One in seven home appraisals done between 2011 and 2014 were inflated by 20% or more, according to data collected by Digital Risk Analytics, a subsidiary of Digital Risk, LLC, and provided to the Wall Street Journal.

one in seven home appraisals have been inflated by 20 percent or more according to new studyThe mortgage-analysis and consulting firm, based in Maitland, Fla., was hired by some of the 20 largest lenders to review their loan files.

The firm reviewed more than 200,000 mortgages, parsing the homes’ appraised values and other information, including the properties’ sizes and similar homes sold in the areas at the times. The review was conducted using the firm’s software and staff appraisers, the newspaper reported.

In what industry executives say is a return to practices seen before the financial crisis, home appraisers are inflating the values of some properties they assess, often at the behest of loan officers and real-estate agents, the newspaper said.

The dollar amount of new mortgages this year is expected to be down 39%, according to the Mortgage Bankers Association, which has put increasing pressure on loan officers and real estate agents.

Almost 40% of appraisers surveyed from Sept. 15 through Nov. 7 reported experiencing pressure to inflate values, according to Allterra Group LLC, a for-profit appraiser-advocacy firm based in Salisbury, Md. That figure was 37% in the survey for the previous year.

“If you thought what was happening before was an embarrassment, wait until the second time around,”  Joan Trice, Allterra’s chief executive and founder of the Collateral Risk Network told the Wall Street Journal. Her company represents appraisers employed by lenders and other companies and has been meeting with regulators to discuss concerns about appraisers being pressured into inflating values.

Read the full Wall Street Journal story here.

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