BluefoxToday blog : Appraisal Fraud is up 46% From Same Time Last Year

Appraisal Fraud is up 46% From Same Time Last Year

For those of you who missed Think Big, Work Small this morning... according to InterThinx, the mortgage fraud specialists, appraisal fraud is up 46% from the same time in 2008.  InterThinx 

But wait, who would be the perpetrators, has not HVCC made us safe?  Thanks to HVCC, Mortgage brokers, those evil, underhanded, self-serving scourges of real estate and sole cause of the mortgage crisis have not been able to order appraisals (except FHA) or even talk to appraisers in the third quarter of 2009.

OMG, that leaves (choke) the innocent victims of wicked mortgage brokers, Banks.  There must be some mistake because we all know that banks would never do anything underhanded. 

I am sure we will soon learn, probably from a trusted politician, that, possibly, the cause was appraisers still tainted by previous mortgage broker contact.  These appraisers will certainly be sent to rehab at taxpayer expense. 

Soon, thank god, due to vigilent efforts of our trusted banks and politicians, the world will be a better place.  Mortgage brokers will have disappeared, banks will make all home loans unfettered by pesky competitors and politicians will be provided will deserved taxpayer paid Cayman Island vacations to visit their secret bank accounts.

Is that the happy ending what you want?

Your FHA GuruYour Fha Guru

Bill Ladewig
800.664.SAVE (7283)
Bill@yourfhaguru.com

 

 


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Comment balloon 47 commentsBill Ladewig • November 02 2009 05:19PM

Comments

It is hard to believe with the current climate that anyone would participate in fraud.  Everyone is looking for a bad guy. 

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) almost 9 years ago

Bill - LOL  Tell us what you really think Bill.  Ok, seriously now, I just had a convo with a Realtor friend and we were debating who the real culprits are of this increased fraud.  I'm saying it's the big, national, retail banks the bank owned AMC's.  My Realtor friend thinks it's still the brokers ordering FHA appraisals, of course, he was quick to exclude me from the statement as an exception to the rule.  LOL

Anyway, while he could provide no supporting argument to his opinion I could support my opinion with actual events. However, it did get me to thinking.  Could there be some truth to his opinion?  Hmmm...

Posted by Donne Knudsen, CalState Realty Services (Los Angeles & Ventura Counties in CA) almost 9 years ago

Nooooooooooo..... not the banks!!! You mean the same ones that had their principles selling their own stock right before the market drove off the cliff? I'm shocked. Who would have thought that leaving the fox in charge of a shrinking hen house would lead to more ..ahemmm... irregularities?

Posted by Pat Palmer, Realtor - Upland, CA 91786 (Forefront Real Estate/ Forefront Mortgage) almost 9 years ago

Not a surprising outcome with that statistice.  Thanks!

 

Posted by PuroClean Professional Services almost 9 years ago

GREAT blog post!  Funny.

Posted by Jake Planton (www.JakePlanton.com) almost 9 years ago

The true value of something is what someone is willing to pay for it.  Why do we even bother with appraisals?

Posted by Mark Lebkuchner / Home Loan Specialist almost 9 years ago

Amen brother!  Too bad not enough mortgage brokers contribute to NAMB our only real voice in Washington.  Since NAMB is underfunded and rarely receives contributions from it's members their voice is about as loud as a mouse.  Wake up brokers and start sending NAMB $20, $50,$100 if you want to be heard before the banks really do take over everything and you find yourself ansewring the phone, "Thanks for calling Wells Fargo how may I help you?

Great post and TBWS is a great resource!

Posted by Nevin Williams, Raleigh Mortgage Pro (Sierra Pacific Mortgage Raleigh) almost 9 years ago

It seems to me that no matter what is happening in the economy, there is always someone that can come up with a way to commit fraud.  It is sad!

Posted by Sybil Campbell, REALTOR® ABR, SFR, SRES Williamsburg, Virginia (Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia) almost 9 years ago

Bill

I am not surprised BIG banks would be behind this but I sure would like to see more data and know which banks were involved. Can I take a guess....Bank of America and Wells Fargo? As for FHA, I know these loans skyrocketed after HVCC as the brokers still had control over the appraisal process, so let's see how the numbers look after January when FHA appraisals must be ordered by the BANKS or AMC's.

If there is still fraud involved then we have the real story here! The real problem is that the government still has not set up the overall entity whereby appraisers can complain if they are being pressured. The individual banks have numbers people can call, but what appraiser is going to call the BANK that gives them work to complain about that BANKS pressure on them. Chances are they will suddenly drop off their list without the appraiser knowing, although HVCC prohibits removing the appraiser from any list without notification and it has to be a good reason, like you are committing fraud or you are an incompetent appraiser. However they can work around that by reducing greatly the number or orders you get and just tell you that work has slowed down in your area. There is always a way around the GAME.  Trust me on that one.

I have real issues as you will see on my Active Rain posts with AMC's, they pay LOW fees to appraisers and charge the BANKS more than the appraiser would, but since BANKS own many large AMC's they are not out anything so it would seem. They are making big money off the backs of appraisers.

HUD has stated that the appraiser can now show in the report what they are paid from the AMC's for the appraisal and the AMC will have to show separately what their fee is. When people realize the Appraiser is being paid half the normal fee and the rest is taken by the AMC's AMC's heads will roll or so I would hope. Maybe if people stayed away  from these big banks, they would change their evil ways? 

Posted by Mary Thompson, Lake Lanier Appraiser in North Georgia (Lanier Appraisal Service) almost 9 years ago

Ha ha ha - your post made me laugh!  Nice use of some sarcasm.  Everyone had been predicting this would be the outcome when the contact was being cut off between appraisers and mortgage brokers...

Posted by Emily Lowe, Nashville TN Realtor (The Lipman Group | Sotheby's International Realty) almost 9 years ago

Wouldn't it be great for the energy used in committing fraud to be turned around and used for something good instead? But then we would not have much negative to blog about.........

Posted by Terry Osburn, Broker Associate (BHHS|Drysdale Properties) almost 9 years ago

Bill:

If you read the report, you will see that Property Valuation Fraud RISK is up 25% from the prior quarter and 46% from 1 year ago, based upon the indicators used by Interthinx found in Mortgage Applications.  I did not find the word appraisal anywhere in the 16 page report.

Since (according to Interthinx) you live in the mortgage fraud capital of the United States, perhaps you have a different perspective than mine.  I can tell you from personal experience that lender pressure is perhaps 10-20% of what it was pre-HVCC.

According to Mortgagefraudblog.com (see link below), in a recent case in New York, 41 people were charged, of which one was an appraiser.

mortgage fraud blog

Posted by Jesse Skolkin (Independent New York State Certified Real Estate Appraiser) almost 9 years ago

For someone to be involved in fraud in our current econmic climate they're either real stupid OR pretty confident about their actions.

Posted by Michael J. Perry, Lancaster, PA Relo Specialist (KW Elite ) almost 9 years ago

Bill - I saw this early this morning as well.  Not surprising.  The HVCC legistlation makes about as much sense playing golf with a wiffle ball bat.

Mary Thompson makes a wonderful point in her comment above. 

I'm so glad this post was featured.  Maybe, just maybe, it will resonate with the powers that are and open up those beady little eyes of theirs. 

 

Posted by Jason Sardi, Your Agent for Life (Auto & Home & Life Insurance throughout North Carolina) almost 9 years ago

HA HA I love the sarcasm. Appraisers being sent to rehab at taxpayer's expense- too funny! You never know in this craziness! Have a great day!

Posted by Kristi DeFazio, Colorado Springs Rea lEstate 719-459-5468 (RE/MAX Advantage) almost 9 years ago

I love the sarcasm its too bad that the mortgage broker I believe, has to suffer more than any other professional for this mess.  Or at least seems to be blamed more than those that actually masterminded it such as uhhhhh Goldman Sachs and others who were not as smart and went under

Posted by Gene perez (Greater Mortgage Solutions & Valley Hills Realty ) almost 9 years ago

i agree, obviously the numbers are incorrect as hvcc has eliminated all fraudulent appraisals, right?

also, in many/most cases here in southwest florida you not only get an original appraisal, but frequently a review. low appraisal are probably the number one reason for denials, so it can't/shouldn't be there.

seller financing anyone?

Posted by Jay Beckingham, "I love first time homebuyers" (Fairway Independent Mortgage Company) almost 9 years ago

Alarming statistics to say the least, good thing we have hvcc to protect everyone.

Posted by Heather Adkinson, Real Estate Agent - Moses Lake (Windermere K-2 Realty LLC www.propertiesinmoseslake.com) almost 9 years ago

You need to work on your sarcasm skills.

Posted by Aaron Vaughn | Builder | Investor, If the deal makes sense, the cash will follow. (Conifer Homes) almost 9 years ago

Is it appraisal fraud?  I just don't see that happening not with the rules and regulations and underwriting and cross examinations and the calls I'm getting from underwriters to ask me my assessment of the home and I'm the listing agent.

Posted by Barb Van Stensel almost 9 years ago

Call me naive, but I just don't see fraud.  Maybe once or twice has somebody said something that didn't sound right and I told them 'that it didn't sound right.'  Not saying it isn't out there.  It obviously is.

Sarah in Nashville

Posted by Sarah, John Rummage, Love Being Realtors® in the Nashville TN Area! (Benchmark Realty LLC, Nashville TN 615.516.5233) almost 9 years ago

In North Florida we have also had problems with low appraisals rather than high ones.

Posted by Ted Tyndall, FL Homes for Sale-Palencia, World Golf Village,Nocatee,St. Augustine (Davidson Realty Inc.) almost 9 years ago

Hi Bill,

Thank you for sharing an informative and helpful article.

John Pusa

Posted by John Pusa, Your All Time Realtor With Exceptional Service (Berkshire Hathaway Home Services Crest) almost 9 years ago

Great post.   This is so much nonsense, but hey change is good.

Posted by Ellen Crawford, Alpharetta Real Estate Agents & Alpharetta REALTOR (RE/MAX Paramount Properties) almost 9 years ago

Bill,

Serves them well. HVCC was enacted too hastily. They didn't make the time to listen to all the relevant players on it and here are the results. Hopefully it'll be either modified or tossed out.

Posted by Esko Kiuru almost 9 years ago

I don't know why my jaw dropped when I read this. It's really no surprise at all. And you're right, we'll all pay to teach those BAD appraisers how to do their job properly. I'd rather see them bagging groceries at the local SaveMart!

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (RE/MAX Realty Affiliates) almost 9 years ago

Sarcasm is my friend - and I see it is also yours!

Posted by Dee Nofziger, Maumee Real Estate, Toledo Homes, Key Realty (|Key Realty | Maumee Toledo Real Estate Blog) almost 9 years ago

Bill - boy, I would think that anyone involved in fraud now would be insane in our current environment...can't say I have seen any problems over the past year. 

Posted by Lori Mode, Real Estate Made Simple (Keller Williams Realty - Elk Grove, CA Homes for Sale) almost 9 years ago

I own a real estate brokerage + an appraisal company. My appraiser is not pressured to "get the number" at all. However, the true FRAUD is in the deals coming through right now that have NO COMPS to prove value, yet the deals are ridiculously high. Of course they send my appraiser the sales agreement and she knows what number they WANT to hit. But when she runs comps, the comps are NOT THERE to support the higher values. So she turns in what she has comps to prove, then everyone is unhappy! She does her best, but realtors must first price properties realistically, and buyer's agents MUST do their homework before writing an offer.

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) almost 9 years ago

Fraud? How can it be? Didn't the government fix the problems with HVCC? That's what we were told....

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) almost 9 years ago

Bill- I don't think there is more fraud-just more enforcement. It's like setting up Highway Patrol with a radar gun on a section of rural highway that didn't receive much enforcement in the past.  Speeding tickets go way up but no one knows how much speeding went on previously. 

Posted by Mike Goff-www.southwestoregonrealestate.com (Oregon Mountain Real Estate) almost 9 years ago

WoW.. what a high rate of Fraud ! This is unbelievable to say the least

Posted by Roland Woodworth, Q Realty - Power In Real Estate (Q Realty) almost 9 years ago

Every time the markets pick up, the same things happen again. In the end, banks are under pressure to perform and show number to their investors. It doesn't matter how they come up with them.

Posted by Marcelo Da Silva (Homesmart) almost 9 years ago

We have only seen tip of the iceberg in my opinion. Follow the money and those people need to go to jail.

Posted by Harry F. D'Elia, Investor , Mentor, GRI, Radio, CIPS, REOs, ABR (Real Estate and Beyond, LLC) almost 9 years ago

Some people just insist on doing things the dishonest way, no matter how many rules we put in place for them.

Posted by Dan Tabit (Keller Williams Bellevue) almost 9 years ago

Hello Bill~  Jaw-dropping post!! and this topic definitely deserves a touch of sarcasm!!  All the best this holiday season!!

Posted by Stephen Arnold, CRS, GRI, SFR (HomeSmart Elite Group) almost 9 years ago

Bill, Small independent business is the salt in the market place.  Look at gas stations for instance.  You find the best service and prices at independent gas stations.  Where there are only Oil Company Owned stations you find the highest prices.  And who posts the highest corporate profits? Oil Companies and... I'm not against big business. I just don't believe big business should be the ONLY BUSINESS.

Posted by Steve, Joel & Steve A. Chain (Chain Real Estate Investments & Mortgage, Steve & Joel Chain) almost 9 years ago

I guess I'm surprised by the number but then again banks need to produce or they lose investors.

Posted by Tim Ludemann almost 9 years ago

I saw TBWS yesterday and laughed.  How do they pin this one on the brokers?  I know, brokers are now transitioning to correspondent relationships and are able to form their own AMC in certain instances (like the big banks) and those AMC's are the ones with the high levels of fraud.  It is just another way those pesky brokers are beat ting the system.  One of these days the truth will come out and the banks real role in this crisis will be exposed.  This will happen when all of us scapegoats are out of the business, then there will be no-one to blame but themselves!

Posted by Kyle Jan, Phoenix AZ Homes for Sale almost 9 years ago

The results of a hurried change, throwing the baby out with the bathwater. Thank God HVCC is on its last legs. Hopefully We The People will stand up and pay attention to these fast flowing regulatory changes and let our elected officials know they are accountable for their vote! Then maybe the mortgage brokers will have the money to pay their own lobbyists. One of the above comments references the increase in FHA loans which brokers used to still be able to order the appraisal on. I doubt it was simply the HVCC avoidance that led to this rapid increase, rather the demise of Fannie/Freddie loans with PMI as a viable tool for the buyers in the market.

Posted by Karen Cooper, Helping Homeowners w/Home Loans in 27 US States (Karen Cooper | Sr Retail Loan Originator ! NMLS # 223305 | 360 Mortgage Group LLC Austin Texas) almost 9 years ago

This too in time shall pass. This is another case of over correction and congress looking for some one to blame for their incompetence.

Posted by France and Mark Clausen (Realty Austin) almost 9 years ago

HVCC was created as a result of WAMU's appraisal management company and a compromise with Sen. Schumer.  The brokers are getting the blame for what the banks did....the problem is brokers don't have the lobby power to buy the congressional votes....So, I became a mortgage bank.  If you can't beat them, join them.

Posted by Kent Neumann, Mortgage Banker (Waterstone Mortgage- An Integrity based mortgage bank) almost 9 years ago

Thank-you!! HVCC is yet another example of government OVER regulation AFTER the fact, too late. This was a failure from day one. Thank god it's going away because it did no good, just made out of towners appraise on the cheap and undervalue homes killing deals.

HA I just read France and Mark's comment, yes, it IS over correction, when will they learn, over reaction & over regulation after the fact always ends badly too?!

 

Shelly Whitworth
www.MorSystems.com

Posted by Shelly Whitworth (MorSystems.com) almost 9 years ago

This is just nuts.  Will we ever return to normal?  I don't think I'd recognize normal if I saw it, it's  been so long since a normal market existed.  Craziness!

Posted by Kathryn Acciari, RSPS, SRS, REALTOR(R) Sturbridge-Shrewsbury MA (Cameron Real Estate Group) almost 9 years ago

Yet another shattered dream.....who would think that the banks would be involved...gag gag!!!

Posted by Edward Bachman, Your Kingwood TX Realtor (EXIT REALTY SOLUTIONS) almost 9 years ago

I can't see how appraisal fraud could possibly be on the rise! But then again we do have HVCC, LOL!

Posted by Vickie Nagy almost 9 years ago

Bill, These are amazing stats.. and if 46% is the known fraud, the numbers are probably pretty high for actual fraud.

That's terrible.!!!

Posted by 1 ~Judi & Don Barrett & Chassy Eastep - Integrity, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) almost 9 years ago

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