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FYI: The Department of Housing and Urban Development says its “Appraiser Watch” system is now fully operational. The system is designed as a check on predatory lending through Federal Housing Administration programs. However, following feedback from the mortgage industry, HUD set the system up as a way to only identify potential predatory lenders, rather than as a way to automatically weed them out of FHA programs. The system monitors appraisers and flags those with “risk factors,” such as being associated with mortgages that have high default rates. In a trial run between October 2001 and September 2002, Appraiser Watch identified 1,900 risky appraisals, and kicked 97 appraisers out of FHA programs. [11/5/03]

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