Appraisal Fraud Plagues Mortgage Marketby Tim Manni
The housing crisis has many little helpers that have contributed to its devastating effect. Real estate agents and mortgage brokers seeking higher commissions through an inflated home-sale price, have sought out home appraisers to fraudulently estimate the value of a home:
After the nation’s last major banking disaster, Congress set up a system to catch rogue appraisers. Their game: inflating the value of homes at the direction of equally unscrupulous real estate agents and mortgage brokers, whose commissions are determined by the size of the deals.
But a six-month Associated Press investigation found that the system is crippled by both the bumbling of its policemen and their inability to effectively punish those caught committing fraud.
And despite ample evidence that appraisers are pressured into inflating home values — sometimes to prices in support of loans that are more than buyers can afford — the federal regulators charged with protecting consumers have thus far made a conscious choice not to act.