Still Cutting Corners to Make Deals Happen

The go-go years of the housing bubble brought out the worst in nearly everyone involved in the real estate business. Agents shameless shopped offers, mortgage brokers helped borrowers fudge their loan applications, and property appraisers turned in inflated value estimates.

You might think, after these practices helped torpedo the whole economy, that things had changed and that regulators would be cracking down. Well, you'd  be only half right. The real estate sector is still poorly regulated, governed by a patchwork of state and federal laws that are enforced with different levels of vigor, often depending upon the state. In Washington, the National Assocation of Realtors wields enormous power, ranking as one of the capital's biggest spenders on lobbying and campaign contributions. OpenSecrets.org puts NAR in the top five of its list of "heavy hitters" influencing government with special interest money and muscle. With that kind of power, it's easy to avoid proper oversight.

The appraisal process remains a particular problem area. The incentives can be huge to pressure appraisers to hit the right numbers and make sure a deal goes through -- especially when there are aren't a lot of deals happening. And so we weren't surprised to hear that, ccording to one recent report, appraisal fraud is on another upward swing.

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