What is a distressed and discounted home but a traditional home that is in foreclosure? To suggest there is some difference between a traditional home and a foreclosed home – as if completely different species – is, well…revolutionary evolutionary nonsense.

Still, you have to admire this man’s guts to so blatantly call for fraud and for crony capitalism t0 rise from the ashes.

http://money.cnn.com/2005/05/23/real_estate/financing/appraisalfraud/index.htm

SNIP:

Trouble is, pressure on appraisers is often subtle and not easy to prove, said Don Kelly, vice president of public affairs for the Appraisal Institute, which is calling for stronger regulation at the state level and legislation prohibiting lenders from meddling with the process.

The problem is so widespread, that more than 8,000 appraisers – roughly 10 percent of the industry – have signed a petition asking the federal government to take action.

Appraisers, like auditors, are supposed to follow a strict standard of professional behavior, said David Callahan, senior fellow at the public policy organization Demos and author of a recent report about appraisal fraud. “What is actually happening is lenders and brokers are telling them what value they want,” he said. “If [appraisers] don’t play ball, they don’t get paid or don’t get work again.”
Inflated values

A puffed up appraisal can have serious consequences for a homeowner down the road.

“There are a lot of people who have refinanced for more than their homes are actually worth and they’re effectively already upside down even without a real estate bubble bursting,” said Callahan. Down the road if they have to sell or decide to refinance, a more accurate appraisal might show that they owe more than the house is worth.

“The real issue is on the refinance side where people are cashing out of their equity on the basis of higher and higher values,” said Zielinski, who before accepting a job e-mails lenders and brokers to remind them that he is obligated to appraise property based on market conditions, not a predetermined value. “Conservatively, I’d say that 10 percent of the houses I appraise are worth less than the mortgage on them.”

One overvalued appraisal can skew home prices throughout a neighborhood, according to the Appraisal Institute’s Kelly. “If a house is appraised for 10 percent or 15 percent more than it’s actually worth and the sale closes, it may be used by another appraiser as a comparable sale the very next day,” he said. “It has a ripple effect.”

That could have even greater implications, said Martin. “The cumulative effect of appraisal fraud is you may have investors holding mortgage debt that’s backed by real estate worth less than they think it is,” said Martin. “It’s a train wreck waiting to happen.”

I almost wrote that in my post. The seem to be mentioning the ETF’s the same way they were blaming the shorts last year. Might be worth paying attention.

Due to all the intervention, fudging and fiddling, markets all over the World resemble Frankenstein: big, unwieldy, unpredictable, distorted and dangerous. The G20 answer is more of the same. Another day wasted in ponziville and another day closer to Palookaville. We could have been a contender.

Sorry to be so OT on this but are you noticing that lately this is a lot more discussion on ETF’s. I keep hearing CNBC in the last week that ETF’s are making up 40% of the trade volume, etc. etc.

Today, two people in the morning advised using open end mutual funds instead of ETF’s. My company has banned the advisor ability to recommend any ultra etf’s or any inverse etf, even if it does not have leverage (SH, for example)

Oddly enough I can still use something like PSSDX, or BEARX.

There seems to be an effort against the ETF’s right now but perhaps its just the negative environment that has me buying into more conspiracy theory.