[Rick Lee]

Appraisers use comparable home sales in the area to determine market value of a house. I don't think even reporting a fraudulent appraisal would fix this situation. Traditional mortgage companies won't loan more than 80% of value without requiring the borrower to buy private mortgage insurance. Subprime lenders usually don't require this, but then their rates were pretty high and they did second trusts above the 80% first loan. Going after the appraiser in this case is sort of like rearranging the deck chairs on the Titanic. Even if the appraiser had said it was $1 million, the borrower should know how much cash out he needed and what he could afford, and shouldn't have taken a dime more.