California Real Estate Fraud Report

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08
Mar

GAO Says Appraisal System Still in Need of Fixing

The Government Accounting Office  (GAO)has been studying the home loan appraisal process and reached the same conclusion as many Realtors, loan officers and home builder: namely, that much needs to be done to improve the process of appraising properties.

Appraisal fraud has often been cited as key to the run-up in home values as banks sought to pad appraisals in the mid-2000s as much as possible. This increased commissions and “performance” bonuses, especially for subprime loans. In the end, flagrantly fraudulent business practices, such as WaMu‘s (Washington Mutual) pressuring appraisers who worked for eAppraiseIT to inflate their valuations, actually played a role in the collapse of the banking giant and its subsequent takeover by Chase Bank.

Overreaction and the implementation of so-called cures, such as Andrew Cuomo’s HVCC (Home Valuation Code of Conduct), made a bad problem worse. Appraisers, instead of being pressured directly by banks, must now share their fees with middlemen and often crank out poorer quality reports in order to make up their financial losses with volumes. The complaint these days is that homes are now being under-appraised, causing sales to fall through and perhaps exacerbating distress in the residential real estate market.

Read the original article in the Niche Report.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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