Yes, at their current rate of irrationality and superstition, IFO expects to see legislation proposing repeal of the law of gravity being introduced any minute in at least four states.
Think she’s wrong? Look at this item from Appraiser News Online:
Four States Consider Legislation Barring Distressed Sales as Comparables
Four states – Illinois, Maryland, Missouri and Nevada – are considering legislation that would prohibit or restrict the use of “distressed sales,” such as foreclosures and short sales, as comparable sales as a part of a residential real estate appraisal.
[Hat tip: Mish]
Later in the same article — the crux of the matter: “If these bills were enacted into law, appraisers would be put in the difficult position of having to choose which law to violate.”
Not that appraisers are blameless in the housing bust debacle, but there were presumably just a few bad eggs in the appraisal field. These laws seem to want to make them all bad eggs.
Banks are already living in this unreal world. They keep the bad loans on their books at the original loan value, not the current market value. In the cynical world of bank-watchers, that’s called “Extend and Pretend.” They extend the term of the loan rather than foreclose on underwater property that mortgage-holders have stopped paying on and pretend the market value hasn’t changed.