By William K. Black
On July 9, 2013 I participated in a radio interview with a lobbyist for the 100 largest financial firms. The San Francisco radio program host asked me what question I would ask the lobbyist and I said that any discussion should begin with allowing him to state his view of what caused the crisis. In the course of his explanation, he bemoaned the fact that there was no warning about the crisis.
I found this ironic because I had just published that morning an article about how the appraisal profession warned us that the senior officers controlling the mortgage lending firms were engaged in pervasive “accounting control fraud.”
Note that the appraisers’ petition began in 2000 and was public. When the regulators and prosecutors did nothing in response to the appraisers’ warning the appraisers delivered it to government officials to ensure that no one could say they were not warned. What tends to be forgotten is that the mortgage industry’s leaders did nothing to restrain the fraud epidemic and a great deal to expand it. A finance industry representative claiming in 2013 that no one warned the industry of the coming crisis when the warnings began no later than 2000 epitomizes the industry’s death of accountability, integrity, and candor.
My comment: Worth reading. Appraisers got what they wanted – freedom from mortgage broker pressure. But, at a huge cost – low fees and incredible scope creep. Fees are up now, but will go down when lending slows down. Maybe lenders will figure out that scope creep doesn’t help anyone and slows down appraisal production.