Andrew Cuomo, the New York state attorney general, is investigating the possibility of corruption by some appraisers in New York City, according to this intriguing article in the New York Observer. Here’s the headline:
New York’s Longest-Running Real-Estate ‘Joke’
Since mid-May, the Observer says, Cuomo has issued subpoenas to three companies. The question is whether appraisers are putting unrealistically high valuations on properties to curry favor with their clients, who need big numbers to justify the mortgages they’re taking out. It’s a question that should sound familiar just about anywhere in the U.S.
One appraiser who is not under investigation, Jonathan Miller of Miller Samuel, tells the Observer that only about one in four or five American real-estate appraisers does his or her job independently.
“The rest of them are order-takers; they’re making the number, and it all works out,” Miller says. “It’s a joke—the system is a joke. … There is very little independent analysis of what collateral is really worth.”
For more of Mr. Miller’s blunt opinions, check out his always entertaining blog, Matrix.