Appraisers Bringing Attention To Fraud
The US congress is going to get an earful Tuesday, when appraisers take center stage. Alan Zielinski said,"All [lenders and brokers] want to do is hit the number because if they don't hit the number the deal doesn't go through and if the deal doesn't go through they don't get the commission. If [appraisers] don't play ball, they don't get paid or don't get work again."
"There are a lot of people who have refinanced for more than their homes are actually worth and they're effectively already upside down even without a real estate bubble bursting," said David Callahan of Demos.
"'The real issue is on the refinance side where people are cashing out of their equity on the basis of higher and higher values,' said Zielinski. 'Conservatively, I'd say that 10 percent of the houses I appraise are worth less than the mortgage on them.'"
"One overvalued appraisal can skew home prices throughout a neighborhood, according to the Appraisal Institute's Don Kelly. 'If a house is appraised for 10 percent or 15 percent more than it's actually worth and the sale closes, it may be used by another appraiser as a comparable sale the very next day. It has a ripple effect.'"