Just when we thought we were in the home stretch of getting back to pre-financial crisis real estate market, it looks as though questionable home appraisal processes may be setting the clock back.
According to a Wall Street Journal report, powered by information provided by Digital Risk Analytics, about one in seven home appraisals were inflated by at least 20 percent between 2011 and early 2014. Digital Risk Analytics, a Florida-based mortgage analysis firm, conducted a review of more than 200,000 mortgages. The study was paid for by many of the 20 largest lenders in the U.S.
The article went on to say that these types of practices, according industry insiders, may be signaling a return to shoddy practices similar to those that were happening before the Recession.
Unfortunately, inflated appraisals may be a response to the housing market cooling off after a brisk summer and fall. Despite low interest rates and increasing home prices, the report says, home value appreciation is slowing in New Jersey. Further, sales here are weak.
The bottom line is this: inflating house appraisals doesn’t help anyone in the end. A mortgage company won’t approve a loan if the purchase price is more than the true value of the home.
If you are looking to buy or sell a home in Cherry Hill, NJ or the surrounding communities, talk with knowledgeable real estate lawyer Joel R. Spivack, Esq. He will protect your interests and make sure you are getting exactly what you are paying to receive.