Why It All Makes Sense

Between 2005 and 2007, approximately 70% of appraisals made for mortgage financing, whether for an original financing or a refinancing were overstated and inflated. Mortgage brokers, real estate agents and lenders had close contact with appraisers and most appraisal order forms had a line item that asked for the borrower or their agent to write down the value that was needed from the appraiser. Given the current economic situation this fact is hard to believe, but it is true.

There was no HVCC. (Home Valuation Code of Conduct) There were no Appraisal Management Companies. The entire chain of the loan process from broker to lender was geared to closing as many loans as quickly as possible. Lender’s risk management, as far as oversight on appraisals, was weak at best and non existent in most cases.

From the large numbers of poorly constructed appraisals in lender’s files, it becomes obvious that lender employees “looked the other way” while loans were processed and funded instead of calling for appraisal reviews. Pressures were put on these employees by Lender Management to deliver numbers in both volume and in dollars at the end of each month. The relationships between lender’s employees, lender management and high volume producing mortgage brokers were inappropriate, much too close, and without controls.

These are not issues lenders are eager to Show Case. A look back at the facts using a Historical Revised Real Estate Appraisal, in most cases, puts just enough pressure on the lender and their representatives to seek solutions rather than face the possibility of dealing with some of the above issues. Therefore, the Historical Revised Real Estate Appraisal is extremely helpful to a borrower and his or her counsel when seeking to modify a mortgage, defend against a foreclosure, or take part in a court ordered mediation.