*sigh* Well, I had hoped that during this real-estate crisis, people would realize that the folks making $300 a transaction are not really the principle parties behind the financial debacle. But sadly, that is not the case.
In an article for the Wall Street Journal, Thomas Frank attempts to affix the blame for the current financial crisis on Wall Street. And in doing so, he quotes a Professor of Economics who states:
Most of the mistakes for which we are paying now, Mr. Black told me, were actually made “by four entities that under conservative economic theory should have exercised effective market discipline — the appraisers, the originators of the mortgages, the rating agencies, and the investment banking firms that packaged the subprime mortgage-backed securities.” Instead of “disciplining” the markets, these private actors “served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble.” It is they, Mr. Black says, who “turned a crisis into a catastrophe.”
I am not exactly sure how appraisers are supposed to “discipline” the market. When bankers and brokers run around using AMC’s and AVM’s to faciliate their loans, they essentially remove any power appraisers have in “disciplining” the market.
While I do not believe that appraisers are completely innocent, they certainly are not as culpable as the mortgage brokers and investment banks who made millions off of the financial crisis, and controlled all the levers involved in the home lending process.
In 20 years, after America learns nothing and we go through another real-estate related financial crisis, I suggest appraisers figure out a way to get rich of these schemes. If they are going to get blamed for ruining America, then they might as well make a penny or two in the process.
Manager of Appraisal Specialties