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Appraisal Fraud: Part 2

Several appraisers including TH from Texas claimed that pressure on appraisers does not typically come from banks or credit unions which do "want to know the true value of the home. The bottom line is mortgage brokers (who) want their loan to close and they do not want the necessary evil of an honest appraisal. Even fairly honest mortgage brokers will use a 'special appraiser' to get the value needed when their 'honest appraiser' will not comply with their value needs. It is 'greed' driven, or as a mortgage broker will say, 'a business decision.'"

GH from Carlsbad, California had an interesting solution: "Appraisals are more closely related to the underwriting process than they are to the origination process. Take the loan originators and everyone in the production side of the deal out of the appraisal engagement loop, and (the cause of) 90 percent of all misleading appraisals would be cured overnight."
"The appraiser is the ultimate mortgage insurer. The problem is they do not know it. They only find out when they start getting sued. The antics of the loan originations departments are different than that of the loss recovery actions of the legal department'.
So where is all of this going?

Steve said that in California "over half of the original appraisers who were licensed 15 years ago have left the business. Now over half of the residential appraisers are Trainees (an official designation in some states). Many residential appraisal shops employ unlicensed people who go out and see the properties or prepare the reports which are then signed by someone who never saw the property."

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