This is getting interesting.
Vanderbilt Appraisal Company LLC, the second of our two major competitors, was subpoenaed last week into the widening probe over mortgage brokers pressuring appraisers by New York State Attorney General Andrew Cuomo.
The news coverage has been particularly heavy, likely because the firms being subpoened cover the most expensive real estate market in the US. The irony here is the fact that this investigation stemmed from subprime lending practices, of which there is a limited amount in New York City. And of course, a subpoena doesn’t infer guilt.
Appraisal pressure is a key ingredient in the problem with the mortgage industry being uncovered today and I am glad it is getting the attention it deserves. Just talking about it helps bring the problem to the forefront. There’s been a lot of news on the topic in the past week:
- New York Subpoenas Vanderbilt in Mortgage Inquiry [Bloomberg News]
- More Mortgage-Industry Firms Subpoenaed as Probe Expands [WSJ]
- Atty Gen. Cuomo Investigates NYC Appraisers [Businessweek]
- SUBPRIME TARGET: ZECKENDORF REAL ESTATE FIRM IN CUOMO’S SIGHTS [NY Post]
- NY AG Cuomo Probe In Mortgage Industry Practices Expands [CNN/Money]
- Mortgage appraiser ensnared in Cuomo probe [Crains]
And in Ohio…
The Ohio Attorney General filed suit against seven mortgage brokers, 2 lenders and an appraiser last week:
- Ohio Sues Real Estate Firms for Pressuring Appraisers [Bloomberg News]
- Ohio sues companies over inflated home values [Charlotte Observer]
A related aside (is there such a thing?)
I was struck by a specific number in the Bloomberg story that was so over the top, I wanted to mention it. Bloomberg reported that the two principals have personally done over 20,000 appraisals. However, their web site actually says that number applies to one of the principals who has personally performed more than 20,000 appraisals since 1991. The site also reports that the other principal has done about 15,000 reports over what I assume to be the same period.
If I do the math with the first principal, that is the equivalent of one person doing 20,000+ appraisals/16 years/50 weeks per year (assume a vacation)/5 days per week (assume time with family on weekends) equals 5 full appraisals from start to finish per day while owning, running and growing a regional appraisal business that includes New York, New Jersey, Connecticut and Florida.
Thats about 4x the number I have personally appraised since 1986 (in 5 more years).
Now thats time management!