New Legislation for Appraisal Fraud

[Jason Barber]

For those of you still performing comp checks...read on



Appraisal Fraud Legislation Moves Out of House Committee

Key MAR-supported legislation is on the move in Lansing. First, the House Banking and Financial Services committee reported four pieces of legislation to combat the growing problem of appraisal fraud in Michigan. Given the recent statistics that Michigan ranks 5th in the nation in mortgage fraud, this legislation is aimed at addressing Michigan’s rising problem and increase penalties on those who are engaged in the activity. This package of bills, HB 4054, HB 6148, SB 343, and SB 356, would amend various acts to prohibit a mortgage broker or lender from coercing an appraiser in order to receive a predetermined appraisal, prohibit an appraiser from developing and communicating an appraisal that was the result of conditions set by a client in order to receive a predetermined appraisal value, and revises the criminal penalties and civil fines for violating the Mortgage Brokers, Lenders and Services Act or the Secondary Mortgage Loan Act. In addition, it establishes penalties under Article 26 (Real Estate Appraisers) of the Occupational Code.

 

[Flatlander]

Amen. Hopefully it passes and is enforced.

 

[Michigan CG]

Jason,

This bill needs to specifically say that it is illegal for a MB or LO to ask for a verbal appraisal since it is illegal for an appraiser to give one. I find it fascinating that I cannot say that I think a property is worth $100,000 on the phone because it is illegal, but someone has the legal right to ask me to do so....

Kind of like it is illegal for me to distribute drugs but it is ok for someone to request them.

The current law is below:

OCCUPATIONAL CODE (EXCERPT)
Act 299 of 1980


339.2609 Appraisal; requirements.

Sec. 2609.

An appraisal shall be in writing and shall do all of the following:

(a) Disclose any limitations on the type of analysis, valuation, or opinion.

(b) Be independently and impartially prepared and conform to the uniform standards of professional appraisal practice and any other standards adopted by the director.

(c) Include an opinion of defined value of adequately described real property as of a specific date and be supported by the presentation and analysis of relevant market information.

(d) Indicate on every appraisal report the license number and level of licensure of the appraiser.


History: Add. 1990, Act 269, Eff. July 1, 1991 ;-- Am. 1999, Act 170, Imd. Eff. Nov. 10, 1999
Popular Name: Act 299


© 2007 Legislative Council, State of Michigan

And, if Michigan is serious, add to the law that it is illegal for banks and others to ask for BPO's from Realtors since it is illegal for Realtors to do them other than for listing purposes. If we are going to pass laws let's put teeth into them.

Find me the sponsors of that bill and I will call them personally, as I hope other Michigan appraisers do.

 

[hglenbetts]

Jason,


Find me the sponsors of that bill and I will call them personally, as I hope other Michigan appraisers do.[/quote]


If you can find that info and post it here, I'm sure many of us will call.

Thanks

 

[David Molenaar]

House Bill 4054 (2007)

Sponsors Jeff Mayes - (primary)
James Marleau

Categories Occupations, appraisers; Occupations, real estate; State agencies (existing), labor and economic growth

Occupations; appraisers; prohibition on setting, developing, and communicating an appraisal based upon certain outcomes; provide for. Amends sec. 2635 of 1980 PA 299 (MCL 339.2635).
Last Action: 05/27/2008 - referred to second reading

House Bill 6148 (2008)

(Original Content Same As Senate Bill 0432)

Sponsor Barbara Farrah

Categories Criminal procedure, sentencing guidelines; Financial institutions, mortgage brokers and lenders; Occupations, appraisers; Consumer protection, other

Criminal procedure; sentencing guidelines; violation of mortgage company act or secondary mortgage loan act; reflect reduction of penalty to misdemeanor. Amends sec. 14p, ch. XVII of 1927 PA 175 (MCL 777.14p). TIE BAR WITH: SB 0343'07, SB 0356'07
Last Action: 05/27/2008 - referred to second reading


Senate Bill 0343 (2007)

Sponsors John Pappageorge - (primary)
Cameron Brown, Randy Richardville, Roger Kahn, Valde Garcia

Categories Financial institutions, mortgage brokers and lenders; Occupations, appraisers; Consumer protection, other

Financial institutions; mortgage brokers and lenders; coercing or inducing appraisers to inflate value of real property offered as collateral for secondary mortgage loan; prohibit. Amends sec. 27 of 1981 PA 125 (MCL 493.77). TIE BAR WITH: SB 0342'07, SB 0356'07
Last Action: 05/27/2008 - referred to second reading


Senate Bill 0356 (2007)

Sponsors Randy Richardville - (primary)
Mark Jansen, John Pappageorge

Categories Financial institutions, mortgage brokers and lenders; Occupations, appraisers; Consumer protection, other

Financial institutions; mortgage brokers and lenders; coercing or inducing appraisers to inflate value of mortgaged property; prohibit. Amends sec. 29 of 1987 PA 173 (MCL 445.1679). TIE BAR WITH: SB 0342'07, SB 0343'07
Last Action: 05/27/2008 - referred to second reading

 

[Jason Barber]

Jason,

This bill needs to specifically say that it is illegal for a MB or LO to ask for a verbal appraisal since it is illegal for an appraiser to give one. I find it fascinating that I cannot say that I think a property is worth $100,000 on the phone because it is illegal, but someone has the legal right to ask me to do so....

Kind of like it is illegal for me to distribute drugs but it is ok for someone to request them.

Tim, I hear what you're saying, but think about how hard it would be to enforce a law to keep people from asking a question. The easier way is to enforce supplying the information. Besides, appraisers carry a license to be accountable for, LO's not so. (Hopefully that will change in the future too).

I like your drug dealer example, but again, it would be much more difficult to enforce all those asking for drugs than just penalizing the drug dealer himself.

What bothers me the most is that 90% of appraisers in Michigan know that providing a verbal comp check is illegal, (I'm assuming 10% are oblivious) but they either A) don't care or B) feel the minimal fine is worth the risk.

Come to think of it... I've never seen any fines distributed from the State Board for providing a verbal comp check.

 

[Jason Barber]

Thanks Dave !!

Here are the contact numbers or email...

Jeff Mayes jeffmayes@house.mi.gov
(517) 373-0158

Barbara Farrah barbarafarrah@house.mi.gov
(517) 373-0845

John Pappageorge SenJPappageorge@senate.michigan.gov
(517) 373-2523

Randy Richardville rrichardville@house.mi.gov
(517) 373-2617

Maybe we should prepare a blanket statement and all start calling???

 

[Ruben Ramon]

Really, itsn't it agnainst the law for anyone, not just l.o.'s, to pressure an appraiser to committ fraud? I just don't see how this will help. The problem is that no one really cares. The system is too big, its broken, and even with the current disaster, not enough people are really willing to make the changes necessary to fix the industry. They'll fight it, and fight it, then when inventories begin to clear back down to reasonable levels, and supply and demand come back into balance, the problem will go away for another 20 years. This "solution" is too little, too late.

Anyway, I think that the only solutions will come from the Federal Government. Interstate Commerce Clause.

Let my lynching begin. I don't care anymore.

 

[Michigan CG]

........r B) feel the minimal fine is worth the risk.

Come to think of it... I've never seen any fines distributed from the State Board for providing a verbal comp check.

What is the fine for performing an oral report or a comp check?

Make the fine $500 and use the money to hire someone to make anonymous phone calls to appraisers asking for comp checks. Maybe that would make too much sense.

What is the fine for a realtor doing a BPO? Glen do you know this?

 

[Ruben Ramon]

There IS no fine for a Broker doing a BPO. DLEG can only go after licensed activity. Appraisals have to be done by appraisers. If an appraisal is done by a non appraiser, like a BPO, then its up to the attorney general or the local prosecutor...good luck with that one.