What would you say to the FBI?

[athome77]

Provocative title, no?

Am doing a short presentation and Q&A with the FBI's mortage fraud task force next week. Agenda so far consists of a brief overview of appraisal history (licensing, etc), industry issues, methodology, and real world examples of good and bad appraisals. As can be imagined, "bad" examples will come from my voluminous collection of review assigments. I am turning to you, my peers, for further suggestions of content. Horror stories, anecdotes, advice, all are welcome.

If you had 1 hour in front of the men with the guns and badges, what would you say?

Please keep all suggestions positive. Thanks in advance for your help.

PS If you prefer to PM or e-mail me directly, That is also encouraged.

 

[CindyR]

Sounds like fun. First thing I would say is "How much time do you have?" I too have more samples of 'bad' appraisals than I ever would have thought it humanly possible to acquire.

On a serious note, I would try to be sure they understand that even though an appraiser is probably involved in every fraudulent mortgage transaction, the appriaser is probably not part of the fraud. The appraiser is probably just stupid.

I can hear the voices on the documents I review (mostly forensic assignments on foreclosed properties) and I can just hear the conversation, "can you appraise this for $700,000?" and the apprasier, "Sure..." and then magically appears a $700,000 appraisal. Never mind that all the model match sales in the subdivision are all under $500,000. Just search for comps between $650 and $800 and all is well. Everybody is happy.

Whether the appraiser is incompetent or complicit really doesn't matter. The end result is the same, and the loan is funded.

There are many on this forum who will defend the pending contract as an indicator of value for a sales transaction. That may have been the case back in the good old days but here in Phoenix during the 2005 buying frenzy most of us learned that buyers will sign anything and that a pending contract is not always a good indicator of an informed buyer's decision process. Too many appraisers drank the kool-aid and crafted appraisals for ridiculously inflated sales prices. A lot of work was performed by trainees who never had a clue they were supposed to figure out what the property was worth. All they learned to do was appraise to the contract price.

These are some of the things I would want to tell the mortgage fraud task force.

 

[panappr]

If you had 1 hour in front of the men with the guns and badges, what would you say?

Are any in your audience familiar with appraisals at all? If not, a short 1 hour presentation is not going to give them the tools that they need to go out and bust appraisers. They would need at least 2 weeks including a 7 hour USPAP. I hope they are not going to be reviewing appraisals after 1 hour, they might shoot the wrong person.

 

[Carnivore]

You might point out that the appraiser can be the best witness they have. I would bet many of the mortgage fraud cases these guys work on are not "one hit wonder" assignments. That they involve multiple properties by the same lender and the same appraiser.

In other words the FBI should always go after the appraiser along with all other the perpetrators!

What to worry right. All the AQB instructors tell you that all you need is a true original of your appraisal in the work file.

 

[Marcia Langley]

athome,

Given your opportunity to speak to the agents, I assume you already know that their main focus is on 'fraud for profit' rings as opposed to 'fraud for property'. (Plus their new focus also on reverse mortgage fraud and rescue mortgage fraud.)

Given that, I'd focus on the red flags that appraisers sometimes notice that they suspect might indicate a ring. I wouldn't spend much time on the sorts of coercion that most appraisers face in the general environment.

That said, it would be hard for me to resist a 60 second blurb about the general coersion that contributed to the general economic woes more pervasively than the actual fraud rings.

If you get the chance to ask questions, I'd be interested in some statistics that were more detailed (more broken down into more specific categories) than those I've seen published by the FBI. In particular as they relate to licensed appraisers.

For example, what percentage of appraisal fraud in the case load is by unlicensed forgers verses licensed appraisers. And what percentage of licensed appraisers receive something of value beyond the normal price of an appraisal.

 

[Scott FL]

Get the appraisers log. Then track the distance for each assignment they signed off on as 'did inspect' for their five trainees the week before and after the assignment in question.

Get the same data from the AMC which knows the appraiser did not inspect because they have the data in house, easily accessible from their AI ready database.

Multiple fraud, gross negligence, quick and easy.

 

[Mike Kennedy]

Suggest 1 minute overview on "history" - they already know it. Suggest remainder focus on REAL WORLD fraudulent appraisals with handouts.

Recommend referring them to Pamela Crowley and www.mortgagefraudwatchlist.org

 

[Don Clark]

I would remind them that pressure on the appraiser is likely the single biggest problem and the cause of most appraisal fraud. When one is threatened with loss of income, loss of future business, blacklisting, and defamation of character, it is little wonder that many appraisers are involved in mortgage fraud.

A cure would be licensing of vereyone who participates in mortgage lending as well as elimination of commission based LO's and MB's.

Also, i once had a state representative try and get me removed from the VA Fee Panel based on complaints from some real estate agents. Doubnt there is little even the FBI could do about that.

 

[Steve Metz]

The crooked appraiser has made the least amount of money on the deal and will probably be the first to turn evidence against the others in the crime orginazation. He will also have the least amount of financial reasources to defend him self. Bad appraisers usually work for more than one set of scam artists so he can lead you to other criminals.

 

[LA Woman]

I would remind them that pressure on the appraiser is likely the single biggest problem and the cause of most appraisal fraud. When one is threatened with loss of income, loss of future business, blacklisting, and defamation of character, it is little wonder that many appraisers are involved in mortgage fraud.

A cure would be licensing of vereyone who participates in mortgage lending as well as elimination of commission based LO's and MB's.

Also, i once had a state representative try and get me removed from the VA Fee Panel based on complaints from some real estate agents. Doubnt there is little even the FBI could do about that.

DITTO! I would also ask them what WE can do to help them.