Disgust – because we’d heard of people doing junk like this and it made us sick. We walked away from prospective clients who tried to ask us to be involved in false appraisals, lending, etc.

Joy – because we’re glad that this story might wake people up who’ve been part of these deceptive practices and depress some of the greed that’s been churning through the industry over the past many years.

Relief – because someone was finally bringing this to the public’s attention. I tried to do this about a year ago (14-15 months) when I was being interviewed by the Seattle Times for a different story. The reporter seemed interested and said she’d run by her editor but she never called me back.

To the guy who blames NAR – I’ll just say that not all agents are REALTORS(R), who are held to a code of ethics that goes beyond state licensing laws, and I’m going to guess this Skyline agent wasn’t one of our members.

I had to move into a cubicle at Mortgage Master…I’m going through and finding some gems too… the prize: Wachovia with a “no credit score” loan….guess Wells Fargo has those time bombs now.

Roger, I yoyo back and forth about some of the key players. The lending industry probably is ground zero, but there are many complicit actors within the transaction.

Scotsman, you’re analysis is right and it truly is a colossal mess. You should see some of the losses these lenders are reaping.

Ray, I don’t know how easy it is to move the “titanic” which is the psychology of the consumer. Making people realize that there are other options out there is a difficult thing. But who knows? Perhaps this market crash, correction or however one defines it, will be the impetus for people to see what alternatives are out there.

Rhonda, LOL….$30K in fees? Does that surprise you? Today I went down memory lane as I was working in our storage building containing our files. Pulled some 2004 and 2005 files just for fun. Kind of like getting a box of chocolates. You just never know what surprises you’ll get. So I reached in a box and just grabbed any file. I even saw a couple New Century files!

It just gets worse at the Rain City Guide.

There has always been fraud in the Real Estate business. As the dollar amounts went up along with the number of transactions it became more obvious.

There are also some very nice, well intentioned people who do a lot of damage to the real estate business. The National Association of REALTORS is a good example. They are as guilty as a Skyline Properties for what has happened in the past ten years.

Too many agents, too many loan originators, too many builders, too many developers, too many speculators, and too many investors made every body an expert. There has been no over sight.

The system is that the Broker is liable. Brokers have been running a popularity contest for way too long. Managing Brokers have hired sixty agents to an office with no way to keep track. There is class room education without mentoring.

I think that a new agent should be partnered or work for an experienced agent for at least a year. Brokerages should be held accountable for transactions. There needs to be more government over sight at this point. The industry has shown they will not self regulate. Sorry Scotsman, that one was for you, but I think that is correct.

Great post.

Opportunity attracts criminals.

I don’t know if fraud if growing here. I suspect the opposite, based on the increased scrutiny.

As one of the last areas of the country to have home prices decline, it was inevitable that we would have fraud uncovered here.

As many have mentioned, rapidly rising home prices covered up a lot of fraud, that is being revealed now (imagine a VERY low tide at Mee Kwa Mooks Beach at Alki!)

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/16/AR2009031601612.html

First, that ING got burned in the first place. While they had one of the few very competitive true Jumbo Rates during that period (above the current conforming Jumbo Rates of $506K), in most other respects, I considered them as one of the more conservative and cautious lenders out there, (higher FICO scores, lower LTVs, careful underwriting).

The other aspect that needs to be highlighted is the unusual and apparent complicity of ALL parties: The defunct escrow company (run by a lawyer), the bankrupt and oft investigated appraiser, the greedy broker, the bogus employer, and the borrowers. All claim innocence, yet it is hard to believe those claims, based on the information presented.

“ING alleges this scheme targeted multiple financial institutions and involved a mortgage broker, an unlicensed escrow company, title insurers, tax preparers, accountants, appraisers, borrowers and shell corporations. Even an auto shop was involved, the bank alleges.”

There was a sidebar story also, naming Skyline Properties and Emerald City Escrow in a separate lawsuit. That brings in the RE folks. Soon to come, the butcher, the baker….

http://seattletimes.nwsource.com/html/localnews/2008865333_lawsuitside16m.html

Even ING bears some blame. They certainly had the opportunity to order an internal appraisal review prior to funding the loan, or insist on a separate appraisal, from an appraiser of their choice; they have done so on loans I have sent them.

I expect appraisal reviews on all loans, these days, and build it into the schedule. It has been like this for a few years.

The story also mentions DFI has 9 open investigations of Eric Perrigo (the appraiser). I could not find those,

http://www.dol.wa.gov/about/disciplinary/disciplinaryapp.html

The state shows Appriasals Unlimited as a licensed appraisal service, and as far as I could tell, no record of complaints.

Nice to know that that WA State is being vigilant with appraisers, too.

Tim, the sidebar story says Emerald City Escrow “an unlicensed escrow company”. How can that occur? Don’t the lenders (like ING) check if an escrow company is licensed? I see that the license is revoked, but I do not see a disciplinary action from DFI, nor does it show when it was revoked.