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Recall what washed up on shore after the tide of stock market bubble money rolled out? The trash that was floating unseen below the pristine surface. After the tide went out... very stinky.
The really big chunks of trash, such as Enron and WorldCom, we all remember. If you have a strong stomach, go to F'ed Company (yes, they're still around), where you will find 1,006 other pieces, large and small, famous and obscure, that washed up on shore.
During a market bubble the trash under the surface goes unseen not because it is not visible, but because no one is motivated to look for it.
For example, we've had numerous communications with mainstream media reporters over the years about what we think is a great story. With the notable exception of BusinessWeek, a publication which has consistently taken the side of consumers, there has been little interest in the story. Odd, because the story, it seems to us, is irresistible.
How's this for an opportunity for The Fourth Estate to take a stand.
- More than 9,000 professionals in the industry, representing at least 25% of the total number of licensees in their profession, sign an online petition providing their name and address
- They complain that their clients, who are supposedly regulated by state and federal government agencies, frequently demand that they break laws–and in some states commit felonies–in the course of conducting business
- They claim fraud is systemic and threatens the integrity of the market for the product their industry sells
- They complain that if they do not break the law, they are blacklisted and put out of business by competitors who are willing to break the law
- They appeal to regulators and authorities to simply enforce existing laws–no new laws are required–in order that they can make a living without being out-competed by others in the profession who are breaking the law
- All petition signers have to provide a name, addresses, and unique IP address, thus putting their livelihood at risk for airing their grievance
- With more than 9,000 signers to call, the group's claim can be verified–all reporters have to do is pick up the phone (that's what we did)
- The petition has been online for more than eight years, since 1999
- Nothing has happened, no senate committee has been formed to investigate, and not one major story has appeared in the mainstream media about this scandal
Nope. Here's a clue.
- Petition signer #1 is Robert D. Ipock, 1218 Heatherloch Drive, Gastonia, NC
- Petition signer #9299 is Carolyn Bailey, 7122 Bunion Drive, Jacksonville, FL, 32222
One petition signer included the comment, "It makes it easy for the crooks to get all the business."
Another, "There needs to be a confidential reporting site that appraisers can report lenders that commit fraud."
And the answer is...
The petition is appraiserspetition.com and the petitioners are U.S. home appraisers. Above is our analysis from Price Deflation Risk Due to Overpriced Appraisals October 7, 2006 (iTulip.com). We analyzed thousands of signatures and assigned an inflated appraisal "pressure rating" to each state based on the number of petition signers, adjusted for state population. It indicates which states have the highest incident of reports of inflated appraisals and are therefor more likely to see most significant price declines in a down market.
Inflated Appraisal Top Five
#1: Florida
#2: Pennsylvania
#3: Texas
#4: Colorado
#5: New York
This petition provides strong evidence of systemic fraud in home appraisals over a period of more than eight years, primarily driven by lenders. Not only have home buyers been the victims, the housing market itself is at risk due to over-pricing. One of the appraiser said, in a comment echoed by many petition signers, "Without legitimate appraisals, we have NO idea what true market prices are... look out below!"
For many years the effects of toxic credit industry products and practices have collected under the surface of the U.S. economy. Just how big and how ugly is the pile of credit industry detritus below? iTulip's Aaron Krowne's Mortgage Lender Implode site is up to 92 "defunct" lenders and counting. The tide is rolling out. But based on the length of the previous real estate down cycle, which lasted more than five years when more than 1,000 banks went out of business, safe to say low tide is still years away.
James Scurlock in his book and documentary Maxed Out notes that some of the most hazardous products in America are credit products, yet the dangers of these products and the often unseemly ways they are sold are not addressed until millions of consumers have been defrauded, and in the case of mortgage market, until the health of the U.S. economy, and its credit and financial markets, are already showing signs of distress.
Between a health insurance industry that denies health care to the ill and a credit industry that sells toxic financial products to millions, Americans are starting to wonder what happened to the government that is meant to serve the public good or at least protect them from abuse, and to the press that is supposed to keep that government honest. Both are overdue for radical and fundamental change. But, as we have said before, likely these changes will come only after a major financial and economic crisis results.
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