A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Thursday, May 26, 2005

Inflated Real Estate Appraisals

On the front page of the Personal Journal section in today's Wall Street Journal, there is an article that everyone should read regarding how lenders are starting to crack down on inflated real estate appraisals.

According to the article ($), accurate appraisals are difficult to perform in hot housing markets because prices are so volatile. However, in some cases, the appraisals are outright fraud. The FBI has noticed an increase in cases where the appraiser and the borrowers team up and the appraiser provides a misleading valuation. This is unfortunate because appraisals are supposed to protect both the lender and the borrower from overextending themselves.

To be fair, appraisers say that they are often pressured to increase valuations by mortgage brokers, loan officers and real estate agents, all of which have a lot to gain from a "good" appraisal.

Anyway, this is a great article. Check it out.

Click Here For The Wall Street Journal Online

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