Century Mortgage Fraud

[airphoto]

Amen!!

 

[Randy Beigh]

Tom

I think for something like this to work, there has to be a lot of "willing partners". Even the investor(WMC Mortgage) had to have questions about what was going on, but continued to take the loans.

I say that because most of these appraisals had review appraisals done and we were doing some. WMC(formerly Weyehauser Mortgage) called me to complain that I was killing their deals. I said that a house that is listed for $53,000, but sells for $70,000 is a problem in our flat market.

However, to suggest that these "buyers" are sophisticated enough to know or understand that they are being scammed or that they are scamming somebody else, I think is wrong.

 

[Karl]

We have programs here where U can get the Down Payment WITH NO PAYBACK. no adjustments are made in ANY Appraisal for this in this area because it is typical of RE Contracts. So U buy a house live there a year get mad at spouse & leave. OH in the meantime nothing has been done to the home not so much as cleaning it. Gee the home is worth less 16 months later than when it was purchased. WELL LETS HANG THE APPRAISER. So many programs to help the POOR & UNFORTUNATE because we can SUE those with DEEP POCKETS & that helps those that just want EVERYTHING for FREE. When they want something they'll lie & cheat for it & then when time to pay back Well it must be SOMEBODY ELSES FAULT that they are in DEBT. OH & as far as the POOR CHILDREN well when a baby can die of SECOND HAND CRACK SMOKE because the people have the RIGHT to have children, time to change some rights.

 

[Randy Beigh]

Julia

"Why is the appraiser always the fall guy, considered to be dishonest in a foreclosure fallout?"

The appraiser is not always the fall guy and wasn't in this case, either. However, the appraiser was the only person who should have been protecting the lenders' interest and only had to tell the truth to do that.

In fact, what was going on was that these folks had created a sub-market. There were so many of these inflated deals going down that the appraiser used the fake sales as comps on the next appraisals. He knew what he was doing.


"Perhaps a little naive and I went in with blinders thinking honest market appraisals would suffice without too much concern about what others may or may not do behind the scenes as long as I was straight about my own part of the work."

Mostly accurate that if you do your work correctly, then the proper pieces will fall into place. But your next sentence is what bothers me.

"Recently did appraisal work for a broker who I eventually came to believe was inventing bogus buyers and contracts on sales of foreclosures. "

I would not care if the lender has a bogus sale. My job is to find out what the house is worth in the marketplace. It does not bother me if they have a fake sale or real sale. I will use market sales to determine what the value is and then analyze the existing sales agreement and explain any differences.

To expand on that, I did an appraisal on a new house a few years where the lots were selling for $15,000. I was in a small town and was thinking this was a lot of money, so I asked for the purchase agreement on the lot. Yes, indeed, the sales price was $15,000 with $7,000 being refunded at closing. So, what was the real sales price? The $8,000 was easy to prove in the marketplace as I had several sales from the community that were unrelated to this scam.

Further, it sounds like you caught this early on. I suspect most states would not be to concerned with someone who completed a bad report, realized, then stopped doing so. Their concern is people who do this all the time, like the appraiser in this scam who does not deserve your sympathy.

 

[Randy Beigh]

Karl

So much anger, so little time.

If you have sales that are not market, DON'T USE THEM. Get other sales, or, at the least, adjust the non-market transactions to get you back to market. If you knowingly use the non-market transactions without adjusting or explaining, you are participating with the scam.

In our situation, all the local appraisers knew that something was wrong and we had meetings(NAIFA) to discuss this. We knew better than to use these.

 

[Soar Ohio]

Randy,
Why do you think these people are unsophisticated? In my area houses are renting for $500-$700 a month. It also takes close to a year to foreclose and get someone out of a house. Here is my logic on why these people are sophisticated. With no money invested and no intentions of repaying, they were able to make $6000 (12 months of rent that they did not have to pay) or more and then shift the blame to someone else. I have never been able to get that kind of return on any of my investments. They are either sophisticated or lucky but I will never call these credit criminals victims.

Tom

 

[Julia Young]

I wasn't given comps to boost an appraisal. Having access to MLS, and two other databases, I can tell immediately if there are sales that have been boosted. They stand out above the rest, particularly in an active market. My appraisal was correct, it was trying to decide if I was going to look guilty by implication because the broker and her "buyer" were bogus. A rule is not going beyond what can be justified in a review or 3rd party analysis. However, there are now new management companies that want you to "use" their comps. You do the work and turn it back in to them. One recently tried to recruit me and when I found out I would be encouraged to use their database, and not my own research, I declined as I am not interested in being a rubber stamp fall guy. I think we need to watch the management companies closely. I am receiving regular and automatic e-mails and mail every week trying to sign me in. It may be tempting when you need regular work. It looks like the industry is always cooking something to fry the appraiser.
Having said that, as a Realtor, not active in sales, I see the agent's view to some extent. Still business is lost constantly trying to stay on the straight and narrow. There is a tremendous amount of pressure with people "shopping" for an appraiser. When my appraiser husband died, his accounts did not automatically transfer to me. I had to develop a larger base of customers through advertising, web, etc. With a diverse customer base, I probably find more pressure as people move from appraiser to appraiser looking for favor, ignorance or both. :lol:

 

[Larry Lyke]

Tom and Randy -- are both right.

But the over-arching fact is none of this scamming works without an appraisal to support the transaction(s)!

The lender who is getting scammed -- even if she is casually monitoring the pipeline -- doesn't know for sure if she is not having the channel(s) independently investigated. It's so much cheaper than defending or righting the wrongs of scams.

WMC being the example cited: When you have fraternization within the company, why wouldn't you pay a few thousand dollars to examine in detail how the pipeline is operating.

My case in point: Examine a few suspicious looking very, very recently closed loans and the underwriter(s) (and LOs); send a human being to look at the agent in the field and her relationships; obtain copies of several loans in progress from the agent; go to the properties and obtain all available information on property and parties; take all of same to an independent appraiser in the immediate territory and follow her lead ... [The latter party's only function is to pick apart the appraisals for possible criminal activity, past or ongoing, and point the investigator in the right direction. [Reviewing for USPooP per se can be done later at the indictment phase.]

The potential savings would be enormous.

It isn't even possible that a far-away lender can't get the scent of this type of activity with a normal, casual review by an appraiser they don't even know. Especially when they are trying to break into the territory. In fact, the first suspect in building a franchise in a new territory is the quality of your own person operating that territory.

When your agent is 'building n' buyiing' business, in a new territory, you simply have to know what coin she's using to attract new business! These people tend to be down n' dirty sales people, most especially in this fiercely competitively field where there's opportunity to do hits n' run. Even the "noblest" company get their fingers tinged from time to time.

 

[Larry Lyke]

A comment about Julia's post which I saw after writing my just above post --

If a client is offering me comps, I gladly accept them, then puruse them to find how they think they are getting better information than I'm able to provide or am subscribing too.

After all, I am susposedly the source of all available wisdom and knowedgle to produce an appraisal. Then, I will incorporate their information into my appraisal if it is at all relevant...

By now, of course, I've investiated the source of their information to see if it's something I ought to be using on a regular, or even occasional, basis.

Usually, the client is just offering the highest dollar value comps they could come up with: Doesn't matter if it's a just-listed property; a pending sale; an out of the area highest sale from the assessor, whatever.

Ive found out that the comps never seems to work on almost any level.

 

[Soar Ohio]

Julia,
Go ahead and use their comps and insert a statement like the one below in every page of your report. I also use a statement similar to this when asked for additional comps.

Tom


This appraisal was completed under hypothetical conditions. The lender / client has supplied the three comparable sales and asked that the subject be appraised as if these sales were the best available at the time of the appraisal. The appraiser makes no guarantees or warranties as to the suitability of these comparable sales. Any persons relying on this appraisal does so with the understanding of the limitations placed upon the appraiser by the lender / client and in doing so agrees to hold harmless the appraiser for any error in value