FBI Increases Mortgage Fraud Investigations.

[Mike Kennedy]

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. "

5 years from now, when the truth is finally told, it will be determined the SARS reporting volume figures were intentionally deflated by Lenders who failed to execute their responsibilitys under existing OCC, OTS, and FDIC regulations........ AND on those who CONTINUE to retain the services of Incompetent and Unethical (a)appraisers on fee panels or approved lists..........INCLUDING those of most AMCs.

double the number above and triple or quadruple it for each year from 2002 on and you will have a more reliable........fraud impact estimate. ( July 2007 FBI stats indicated 14% of fraud cases actually investigated involved (a)ppraisers.............86% did NOT.)

Failure to execute Due Diligence and SARS reports during the past 5 years is a disgrace on the part of the USERS of mortgage brokers and appraisal services. IMO its' a total abdication of responsibility on the part of the Federal Regulators and State Regulators WHO are mandated to MONITOR, CONTROL, and ENFORCE USER compliance.

$$$$$ the Bottom Line is all that matters...........until suddenly......... the spotlight gets turned in the proper direction.

No Buyers for fraudulent loans or appraisals - no fraud. Simple.

 

[Tudor]

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.

Well said.