TW: Have posted before about how evil the Nat'l Assoc. of Realtors can be. NEVER trust anything their PR machine spews out. Here they are going for some good old regulatory capture in order to resuscitate the moribund real estate market by cooking the appraisals. I think most who have dealt with appraisers know they can be pliant. There are good ones for sure but without proper incentives and supervision it is a role ripe for abuse. Count on the NAR to try to make things ripe for abuse.
From Barry Ritholz at Big Picture Blog:
"I am beginning to suspect that the Realtor’s association and the Mortgage Broker’s association are pro-fraud.
...I noted the bizarre (and potentially corrupt) statement from NAR economists Lawrence Yun calling for appraisers “familiar” with local neighborhoods:
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales. In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
I called that a thinly veiled hint for “friendly” i.e., “corruptible” appraisals.
I did some more digging, and I quickly discovered what this contemptible suggestion was all about: It is part of a broader lobbying effort by the The National Association of Mortgage Brokers (NAMB) and The National Association of Realtors (NAR) against honest appraisals.
...Appraisal fraud was an enormous contributor to the unsustainable run up in prices during the boom period. Many (but not all) mortgage brokers and realtors referred buyers to appraisers that ALWAYS hit the number of the home purchase price.
A Bernie Madoff-like 100% success rate is often cause for suspicion, but we have much harder evidence than a statistical fluke. For that, let’s go to the big book of real estate fraud, Bailout Nation:
Fraud in Real Estate, Mortgages, and Home Building Minor amounts of real estate–related fraud have always existed. During the housing boom years of 2002 to 2007, it became a pandemic. These various fraudulent actions helped make the housing boom much bigger—and the bust that much more painful:
Appraisal fraud: Historically, there was no incentive to inflate appraisals. But with the rise of the mortgage brokers—many working closely with real estate agents—the business of steering appraisals to the most generous rose rapidly. By inflating appraisals, many appraisers found they could attract more referral business; some even managed to always hit the target prices given by real estate agents, which contributed significantly to the huge run-up in home prices. In 2005, more than 8,000 appraisers—roughly 10 percent of the industry—petitioned the federal government to take action against such abuses. But both Congress and the White House did nothing, allowing this rampant fraud to continue unabated.
So the very people who were enormous contributors to the credit bubble (mortgage brokers), and their colleagues who helped feed the housing boom and bust via friendly (i.e., corrupt) appraisals (RE Brokers, appraisers), are now mobilizing to make sure that honest appraisal reform is thwarted.
The NAR and NAMB apparently have no ethics to speak of. Their shameless self-interest, regardless of the damage it may cause, disgusts me ."
http://www.ritholtz.com/blog/2009/06/nar-namb-fighting-appraisal-reform/
No comments:
Post a Comment