Dishonesty in the Appraisal Business: The Cause of the Foreclosure Crisis

America is suffering greatly in the economic sector right now, and more specifically, in our housing industry. Fortunately, every problem has a solution, some are just harder to find than others. Americas housing problem, just like any other problem, has a solution. This solution requires three things to happen, we need more honesty in the appraisal business, we need more stringent regulations on who can get credit, and how much credit they can get, and last but far from least, are the values we teach our children about spending and saving money, and the true value of money and honesty.

This housing crisis occurred due to a large amount of dishonesty in the appraisal business. My father experienced this firsthand, as he trained to be an appraiser, but discontinued his work in that profession, due to the large amount of immoral practices. If someone desired to be a successful appraiser, they would often have to conform to these unethical practices of valuing a home at much more than it was actually worth, in order for the home to qualify for a loan for the price it was listed for sale at. This in turn led to things like a two hundred thousand dollar mortgage being taken out on a home that was truly only worth 150,000. Borrowers were also encouraged to take out a second mortgage on the home and borrow even more money to add new appliances, carpet or other amenities, or to just have some extra spending money. These practices continued to the point where houses were reaching ridiculous prices all over the nation, and the whole mess finally collapsed on itself. If we enforce the home appraisal business by either requiring multiple home appraisers to give estimates on the actual value of a house, or to not disclose the asking pr...

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... laws passed that call for stricter credit regulations, and teach our children and students to work and earn money before they make a purchase to avoid borrowing to buy things, with time the mess we have found ourselves in financially should get better. If kids can learn to be responsible spenders at a young age, they will hopefully continue to be more responsible adults, and home buyers. The foreclosure mess we got ourselves into should be a lesson so well learned that it will never be repeated again. Future borrowers will hopefully be up against much stricter rules and regulations, that will force them to be more careful borrowers.

Our changing America is a bright and wonderful place, but perhaps we should look back in time to simpler lending practices and more moderate borrowing rules and be a bit more conservative about how we spend money and borrow it.