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Appraiser Indictment

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Rachel Dollar

Freshman Member
Joined
Nov 29, 2005
Professional Status
Banking/Mortgage Industry
State
California
I spoke at the annual conference for the Georgia Real Estate Fraud Prevention and Awareness Coalition earlier this week. My topic was the real estate cycle and how fraud appears in the various stages of the cycle. I advised that the first place we see fraud in a rising market is in the appraisal side of the business - appraisers are always the first to know when valuation fraud starts to heat up because the pressure to exceed prior values intensifies. One of the things I discussed was a rising issue with appraisers using unlicensed assistants to expand their capacity - it may not be apparent to the originating lender but is obvious in a pooling situation - such as where Fannie/Freddie/HUD purchase loans from a number of different lenders. It was just interesting today to see that a Kentucky appraiser was indicted in federal court for this practice. I posted it on the blog:

http://www.mortgagefraudblog.com/ex...d-for-using-non-licensees-to-expand-capacity/
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
"By doing this, Garner was able to greatly increase the number of appraisals he could perform in a given time."

Rachel, thanks for sharing. (quote taken from the link you provided) It's sad in so many ways and a definite blemish on our profession.
 

Terrel L. Shields

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Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Everyone needs to play by the rules but the rules need changed. USPAP doesn't require an inspection and therefore when fannie/FHA created these conditions back in the day when tiny BW pix were all you had for comp pics and no access to subjects, what does anyone expect but people gaming the system. F/FHA for their part speak with forked tongue. They have drive by forms, used AVMs, then demand appraisers compete solely on price. They created the very conditions that foment these frauds, then act like they are shocked. I can't condone fraud but it's easy to see why it exists. I am only surprised by the fact we don't see more of it.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Make regulators aware that is the clients who facilitate this, which does not absolve that segment of appraisers of blame, but the AMC/cheap pay lender divisions who constantly pressure fees down, ( result appraisers take on volume which can lead to reckless ways to produce that volume), and the pressure to number hit has returned as well, just more insidious than before.
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
I spoke at the annual conference for the Georgia Real Estate Fraud Prevention and Awareness Coalition earlier this week. My topic was the real estate cycle and how fraud appears in the various stages of the cycle. I advised that the first place we see fraud in a rising market is in the appraisal side of the business - appraisers are always the first to know when valuation fraud starts to heat up because the pressure to exceed prior values intensifies. One of the things I discussed was a rising issue with appraisers using unlicensed assistants to expand their capacity - it may not be apparent to the originating lender but is obvious in a pooling situation - such as where Fannie/Freddie/HUD purchase loans from a number of different lenders. It was just interesting today to see that a Kentucky appraiser was indicted in federal court for this practice. I posted it on the blog:

http://www.mortgagefraudblog.com/ex...d-for-using-non-licensees-to-expand-capacity/

Rachel, thanks for the post. I would be curious to see if the pressures inducing appraisal fraud were as prevalent in declining markets, perhaps equal to that found in a rising market.
 

George Hatch

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Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
I'd call it inspection fraud as opposed to appraisal fraud because the latter implies they were dorking the appraisals to hit a desired value, but whatevah.

I would think that if a lender is taking appraisals in from an AMC that's using a limited number of appraisers per geographic area that it would be easy for them to compare different reports from an appraiser to each other to see what the diagrams look like, how the maps are done, what kind of verbiage is being used in the comments, etc.

I don't recall ever seeing any two appraisers use the same "style".
 

Michigander

Senior Member
Joined
Oct 23, 2003
Professional Status
Certified Residential Appraiser
State
Michigan
Thank you for the post Rachel.

There are certainly a number of early signs. I think of builder incentives as one of the first signs of a market softening, and a great place to manipulate the market (think of those "free" upgrade packages). Think many of us are very concerned about where the market is going right now, as the irrational exuberance of the early 2000's appears back in large scale in many places in the US. My market is crazy with over-bidding at the moment. Primarily because of lack of inventory and fear of rates increasing. Sure I am not the only one in such a market.
 

Marty Boone

Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
Pennsylvania
Even if they question how Speedy McGreedy is able to do three times the amount of the typical appraiser in a month, my guess is that most clients look the other way. If its done fast and the numbers are high there is no reason for any outcry.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
There is a current post that Fannie clarified its okay to have unlicensed inspectors. Not saying the engagement cant require, but isnt this where ASC is headed with licensing? Y'know that 'appraiser shortage' fake news.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Even if they question how Speedy McGreedy is able to do three times the amount of the typical appraiser in a month, my guess is that most clients look the other way. If its done fast and the numbers are high there is no reason for any outcry.
:clapping:

As long as HAL doesn't beep and the deal closes on time, nobody cares. Never did, never will.

.
 
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