Appraisers say cheaper valuations open door for short-sale abuses
A run-up in housing prices contributed to the downfall of real estate, but now some appraisers fear low-ball valuations could lead to the next market muddle.
They say a new federal rule to speed up short sales will increase banks’ reliance on broker price opinions — cheaper, quicker and unregulated home valuations that some argue could lead to an emerging type of mortgage fraud called “flopping.”
Banks have increasingly used Realtors to do broker price opinions, or BPOs, to set list prices as the market swelled with short sales.
A short sale is when the bank agrees to accept less money for a home than the borrower owes on the loan.