Even though the redirection of blame is an ancient approach to avoid taking responsibility for ones one actions, this seemingly innocuous tactic has become the leading downfall to the financial industry today.
Consider, the consequences of shifting blame:
1) The actual party who has made poor lending decisions escapes taking responsibility, and often times will even get promoted. Thus the initial behavior does not change.
2) Since the poor decision has not been corrected, the pattern will continue.
3) Redirecting the blame combined with the continuation of the faulty decisions expands the direction of investigation, because now a larger pool of appraisers appear to be at fault – even though the initial behavior was to blame.
4) Much time and money was devoted to the regulation and education of real estate appraisers, but no actual safeguards were put into place to ensure the soundness of the lending decisions.
Therefore, the consequence of improper decisions only expands and the innocent continue to take the fall.
Those appraisers who do accommodate sale prices or refinance loan amounts are certainly harming the reputation of the rest of us, but the real culprits continue to shape this industry to accommodate a larger objective of repackaging loans and selling them as derivatives.
What can be done? From the position of a real estate appraiser, actually very little can be accomplished. We must continue to be accurate in our reporting and analysis and strive to only produce reports that are supported by the market data.
However as a larger group, I believe it is time for each and every one of us to stand together and direct our legislators to take a courageous stand against those that are encouraging a continuation of unregulated derivatives and support regulations that has enabled the pressure that used to come from mortgage brokers to simply be shifted to appraisal management companies.
I would love to hear some thoughts on this.
See you around the water cooler.