Appraiser, Lender ‘Testimony Veers Into Finger-Pointing’
The Charlotte Observer is one of the few newspapers looking into appraisal fraud. “Members of the home mortgage industry took their turn Tuesday to explain to a special committee of the North Carolina House why so many state residents are losing homes to foreclosure. They said most foreclosures are the result of turmoil in borrowers’ lives, and the rising numbers are a natural consequence of increased lending to people with lower incomes or credit problems.”
“They acknowledged that some of their colleagues have inflated the cost of loans or the price of homes, or imposed unnecessary fees. But most speakers argued against sweeping new laws, saying most of the problematic conduct is already illegal, and the focus should be on increased enforcement.”
“‘I think there’s some level of increased foreclosures that we’re just going to have to live with in exchange for making credit available to more people,’ said Bill Bost, general counsel of the N.C. Association of Mortgage Professionals.”
“‘We need to be held accountable and there need to be consequences,’ Bob Ipock, a Gastonia appraiser, told the committee.”
“The committee heard from representatives of the banks who provide money, the brokers who sell loans and the appraisers who value homes. They said high-interest loans have played a key role in raising home ownership rates to record levels. They also urged the state to spend more on educating borrowers so they can defend themselves. ‘I’m not sure counseling helps that much because I’m not sure people listen to what they don’t want to hear,’ said Rep. Robert Grady.”
“At times Tuesday, the testimony veered into finger-pointing, as representatives of one industry group told the committee the problems lay elsewhere. Appraisers pointed at lenders and brokers, and they pointed back at the appraisers.”
“Members of the committee at times appeared incredulous, or amused. ‘Would you agree that at least some appraisers might be less than honest?’ a legislator asked an appraiser who had just finished a defense of his industry. Yes, the appraiser conceded, that was possible.”
I have been following this series by the Observer at the foreclosure blog. The reason this has surfaced in NC; the region has lost a lot of manufacturing jobs, and whole neigborhoods have had prices fall because of double-digit loan defaults. Then the state lawmakers got involved, largely because of the Observers reporting, IMO. This isn’t limited to this state; Ohio & Michigan also have serious appraisal fraud problems. When the economies of these overvalued areas stumble, the fraud becomes apparent. Coming to a housing bubble near you.
Denial
Anger
Bargaining — Bingo!
Ben…Sorry…Off topic….
Sean Snaith, UOP/Stockton Ca., is releasing a forcast today…Can you get it ???
That report is available as a pdf at this site. http://forecast.pacific.edu
His thoughts re housing are that it is a “souffle” which is “cooling” but will not collapse. Anyone who has every tried to make a souffle will not take comfort in that metaphor.
Thanks Bob…
Charlotte/Mecklenburg has had 7000-8000 foreclosures a year since 2003. This year shows no sign of slowing down.
If you go to the courthouse to bid on a property, you may find the auctioneer reading aloud to an empty room. There are so many to choose from that the speculators just catch the best deals falling out of the gusher. If it’s more than 70% LTV nobody will buy it. This area is not the RE buyer’s frenzy that has been taking place elsewhere!
That being said, much of the residential market is doing OK. I see homes on my street getting sold, and they’re a few percent above last year. Money can be made in a rational market. It just takes research, patienct and — work. Fancy that!
There is no such thing as a rational market.
‘I’m not sure counseling helps that much because I’m not sure people listen to what they don’t want to hear,’ said Rep. Robert Grady.”
And Rep. Grady, the only thing that they want to hear is ‘How much’a month is’a it gonna cost me?’
You people just wait until this kind of “witch hunt” visits Florida….and there are gonna be plenty of witches to burn at the stake down here too.
There has been OVERWHELMING complicity between Realtors(tm), appraisers and mortgage brokers in order to keep this pitiful house-of-cards market propped up. They have “back ended” the majority of these loans ( especially subprime )…..meanwhile keeping their pockets lined and their Hummer tanks full.
All he11 is fixin’ to break loose; and it will be sooner rather than later. In two yeras I look for the hearings to begin both at the state and federal level.
This housing bubble has been a rotten, greed-inflated mess that should and could have been nipped in the bud long ago.
I can only pray that the more prudent folks that didn’t buy into the Real Estate Lie aren’t stuck having to bail out these idiots who went way beyond their means.
coming to California too. Especially in OC where all the mortgage lender corp offices are.
There has been OVERWHELMING complicity between Realtors(tm), appraisers and mortgage brokers in order to keep this pitiful house-of-cards market propped up.
Roger that, HC, good buddy.
Nothin’ like a Cendant Mortgage sleaze originating mortgages for their real estate arm C-21, and then having the deal get the rubber stamp seal of approval by the appraiser in the hip pocket of the real estate agent.
Can we say maybe a little bit of a conflict of interest here?
If this racketeering “RE agent-mortgage originator-appraiser feed-chain BS were going down on Wall Street, you can bet yer azz, the SEC would be sendin’ allot of people off to prison.
Sounds like your in foreclosure or something. Your awfully bitter. You would’nt be blaming someone else for your error in judgement would you. There’s no conflict of interest there that particular set-up has been going on since christ was a corporal. It goes on from the mom and pop shop on the strip to international corporations. If there was a conflict of interest it would have been flushed out long ago. This set up is going down onWall Street on a daily basis.
Not at all bitter.
Just pi$sed that I saw unrealistic home “valuations” almost double here in Central Florida in three short years.
You see, I am one of those people that has to work and shelter myself in this mess down here that all the greed, graft and outright corruption created.
And I refuse to buy a soon-to-be rapidly depreciating, mostly illiquid asset.
You fail to see that there are plenty of people out there who refuse to buy into the lies that were made up about the “shortage of land” and that the “baby boomers are coming” and also the oft-chanted mantra that “real estate never goes down” Let’s not forget that “Florida is paradise”
No. I am not bitter.
But I am pis$ed off to see that all the housing down here has been run-up based upon fraud and rampant speculation by absentee flippers.
You’ve got the wrong guy here, I think those comments are idiotic and the people who fall for it are even bigger idiots.
Don’t be pissed be patient.
Mr. InStream-Nah, no foreclosure for me.
Just 22 years in the appraisal biz.
I know how the game is played. And your qualifications?
Perhaps you can expound on the mom & pop to international comment.
I must be a little dense.
12 years of cleaning up the messes that appraisers who would rather eat then worry about the carnal damage that their compromised interigrity(sp?) brings to the market. (”LAUGH” I’m sure somebody is going to jump all over that misspelling being that I’m in the business but I digress). For the F.D.I.C and just about any R.E.O. entity you can think of.
” Perhaps you can expound on the mom & pop to international comment.
I must be a little dense. ”
From the Mom and Pop broker who appraises, places the money albeit private, services the note, and earns a commission on the sale to REIT’s that do the same thing with the shareholders blessings theirs some variances between the two instances but not a whole lot.
You sure you’ve been in the business 20 yr’s
thanks for making me laugh.
“There’s no conflict of interest there that particular set-up has been going on since christ was a corporal. It goes on from the mom and pop shop on the strip to international corporations. If there was a conflict of interest it would have been flushed out long ago. This set up is going down onWall Street on a daily basis. ”
Sure it’s been going on forever, but it’s still conflict of interest
That my friend is very true.
Your article was dead on. This scam between realtors, appraisers and lenders is huge. The sooner the investigations start the better. I have been waving the red flag for years to no avail.
“Appraisers pointed at lenders and brokers, and they pointed back at the appraisers.”
HOUSTON… WE HAVE A PROBLEM.
“This housing bubble has been a rotten, greed-inflated mess that should and could have been nipped in the bud long ago.”
If left unregulated, humans and human entities in the pursuit of “maximizing return on investment” will engage in deceit, rape, and pillaging without restraint. A mere cursory glance at the history books confirms this fact beyond any doubt.
Fraud, overvaluation, speculation, eased lending practices, and a feeding frenzy mentality where all part of the stock market bubble.
And you know how that ended.
-X
-X
BubbleTrack.blogspot.com
Members of the committee at times appeared incredulous, or amused. ‘Would you agree that at least some appraisers might be less than honest?’ a legislator asked an appraiser who had just finished a defense of his industry. Yes, the appraiser conceded, that was possible.”
See how numb current members of this profession are?
This loser is obviously the designated owner of a “number hitter” mass appraisal bucket shop, employing HS educated newbie “trainees” who they are probably paid less than minimum wage to value million plus dollar properties, while he rakes off 2/3rd’s of whatever some appraisal management company decides to pay at the moment.
This bozo isn’t gonna surrender his racket easily.
Hope the miscreant has his E&O insurance paid up.
You people just wait until this kind of “witch hunt” visits Florida….and there are gonna be plenty of witches to burn at the stake down here too.
This is already happening, i mean the bogus values, in the heart of SF Bay Area.
Google world map with NASA elevation data showing anticipated flooding from global warming.
http://tinyurl.com/osexz
drop down in upper left allows you to choose amount of sea level rising.
seven meters puts most of Venice under water.
14 meters submerges Playa Vista, big parts of the Netherlands
and the bottom half of Florida.
Sweet, I win a free river front apartment. Am happy I live on a nice little hill. Commute would suck but I suppose they would raise the metro bridge a little bit more.
http://flood.firetree.net/?ll=26.41647024087778,-80.8209228515625&z=9&m=12
Seattle Real Estate Investor buys two new properties.
http://seattlerei.blogspot.com/2006/03/two-new-deals.html
Is this guy for real? I shouldn’t be surprised anymore.
Sounds like he already had a head injury before he bumped his head and needed the stiches….
You gotta love all the IO loans these folks take out. What’s even more interesting is that he is putting money down on other houses. If the SHTF and the banks foreclose on the IO loans, he’ll lose the other properties too.
One of the comments to his latest post was this one:
>At 1:52 PM, Michael Viking said…
>You’re famous…your blog was mentioned at this blog: >http://thehousingbubbleblog.com/
So if Eric is reading this….hi Eric! I hope you’re sure that it will only take 6 months to subdivide that land…
drop down in upper left allows you to choose amount of sea level rising.
seven meters puts most of Venice under water.
14 meters submerges Playa Vista, big parts of the Netherlands
and the bottom half of Florida”
Yeah there was a show on last night on glogal warming and it said this rise in sea level due to the melting of the polar ice cap will put Florida under water, can you imagine in 50 or 60 years there might be no south florida, you know the RE flippers will still try to sell it.
The blame goes to the wholesale lenders who let the brokers choose their own appraiser. This is universal in the business. The broker can pressure the appraisers or be involved in outright fraud. Compare this to banks I am familiar with that have loan officer employees. The appraisers are hired from a central appraisal ordering office of the bank with no choice or influence by the loan officers. The loan officers are not even allowed to contact the appraisers. The bank monitors the appraisers work and maintains an approved appraiser list. These banks have a delinquency rate that is a small fraction of the state average here in California.
Exactly how the system should work.
Bet your local real estate agents aren’t bringin’ too many deals to your door.
I’m surprised you can complete.
To CrazyintheOC
‘can you imagine in 50 or 60 years there might be no south florida, you know the RE flippers will still try to sell it.’
You gotta get more creative here ! Buy inland and start advertising as ‘Beach Front Property’…buy now and plan for your retirement…
:-))
“‘I think there’s some level of increased foreclosures that we’re just going to have to live with in exchange for making credit available to more people,’ said Bill Bost, general counsel of the N.C. Association of Mortgage Professionals.”
“We’re” going to have to live with? Who’s the we, pal? These are easy words to say when your not the one left “holding the bag” when the deal goes south.
A true “Mortage Professional” wouldn’t be loaning money to people who can’t afford to pay it back. Imagine if the broker was by law required to refund any fees and commissons plus interest on loans that went bad. These are no longer professionals we are talking about, they are modern day loan sharks taking advantage of the system with no repercussions for their preying on the poor and stupid.
That already is in effect. Mortgage Proffessional’s buying back loans
If the individual brokers didn’t return their commissions it’s not really the same thing is it ?
Maybe were talking about 2 different things. In a lot of cases when a deal goes bad within a certain amount of time the broker is responsible for buying back the loan which would in turn mean him giving back the commission. It’s in the wholesale lender agreement between broker and lender.
7m is only 3500 years away. Quick! Martha, grab the cat, no don’t bother to turn of the stove, we gotta run!
Lol. Well, assuming current rates of sea level rise remain constant, it’s actually closer to 2,333 years (3mm rise/year: 1/.003 X 7 = 2333.33), but I get your point. Of course, if the rate begins to accelerate, then all bets are off.
http://en.wikipedia.org/wiki/Sea_level_rise
http://www.realclimate.org/
Projecting forward in time, the implication is that our future will also see 4-6 m of sea level rise, and that — given the recent evidence for accelerated flow of both Greenland and Antarctic glaciers — this may occur much faster than we expect. In the model simulations, Greenland may already be warmer in 2100 than it was at the height of the LIG. The rate of sea level rise associated with the warming into the last interglacial was probably greater than 10 mm/yr* while current sea level rise is roughly 3 mm/yr. To the extent that the LIG is a good analog for our future, sea level rise is therefore rather likely to accelerate.
You might want to look into environmental feedback loops and then see if your can get the old math to pencil out.
Again I recommend “The Weathermakers” by Flannery. It’s an easy read, very current and thoroughly enjoyable, in as much as climatic armaggedon can be.
Hey Txchic, this is for you:
Got this off Nationalmortgagenews.com
Net Branch Company QuoteMeARate Goes Bust
QuoteMeARate.com, a Houston-based net branch operator, closed its doors this week amid allegations of loan fraud, MortgageWire has learned.
If you are interested in that story, check this thread out where someone posted a private email from a company exec. It got deleted later.
Despite the appraisal fraud, I would never sell a house without first hiring my own independent appraiser to give me a marketing appraisal based on cost to build, cost to rent, recent true comps and a sense of how the market is trending. There are just too many agents out there who will “buy your listing” with a ridiculously inflated feel good price. The same agents who will be encouraging you to drop your price almost as soon as they have you under contract.
The $200 or so you pay for the appraiser is money well spent. Far less costly than chasing a plummeting market with your too late/too little sales price reduction.
I’d also seriously consider hiring an appraiser if I were about to make an offer. That would be in addition to reading this blog of course.
Yes, in effect there are two types of appraisers. One works for brokers and has tremendous pressure on him to “hit a number”. I tried to work for brokers years ago and was fired after the first job, in every case. Then along came working for management companies and doing FHA foreclosures. In this area you get NO pressure. IN fact, it is made clear that if you receive pressure you are to report it immediately and in the FHA case the FBI is brought in.
So I have limited myself to these two areas of work. Unfortunately, the middle man takes about 1/3 of your fee so you make less money for the work effort. The good news is you will not be in line for a RICO indictment.