, but they did it anyways, Beside no job, no income and no assets it was no money down thanks to the appraiser.

[Common Sense Party]

16. Get this: the federal agency that's supposed to watch these appraisers...

only has FOUR field auditors. And no agency director, as of last August.

And this agency reports directly to...you guessed it.

The U.S. Congress.

http://www.palmbeachpost.com/business/content/business/epaper/2008/08/24/sunbiz_appraisers_0824.html

This is stinking more and more.

The appraisers are just one part of the pie here, but it's definitely a part that needs to be overhauled.

[sandnsea]

17. In part, realtors, appraisers, mortgage brokers

If I could see it in my teensy town, don't tell me that the people who were doing it didn't know it would all blow up.

They created this economy, from Wall Street down.

[The_Casual_Observer]

18. Appraisals are basically based on the comparable values

in the neighborhood. As the gold rush is in full swing they don't have much choice but to go along for the ride.

[Common Sense Party]

20. That's what they're SUPPOSED to be based on. But when every

other four-bedroom, 3-bath in the neighborhood was selling for $250,000, but the mortgage broker and the realtor really NEEDED this one to be appraised for $300K (so they could hit their monthly commission goal), they appraiser didn't HAVE to play along. He could have solely stuck with the going comparable rate of approximately $250K.

But he didn't. Why not? Because he wanted that realtor's and that mortgage broker's future business. He scratched their backs, hoping they would turn around and scratch his again in the future.

So he went along with it. And next time, when the next house came up, they "needed" it to appraise for $310K. Then the next one "had to" appraise for $325K. And so on. And so on.

Everybody was happy. Everybody was making so much money. What could possibly go wrong?

[remember2000forever]

23. Absolutely True! Comps, Comparative Market Analysis....

Were determined by the HIGHEST price recently sold. A Realtor would meet the Appraiser at the property with his or her Comps in hand. The appraisor, usually lazy, would use these presented CMAs.
I know. I'm a Realtor.

[grasswire]

19. In Seattle, the ING bank has filed a racketeering suit against...

...appraisers, escrow agents, ten couples who took out loans, and others in a groundbreaking suit to defraud the bank itself. The parties conspired to suck 6 million bucks out of the situation through loans, equity skimming, etc.

More of this will follow.

[wuvuj]

21. The criminality underlying the mortgage crisis....

http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html


The Two Documents Everyone Should Read to Better Understand the Crisis


As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.

When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting.

Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Don't ask; don't tell: book profits, "earn" bonuses and closet your losses

[notesdev]

22. Among them, not even close to the only

One of the amazing things about this scam is how many self-serving people who bought into it. You can go from the very bottom of the chain to the very top, rogues and scoundrels all, differing only by degree.

[C......N......C]

24. From what I have learned here.

Honest ethical appraisers had the key to stop the whole housing mess . They did not need to make every appraisal match the selling price or selling price with down payment.