Overstating of Appraisals is Widespread
"As the housing market cools — for the first time in years, — folks are confronting a problem that was easily ignored during the real estate boom."
"The problem is inflated home appraisals."
"Real estate appraisals that come in over the “true” property value threaten home owners and home builders alike."
"Critics inside and outside the appraisal business have long warned that many appraisals are too high because generous appraisals help mortgage loan officers and brokers, who often select the property appraiser, complete more deals."
"Inflated appraisals were a non-issue when home prices were rising faster, since market values quickly could catch up. Now, some homeowners are finding that the market value is below what past appraisals led them to believe."
"Those with flawed credit are particularly vulnerable, says Iowa Assistant Attorney General Patrick Madigan, who coordinates with law enforcement officials from other states on a variety of mortgage-related issues."
"Madigan believes that the deliberate overstating of appraisals is “widespread” among loans to subprime borrowers. Jacquie Doty of Freddie Mac, a big buyer of home mortgages on the national scene, predicts that inflated appraisals will lead to higher default rates in the coming years."
"For sure, the inflated appraisal concern in the Quad-Cities likely is lower than in places like Florida or California, where consumers had little choice but to play along with silly appraisals if they hoped to buy a home. "