I remember the days before my wife and I closed on our current home. Our mortgage company ordered an appraisal. No one was surprised when the appraiser came back with more or less the exact value we needed to close our loan.
During the housing boom, that's how it worked. Real estate appraisers, under pressure from real estate agents and mortgage loan officers, valued homes at whatever number was needed to guarantee that a real estate transaction could take price. This is one of the main reasons why housing prices rose far too high too quickly during the housing boom.
That's why it's so funny to hear real estate appraisers complain today about new appraisal rules designed to help prevent mortgage fraud. Should we really be listening to these "professionals" about anything? If the people in this industry had backbones, we wouldn't have seen so many over-inflated housing prices during the last seven years.
A recent Associated Press story, which you can read here, details the appraisal scam run by a group of real estate pros in Central Ohio. According to prosecutors, the appraisers in involved ripped off banks by willingly overestimating the values of homes in the central portion of the state.
Good work guys. Thanks for contributing to both the housing collapse and the financial mess that resulted from it.
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