There is a story on CNN today, "
Real Estate Appraisers Claim Pressure to Make Fraudulent Appraisals", that is rather disturbing.
Here's the money quote:
. . .
But on Tuesday, the Appraisal Institute will tell Congress that its members are under increasing pressure from lenders, mortgage bankers and real estate agents to "hit their number" when appraising property.
...
(In the secondary market for mortgages, an institution like Freddie Mac assumes the risk of an outstanding loan by purchasing the rights to the mortgage payment stream from the bank that issued to loan. So the institution -- not the originating bank -- is on the hook if the loan goes bad.)
I was discussing this on a small web discussion board, and someone made this even scarier. He said:
(more below fold)
My officemate just refinanced. They accepted his own valuation for the property without sending out an appraiser.
And in a followup.
He didn't do it deliberately, he was just going through the whole refi process and at the start they asked him what he thought it was worth, and he estimated (reasonably). It wasn't until a few days later he asked when the appraiser was coming and they said they had the valuation and there was no need.
The banks don't even care any more.
They make the loan, sell it, and it's someone else's problem.
I see Fannie Mae and/or Freddie Mac being in REAL trouble in the next few years.
I'm trying to be an optimist, so I'm wondering how I make money off this catastrophe.
Any suggestions?