A Decade After the Great Recession, We’re Outsourcing Home Appraisals to India

Manuel Romano/NurPhoto via ZUMA

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The Wall Street Journal reports that banks are getting tired of performing actual appraisals for high-volume home loans—the kind that get packaged into mortgage-based securities—and are turning instead to less rigorous broker price opinions:

Now these perfunctory valuations abound, underpinning tens of billions of dollars of home deals. Sometimes the process is outsourced to India, where companies charge real-estate agents a few dollars to come up with U.S. home values by consulting Google Earth and real-estate websites. BPOs have been used to value collateral in the more than $20 billion of bonds sold by institutional landlords, such as Blackstone’s Invitation Homes Inc., and in the fast-growing business of lending to individual house flippers.

What could go wrong? “Their popularity,” says the Journal, “shows how Wall Street is finding ways to adapt to government efforts to crack down on some of the excesses that contributed to the housing crisis.”

It’s remarkable how fast we’ve decided to ignore the lessons of the great housing bubble and the subsequent crash. Republicans, of course, never wanted to learn any lessons from the very start, but Wall Street stayed cautious for at least a few years. Now even that’s receding into the rear view mirror, a mere decade after the second-worst recession of the past century. Republicans are naturally happy to help this process along, because the market is always right, even when the market is wrong. Plus the finance industry is generous to politicians who let them do whatever they want.

It took upwards of 50 years to unlearn the lessons of the Great Depression. The Great Recession took only ten. I wonder how long we’ll pretend to have learned anything from the next one?

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FACT:

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Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

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