DING! We Have a Winner!

For several months I've blogged about the 'unnamed' contributors to the mortgage crisis that had yet to really be named. Check Confessions, Opinions, Rocket Science or Fraud for some background on my perspective. Today the Senator from Pennsylvania Robert P. Casey Jr. speaking at the Housing & Urban Development Secretary Confirmation asks Nominee Steven Preston, regarding standards that apply to the appraisal issue, "it's my understanding that HUD has eliminated the test for appraisers, and just want to get your sense of that, I've been deeply concerned about this aspect of the challenge that we have with housing, that we have independent appraisals, that we get them done in a very professional way, that the people that are doing the appraisal work have the kind of skill and background and education. I have an amendment on that that was included in the legislation we passed Tuesday. Senator Martinez and I worked together on appraisal issues and I appreciate his work on that as a former HUD secretary and now as a United States Senator, but I wanted your sense of that in terms of the testing issue and also with regard to relaxing of repair and inspection requirements, just get your perspective on both those issues."

Here you will find some detail of Mr. Casey's thinking on the appraiser issue. While his concern seems to stem from a 'Flipping' scheme, the effects of his efforts should have the desired results across the board. In my own experience as well as from looking at defaulted loan information it is clear that these appraisers had their hands in more than just some flipping scheme. Wherever sales prices jumped that is where you will find the 'bumped' appraisal value. From including comparables far outside the usual range without substantial justification to adding imaginary outbuildings and other improvements and who knows what else.

S. 2860 Fair Value and Independent Appraisal Act information.