Appraisal Fraud

It's not new. No it's been happening ever since we bought our first house in 1976 and probably for as long as appraisals have been required for qualifying for a real estate loan (refinance or new). More and more, the current housing slump is being laid at the door of appraisal fraud. Amazing that anyone would believe that there wasn't something amiss when the appraiser is being paid by the lender.

I found this article from CNN Money from 2005 where people were testifying in congress about fraud but guess what? No one did anything about it. Here's the last line of the article -

"The cumulative effect of appraisal fraud is you may have investors holding mortgage debt that's backed by real estate worth less than they think it is," said Martin. "It's a train wreck waiting to happen."

No one did anything. read more here