Saturday, June 11, 2011

FDIC Sues LPS and CoreLogic Over Appraisal Fraud; Shows Investors Leaving Money on the Table | The Subprime Shakeout

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It is Shocking that after years of collusion between banks and appraisers, there has been little discussion as to what role the appraisers played in creating the doom for real estate. I have found it hard to believe that appraisers have gotten off so easily for years when it was always clear that they were in the business of facilitating sales and loans rather than to give good appraisals. The appraisers have always been in the banks pocket whether it is for inflating or deflating appraisals. Anyone who has knowledge of real estate and has been involved in more than a couple of transactions knows that 99.9% of the time an appraisal relying on the sales comparison approach comes in at the sales price.

How can that happen? Well it can only happen if their is an agenda being followed. Namely, that the appraisers do what the banks tell them to do because they get hired by the banks. However, the way the banks cover up the conflict of interest is by having the buyer pay for the appraisal even though it is required by the bank, and usually done by an appraiser or appraisal firm that is tight with the bank and mortgage underwriters. Appraisers commit fraud on a daily basis. If a banks suggested a price is too high on a purchase agreement then the appraisal will get re written at a lower price. This type of fraudulent appraisal costs the borrower far more that an inflated appraisal costs the bank because the borrower doesn't get TARP money when the economy collapses.

READ MORE on appraisal fraud at this link

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