The Center for Public Integrity has a new report on problems in the home-appraisal industry--problems that are no news to real-estate experts, appraisers, and old-time (like, from the 1980s) mortgage bankers, but might surprise other folks.
The gist: Lenders and mortgage brokers pressure(d) appraisers to find higher values for houses, so that the lenders could write bigger mortgages and collect more fees.
In the old days, banks kept appraisers on staff. Back then, banks wanted accurate appraisals because they lost money on bad loans that went into foreclosure. In more recent times, banks (and brokers and other lenders) sold off their loans to Wall Street securitizers (who in turn sold them to pension funds and stuff), so that the mortgage lenders' business model changed from "make good loans" to "make lots and lots of loans." As The Center reports: