These “Historical Revised Real Estate Appraisals” are completed by certified state licensed appraisers on standard forms, but value the property at the last time of financing (which could be years ago), instead of at the present date.
“The theory is that the financing was based upon a questionable appraisal which the lender approved without proper oversight,” a RetroAppraisals.com release said.
“The Revised Appraisal looks back at the actual facts existing at the time and brings to light the real value of the subject property (on the past date) as opposed to the inflated value that was the basis for the loan.”
“Mortgage brokers, real estate agents, and lenders had close contact with appraisers and most appraisal order forms had a line item that asked for the borrower or their agent to write down the value that was needed from the appraiser.”
The company claims mortgage lenders “looked the other way” while loans were processed and funded, instead of calling for appraisal reviews, as they gave in to management demand for high-volume production.
Besides, most loans were quickly sold off via the originate-to-distribute model, so there wasn’t much concern with regard to valuation.
Steven Greene, co-founder of Retro Appraisals LLC, said in most cases, a look back at the facts using a retro appraisal puts just enough pressure on the bank or mortgage lender and their representatives to find solutions rather than face the consequences of their previous actions.