I heard this being discussed on the radio. Just all sorts of greed contributing to the bubble wasn't there?

A bit more from the AG's press release:

"In April 2006, EA began providing appraisal services for WaMu, which became EAÂs biggest client. Within weeks, WaMu began complaining to EA that its appraisals were not high enough. WaMu pressured EA to employ exclusively a new panel of appraisers that WaMu hand-selected as "Proven Appraisers." This set of appraisers was chosen by WaMu specifically because they inflated property appraisals. WaMu profited from these higher appraisals because they could close more home loans, at greater values. Over the course of their relationship, between April 2006 and October 2007, EA provided approximately 262,000 appraisals for WaMu."

Three Reactions:
1. As long suspected, this House of Cards definitely included the Jokers.
2. What took the AGs so long?
3. After Enron, Worldcom, Adelphia, and Lipstick on This Pig, you'd think Corporate America would wise up and start using the phone instead of e-mail.

The Appraisers have had a petition before Congress for at least 2 years or more regarding the fact that if they don't deliver the numbers,. Â.most lenders will not refer business to them...since Congress has consistently looked the other way, maybe Spitzer will have some luckÂÂhowever, this is a nationwide problem...even before the mortgage meltdown

Here is a link that might be useful: Appriasers Petition

I have always wondered how much a high appraisal contributed to us not being able to sell our home before the slump hit hard. We put our house up for sale March 1 2006 at a price that we thought reflected the comps quite well. In early April, we paid to have an appraisal done to make sure we would hit the spring selling season at the right price. We ended up adding $5000 to the price because of the appraisal, then had to lower again a few months later. We did not get an offer on the house until the summer of 2007 and it is now leased out in a rent-to-own situation. We followed the market down with our price cuts, just not able to believe that we needed to lower the price faster. There were so few sales to compare to, and that made it harder to see the trend. We went from $160 to $165 to $160 to $155 to $149 and are contracted to sell in two years for $139.

The appraisal was done by a man who was recommended by a local title company. The appraiser was leaving the day-to-day appraisal business behind soon after our appraisal because he had been hired to teach home appraisals at the regional home appraiser's school. It seemed to me that we had the best of the appraisers working for us.

Homeowners trust these professionals. We do not have the knowledge to judge the real estate markets for ourselves - or the ability to see our own home's value dispassionately. So we pay $350 to someone to spend a few hours of research and end up with an over-inflated estimate of what our house is worth. It in no way assists us to have an inflated price - and you only know it is inflated when the house does not sell. In the market here, nothing was selling. It was impossible to say that your house was not selling because the price was too high, since there were very few sales at all. I see no reason for an appraiser doing an appraisal for a seller to come up with inflated numbers. Did the appraisers just come to believe their own deceptions?

Read the emails going back and forth at FAF, they are simply damning...

"On February 22, 2007, in response to a description of the WaMu "Proven Appraiser" program as one in which "we will now assign all WamuÂs work to WamuÂs ÂProven AppraisersÂÂ [and] Performance ratings to retain position as a Wamu Proven Appraiser will be based on how many come in on value," eAppraiseITÂs president told senior executives at First American: "we have agreed to roll over and just do it..." "

This is a HUGE story...

I hope the Feds go after WaMu. They shouldn't be allowed to get away with just saying, "We're disappointed...."

/tricia

I'm w/ tricia--I want them to go after WaMu--they STARTED the whole thing. They are the ones who applied the pressure.

I third that motion on Wamu. I'm sick of these big banks getting to have everything their own way, and then blaming their customers when things go wrong.

There are laws--or if not, there bloody well should be--governing these sorts of relationships.

It sounds SO much like Arthur Andersen and Enron, it's uncanny.

Doesn't anyone think the appraiser has responsibility, they didn't need to roll over and just do it, they wanted the income?

WAMU didn't start it...they just continued a practice that many lendersÂ..if not all.... have been engaging in for years...

As far as the appraisers go, if they don't roll over, they don't get any work...and the work goes to those who will roll over...

Once again, click on the above link...this has been a major problem for years...and it has now come home to bite the lenders in the butt...

In a nationwide survey released early this year, 90 percent of 1,200 appraisers said they had felt "uncomfortable pressure" to adjust property values. Mortgage brokers were named as the most common culprits, followed by real estate agents, consumers, lenders and appraisal management companies. The increase in pressure was dramatic compared with that found in a similar survey in 2003, when 55 percent of appraisers reported feeling pressured....Read More

{{!gwi}}

I just don't get that others here don't feel the actual appraiser also has personal responsibility.
Sounds like the kid on the playground crying, he made me do it.
One can feel pressure, but does one need to buckle under that pressure?
The graph shows the loan brokers are the real culprit, but WaMu is being named, I guess because they are so big. Big companies usually are the fall guy.

cmarlin20,

I, for sure, believe appraisers should be held accountable. But, not just appraisers. I think WaMu should also be prosecuted. I recognize that it's easier to get the small guy (appraiser) than it is to go after WaMu but at least with this article the top dog was WaMu.

/tricia

cmarlin20: "I just don't get that others here don't feel the actual appraiser also has personal responsibility.
Sounds like the kid on the playground crying, he made me do it.
One can feel pressure, but does one need to buckle under that pressure?"

Well...those who don't, leave the business, as it is very hard to make a living at it if the major players refuse to refer busienss unless one plays the game their way.

When that happens, what is left behind are those who do roll overÂ..so, in effect, this does nothing to help the consumer.

The point is, Congress has been more than aware of this issue for YEARS as the link above to the Appraisers petition proves.

That said, how about we hold the REAL culprits accountable? Those government entities that have consistently allowed such to continue due to the mega bucks they receive from the lobbyists for the lender's and RE professionals???

The NAR (National Association of Realtors) is THE largest contributing lobbying organization in the country...even more so than the NRS (National Rifle Association.

The same culprits are should also be held accoutable for allowing the mega gazillion buck hedge funds to exist largely unregulated...which was a major player in the mortgage debacle.

It pays to not forget that the fish stinks from the head down. Cutting off the tail is an exercise in futility.

cmarlin
Three 50 lb boys are playing on the playground and a 200 lb young man comes up and says "If you don't go vandalize the school I'm going to pick up one of you and use him as a club to put you all in the hospital"

I suppose you expect them to all go to the hospital?

New York Attorney General Andrew Cuomo said Wednesday that his office is expanding its probe of the mortgage industry to include Freddie Mac (FRE) and Fannie Mae (FNM) and is asking the companies to retain an independent examiner to review certain appraisals and mortgages they purchased...Read more at cnnmoney

About time. The question remains to be seen as just how far Cuomo et al plan to take the investigation in terms of nailing all of the scammers.

There is a ton of corruption in the housing and finance industries and has been for a very long time. Lax enforcement, and collusion, have allowed it to worsen to the point now where it may do serious damage to the entire economy. For years, various consumer groups and even some inside the industry have been yelling about this. It's only getting press now because Wall Street lost money. This isn't about home buyers being irresponsible though that certainly was a factor; this is about outright corruption by the industry and government. Without that there couldn't have existed the toxic loans and lax standards that lured irresponsible buyers along with buyers who were actually duped or had documents forged, etc.

What's partly so irritating is that the people pulling these scams fought tooth and nail to keep government regulators out of it until they lost money. Then, all of a sudden, they want the government to help them out of this mess that they got themselves into.

I also see the government as part of the corruption because if laws were enforced and agencies doing their jobs when problems began, it would not have gotten so out of hand. Now, millions of people will be financially impacted even if they personally took no part in any of this insanity. Any government "help" is going to be funded by tax payers, and will go straight to the pockets of the industry crooks, even though its' being pushed as consumer help. Bah! consumers are already losing their houses, there is no help coming for them in any timeliness to work.

I'm glad that I didn't buy during the bubble and I'm glad I sold when it was at its peak. If not for some pure luck I could've easily been among those now trying to sell a house that just isn't worth what the "professionals" in the industry said it was. I feel sorry for people who put their trust in this industry. It was misplaced, as if they'd put their trust in the mob. It's very possible that the only reason I knew the housing industry was a sham was because of research I did during those years to battle a bad homebuilder. Had it not been for my house case I might've been ignorant that there was so much corruption, too. "There but for the grace of God go I," as they say.

However, I have no doubt that people in the industry committed crimes and should go to jail. Instead, they will maybe pay fines that amount to peanuts for them, and they'll be back to business as usual the next day. VERY disgusting and really has made me quite cynical about our whole artificially supported corrupt economy. It'd be easier to just slip into denial or apathy like so many do, but that's not an option at this point! Seen too much!

Extremely well put fathen...you have nailed it to the "T".