A few years ago, we had a good loan officer make a very bad decision. His management recommended he not make any further loans to a local rancher/investor type who was his friend. They felt they were in as deep as they wanted. Sure enough he made a large loan to the guy on a sure thing investment and he went bellly up.....took the loan officer down with him.
Often these cases are not a series of borrowers, but a string of related properties with one borrower.
Same old story....lay the blame on the appraiser! Shades of the 80s and the RTC. Actually, I think this will end up as a blessing for those of us who do a good job, don't inflate values, and stay the course.
Mike has a point ... it may be a blessing in the long run .... but considering all of the posts I've read here regarding bad appraisers and all of the poor appraisal work that I've seen, why wouldn't the public/investors, FED's etc blame it on the appraiser/appraisal?
I'm not saying that blame isn't due the LO's, management, agents, etc ... but a lot goes directly to those who knowingly or willingly participate in making or supporting such loans ... and from what I've seen over the years ... a lot of that goes directly back to the appraisers and some very creative reports... they simply didn't do what they were suppose to do ... they did what someone wanted them to do.
Its been a problem for as long as I can remember and I've been in this business since 1975.