He is only rehashing what has been stated by others. MB used the loan programs to their advantage, created documentation and went dialing for dollars by contacting as many appraisers as it took to find a "team player".
His biggest criticisms, though, are reserved for mortgage brokers and appraisers. As Bitner describes it, lenders like his company, which underwrote loans offered up by brokers and resold them to giants like Countrywide, spent much of their workdays trying to spot the stupid tricks brokers routinely used to get unqualified borrowers approved for loans. They'd say a buyer intended to live in a house when it was really an investment property. They'd falsify the buyer's income by having a relative pose as his employer, or use scanners and software to forge W-2 forms. They'd find ways to hide debts (like a car payment) by looking for a credit report that omitted key data. They also routinely gamed the appraisal system, encouraging appraisers to look for "comparables" that were far nicer homes in better neighborhoods—all in an effort to drive up the appraised value of the home they were mortgaging.
The article speaks poorly of the MB industry and the ethically challenged "team players" that held appraisal licenses.
"The rate of property appreciation experienced on a national basis over the last seven years was not only a function of market demand, but was due, in part, to the subprime industry's acceptance of overvalued appraisals, coupled with a high percentage of credit-challenged borrowers who financed with no money down," Bitner writes.
The acceptance of overvalued appraisals??? Try the demand, coersion, extortion by MB's for overvalued appraisals if you dare to accurate about it.
They also routinely gamed the appraisal system, encouraging appraisers to look for "comparables" that were far nicer homes in better neighborhoods—all in an effort to drive up the appraised value of the home they were mortgaging.
That's a patently stupid statement. SoCal MBs asked for comp checks
to get the pre-ordained value they wanted. They didn't know a neighbor-
hood from a hole in the ground. While the 'author' might of written what
he thought was happening (so he wouldn't be prosecuted for fraud),
he's playing the dumb card. Nice job Newsweek on getting scammed.