Mortgage consultant

Most collateral is in the form of real estate. Appraised property prices are inherently subjective and only really reliable when given for smaller homogeneous properties for which there is a relatively liquid market. For large, unique developments they are at best an educated guess. Banks are often required to use external, qualified realtors for estimates of collateral values. Moral hazard rears its head again. Realtors are under pressure from banks to understate the value of collateral at the time a loan is granted and to overstate the value of collateral for NPLs. No money need change hands, although it may for the bank to be able to exert pressure for the outcome it desires.