Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Monday, August 14, 2006

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. "


At 8/15/2006 12:46:00 PM , Anonymous Ben said...

Have you seen the CAR no.s for Sonoma county?
YoY sales down 40%
Sales down 21% from June
YoY Median price down 2.6%-first time since '91(I think)
Can anyone say "inflection point"?

At 8/15/2006 01:25:00 PM , Blogger Marinite said...

Do you have the link?

At 8/15/2006 01:50:00 PM , Anonymous ben said...

you can get it at

At 8/15/2006 04:20:00 PM , Anonymous tom stone said...

there are discussions of this problem at you look at how appraisers are paid,and who pays them you can see the roots of the problem.realtors and loan brokers put pressure on appraisers to get the right value,there are lots of appraisers competing with each other for the biz,and lenders don't care about the quality of the appraisal any more than they care about the capacity of the borrower to repay the loan as long as they can sell it to the next sucker in line for a profit.appraisal mills hire lots of trainees (who need 2000 hours of supervised work to get a license)pay them squat,and outcompete legitimate appraisers by charging lower fees and giving quicker turnaround times.all the client wants is a signed piece of paper,cheap and fast.the oddest thing to mee about appraisal fraud is how little the appraiser gets to commit a felony,an appraisal costs 250-350,which is not a lot more than you'd get knocking over a 7-11.

At 8/15/2006 05:59:00 PM , Blogger Athena said...

Ben- no!! I haven't seen that yet. Sorry, been registering a child for college and took my eye off the stats! good lord! Can't wait to get back tonight and get that posted! Thanks for the heads up!


At 8/16/2006 10:44:00 AM , Blogger marin_explorer said...

Wow, it's a real stinker of a season for Sonoma! It peaked months early--and at volumes comparable to previous spring sales. That doesn't look good at all!

At 8/18/2006 08:00:00 AM , Anonymous Anonymous said...

America - your appraiser LIED to you !


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