The Con, We Were All Sold a LIE

The Con, We Were All Sold a LIE

The Con, a 5 part docu-series premiering August 5, 2020 at 8pm EDT, is an in-depth investigation into the 2008 financial crisis nine years in the making. Through interviews with regulators, former officials, foreclosure victims, industry whistleblowers, and journalists, THE CON connects the dots to what America used to be and where we’re headed in 2020, as nearly 40 million Americans are currently claiming unemployment. Stay tuned for a live conversation with the filmmakers and voices from THE CON after the screening.

William Black: “Most things viewers “know” about the Great Financial Crisis (GFC) are false…. The GFC was not a “subprime” crisis. The twin appraisal fraud and liar’s loan fraud epidemics caused the GFC.

In nearly every case, it is lenders and their agents (principally loan brokers) that extorted appraisals to inflate dramatically reported home values. They did so by blacklisting honest appraisers. The borrower does not hire the appraiser and can virtually never inflate it. By 2006, 90% of appraisers reported pressure to inflate appraisal values that year, up from 60% in 2003.

No honest home lender would ever inflate, or permit loan brokers to inflate, the appraisal value because it is the lender’s great protection from loss. Massively, and extensively inflating reported home prices optimizes elite bank CEOs’ fraud and predation schemes.

The Con is the first documentary to introduce viewers to one of the most important principles of economics, white-collar criminology, and effective regulation – the “Gresham’s” dynamic. Epidemics of appraisal fraud are classic examples. George Akerlof, a Nobel Laureate in Economics (2001), created the term in 1970 in one of the most famous and influential economics articles. He used the term to describe the results when unethical CEOs gain a competitive advantage by cheating. Market forces then become perverse and bad ethics drives good ethics from the markets. The Con shows how elite financial CEOs created such perverse dynamics in appraising, auditing, loan brokerage, and credit rating. The goal, which they achieved, was to aid their fraud and predation efforts.

A liar’s loan is a loan in which the bank CEO chose not to verify the borrower’s income. Regulators always warned against making such loans. The purpose of liar’s loans is to inflate massively and in huge numbers borrowers’ reported income. To state what should be obvious – this makes zero sense if the (fictional) CEOs’ goal was making loans to the poor to satisfy (nonexistent) Community Reinvestment Act (CRA). Inflating borrowers’ income dramatically would be a nonsensical means of proving that your bank was lending to the poor. “Shadow” financial sector lenders not subject to the CRA made the overwhelming bulk of liar’s loans. Those “Shadow” lenders overwhelmingly sold their liar’s loans in the secondary market to Shadow sector firms not subject to the CRA.

Bank CEOs loved liar’s loans because their loan brokers and loan officers used to them to inflate borrowers’ income, which maximized the CEOs’ bonuses. The fraud incidence on liar’s loans was 90% according to the lenders’ own anti-fraud experts.”

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11 Responses

  1. Retired Appraiser Retired Appraiser says:

    I am looking forward to the followup series (The Con II) where they explain precisely why appraisers are getting paid the same $300 to $400 today that I was getting paid nearly 30 years ago. Hopefully that docuseries will locate hundreds or thousands of people from all walks of life whose income has not doubled over the past 20 years. I’ll bet my money on the fact that they don’t find a single person or career field.

    • Avatar Koma says:

      Not even a person working at McDonalds.

      • Retired Appraiser Retired Appraiser says:

        In my state minimum wage was $5.15 in 2001. It will be $9.15 in 2021. You are correct, even McDonald’s salaries have nearly doubled in 20 years. To add insult to injury however, you will find that every fee that you pay to stay in business has increased HEAVILY. I have no clue how residential appraiser stay in business other than by cutting corners or outsourcing your typing to India.

  2. Perry E. Turner, Jr. on Twitter Perry E. Turner, Jr. on Twitter says:

    Thanks for posting this!!!

  3. Avatar Scott says:

    Take a look at title insurance too. Just type into Google “Title insurance is a scam”. In California it add’s thousands of dollars to a home loan. Hoping this link will work. It’s never made any sense that the ONE person that has no vested interest in the transaction (the appraiser) get’s paid so much less than others (escrow/title/REALTOR, etc) yet has such an important role in the overall transaction (what is the value).

  4. Baggins Baggins says:

    Caveat Emptor. One solution is to uncouple the effective cost of services from the loan origination and sale itself. Watch consumers take a big step back and get better educated without any help from anyone or further incentive to be better educated, simply due to the gravity of the high out of pocket costs. Bad money to the back burner. It may be difficult to engage in systematic origination fraud, if you had to pay your own service fees.

    Can you imagine, if they wanted money supply expansion, if they had to call down to the miners and mines, and say fire up the drill boys, work overtime, the bankers need more cash! The con is rooted in the money itself. Audit the fed. Could those powerful corporations ever have achieved those positions if the dollar was backed by gold and silver? If perhaps the government was not in the business of lending and insurance with taxpayer backing?

  5. I urge all to watch this. Many of the appraisers that attended Appraiserfest in November 2018 were interviewed for this. They included former FNMA QC appraisers, state regulators, USPAP instructors, & activists in the appraisal profession.

    No one except the editors know what the final cut includes but I’m guessing it will be extremely informative for many. It should be of interest to everyone. Not just appraisers. Pass the link along to friends & family

  6. Avatar Realrose says:

    Sounds like a mob boss has his fingers in the pie still; I will wait for more details when I watch this new documentary. I hope it is accurate;. I remember Black from the RTC days when I was a review appraiser. Mozillo bought the Gibraltar S& L building I appraised in 1992 for the price I valued it at; maybe we have a case of the mob; remember, our president is involved heavily in real estate fraud, laundering money for the Russians. I know of one case and I can disclose whatever you want. Challenge me. For references to his connection with the mob, please read House of Trump, House of Putin, by Unger. It is not a joke. Yes there is trouble, yes, we are screwed again.

    • Avatar Bill Johnson says:

      Perhaps there’s something to what you are saying Realrose, or not, but call me a fool (Fool), but I would rather have a bunch of bad individuals, corporation, etc., versus the left’s push towards cancel culture and wanting a fast track to socialism.

      I’m from the government, and I’m here to help.

      Seek the truth.

  7. Avatar Frank Folupa says:

    I just read that it was George Soros who bribed Barney Frank and Chris Dodd to write the Dodd-Frank legislation.


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The Con, We Were All Sold a LIE

by AppraisersBlogs time to read: 2 min