Released: November 11, 2007

Lawsuit aims to deflate appraisal puffery

Source: Kenneth Harney, Washington Post (Free Registration)

When an appraiser hired by your mortgage company confirms that the house you are buying is worth what you’re paying, that’s reassuring.

But what if the appraiser was pressured to fudge the number? What if the house is actually worth $20,000 or $40,000 less than you paid, and you have no equity? Does that happen often? And what connection, if any, might inflated appraisals have to the current mess in the mortgage market?

A lawsuit filed in New York on Nov. 1 suggests that puffed-up appraisals may be common in softening markets and may be the result of collusion by some of the largest companies in American real estate. 

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