FBI Increases Mortgage Fraud Investigations.

[bclery]

Public Message

``This is clearly intended to send a public message that the bureau is taking these matters seriously,'' said Joshua Hochberg, a former chief of the Justice Department's fraud section who is now a partner at the McKenna Long & Aldridge law firm in Washington.

FBI Director Robert Mueller told Congress in April that he had seen a ``tremendous surge'' in cases related to subprime loans, which are made to borrowers with poor credit.

The cases, known as loan-origination fraud, involve schemes to flip properties for a quick profit, cheat banks or rip off homeowners facing foreclosure. Targets of investigations can include real-estate agents, home builders, lawyers and appraisers.

One measure of the increase: Last fiscal year, which ended Sept. 30, the FBI received almost 47,000 so-called Suspicious Activity Reports detailing potential mortgage crimes, a 31 percent jump over the previous year. In the first half of 2008, there already have been 38,000 reports. "


This is probably the best news for Professionals who have lost market share to the rubber stamping "skippy" appraisers that have *****d their licenses to mortgage pimps.

Off with their heads!

 

[peturner]

An d there is MORE to come

 

[Marcia Langley]

The cases, known as loan-origination fraud, involve schemes to flip properties for a quick profit, cheat banks or rip off homeowners facing foreclosure. Targets of investigations can include real-estate agents, home builders, lawyers and appraisers.

This is good news but they seem to have left out the actual originator and the lender who enables him.

I'm all for this but I get tired of the FBI only being interested in portraying the lenders as victims. And now the borrowers, too as an afterthought. The bank always comes first.

I noticed FHA put out some new guidance this week on reverse mortgages.

 

[Carnivore]

This is good news but they seem to have left out the actual originator and the lender who enables him.

Like Karl always says, those who speak first get the best cheese in return.

Appraiser will be rolling over on lenders in record numbers once the snow ball comes rolling down the mountain.

 

[Lawrence R.]

I like it by its other name.

The "Counting sand on a beach" initiative.

Vanity of vanities, all of life is vanity.

Finding the crooked appraisers is like deciding which one of the hairs on your head is the curliest.

Too many to choose from.

This will change nothing.

 

[Carnivore]

Larry,

Do you think the FBI might have some interest in speaking with the Infamous North Carolina resident who had several trainees complete hundreds and hundreds of appraisals in Florida and he signed as DID INSPECT?

What if these trainees all appraised lets say all the units in two or three high rise condo buildings in Florida and now there all vacant REO's!

he still practives in NC and TN. Wonder how much damage occurred or is occurring as we speak?

 

[Lawrence R.]

Carnivore, my guess is that putting all of them in jail only clears the way for the next group.

but the reason I say it is pointless is the fact that you and I KNOW that is going on, it is basically public knowledge, and as you say he is still doing damage.

Yeah, now the FBI says they are going to crack down?

Too little, wayyyy too late. It has become catch me if you can, and there are too many people out there now to get them all.

 

[Financially Feasible]

Will the FBI be using an AMC for their orders? :icon_mrgreen:

 

[Caligirl]

I'm glad that fraud is finally being investigated. I'd have to say that based on my observations, if anything fraudulent activity has *increased* lately rather than decreased. That might change if someone actually does something.

 

[Mile High Trout]

Carnivore, chomping at the bit

Right on Carn, it is exactly the situation of jr appraisers getting signed off on, that has caused a lot of damage. More than any rarer specific case of fraud, in an overall sense of course.

Systemic appraisal training problems are cause for increased uncertainty & decreased public trust of appraisers. Larger group appraisal firms are responsible for pushing out high value, after high value, making EVERYTHING work. Jr appraisers are sent out to inspect solo, with pre-chosen comps. It's all basic software form filling after that. Then the chief appraiser signs off as has inspected, although he clearly has not. When I tried to work for one of those companies, I realized I would not learn anything new. After only a few weeks, I was out the door. Good appraisers actually take the time to educate their apprentices. "Value hitters" as they were, took a huge portion of available work. That is how the big companies got big. Then when values declined, they still pushed it, to keep getting work. When they lost their income, because they eventually could not hit the values in the declining markets, they cried FOUL!
The truth is it's the honest appraisers who are struggling the most, and can't get the work. (aside from good appraisers, with longstanding client relationships of course, but those are fewer and farther between every day) These jr appraisers that hit value, did not work very hard to do so, and typically recieved a maximum of 50% of the initial fee anyways. It was very profitable to train appraisers quickly. Now they have flooded the marketplace with their idea of appraisal fees & quality, driving down appraisal prices & reliability. Now it's harder and harder to identify what is and is not quality work for people not familliar with appraisal theory. Because most of the work being performed is from the wide variety of skippies, who are willing to take big fee cuts. Most quality appraisers I talk to, are stalled for work, because skippies worked it away from them.

These companies are still practicing these proceedures, of signing off, incorrectly marking appraisal conditions, and inadequetly reporting actual market conditions. They are still busy, while many honest appraisers get only closed doors. If the FBI were to do anything, they should take a look at the big guys who produced volume, before examining case by case instances of fraud. If their intention is to help fix it, and not just follow up, of course.