The Motley Fool [MSNBC] writes about the “tip of the iceberg” at Fannie Mae. The idea that the lending industry has no real safeguards against appraisal pressure is great cause for concern as to the risk rating for Fannie Mae’s portfolio.

Think about it. Appraisals are routinely over valued by 5% to 10%, often higher. In fact, it happens so routinely now that most involved in the process, don’t realize what they are doing is wrong.

Wholesale mortgage origination has taken over retail mortgage origination so controls and protection of the appraiser from pressure are now gone, and Fannie Mae holds these loans in portfolio. Fannie Mae is under the false impression that the collateral is adequately measured.

Loan portfolio’s are bought and sold based on outdated risk models for the value of the assets they contain.

Who’s kidding who?

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