APPRAISAL FRAUD IN DETAIL

APPRAISAL FRAUD IS THE ACT OF GIVING A RATING OR VALUE TO A HOME THAT IS WRONG — AND THE APPRAISER KNOWS IT IS WRONG. This can’t be performed in a vacuum because there are so many players who are involved. They ALL must be complicit in the deceit leading to the homeowner signing on the the bottom line and advancing his home as collateral on a loan which at the very beginning is theft of most of the value of the home. It’s like those credit cards they send to people who are financially challenged. $300 credit, no questions asked. And then you get a bill for $297 including fees and insurance. So you end up not with a credit line of $300, but a liability of $300 just for signing your name. It’s a game to the “lenders” because they are not using their own money.

And remember, the legal responsibility for the appraisal is directly with the appraiser, the appraisal company (which usually has errors and omissions insurance) and the named lender in your closing documents. The named “lender” is, according to Federal Law, required to verify the value of the property.

How many of them , if they were using their own money, would blithely accept a $300,000 appraisal on a home that was worth $200,000 last month and will be worth $200,000 next month? You are entitled to rely on the appraisal and the “verification” by the “lender” (see Truth in Lending Act and Reg Z). The whole reason the law is structured that way is because THEY know and YOU don’t. THEY have access to the information and YOU don’t. This is a complex transaction that THEY understand and YOU don’t.

A false appraisal steals money from you because you rely on it to make the deal for refinancing or for the purchase. You think the home is worth $300,000 and so you agree to buy a loan product that puts you in debt for $290,000. But the house is worth $200,000. You just lost $90,000 plus closing costs and a variety of other expenses, especially if you are moving into anew home that requires all kinds of additions like window treatments etc. But the “lender” who is really just a front for the Wall Street and the investor pool that funded the loan, made out like bandits. Yield spread premiums, extra fees, profits, rebates, kickbacks to the developer, the appraiser, the mortgage broker, the title agency, the closing agent, the real estate broker, trustee(s) the investment banking entities that were used in the securitization of your loan, amount in some cases to MORE THAN YOUR LOAN. No wonder they are so anxious to get your signature.

“Comparable” means reference to time, nearby geography, and physical attributes of the home and lot. Here are SOME of the more obvious indicators of appraisal fraud:

  1. Your home is worth 40% of the appraisal amount.
  2. The appraisal used add-ons from the developer that were marked up for the home buyer but which nobody in the secondary market will pay. That kitchen you paid an extra $10,000 for “extras” is included in your appraisal but has no value to anyone else. That’s not an appraisal and it isn’t collateral or fair market value.
  3. The homes in the immediate vicinity of your home were selling for less than your home appraisal when they had the same attributes.
  4. The homes in the immediate vicinity of your home were selling for less than your home appraisal just a few weeks or months before.
  5. The value of your home was significantly less just a  few weeks or months after the closing.
  6. You are underwater: this means you owe more on your obligation than your house is worth. Current estimates are that it might take 20 years or more for home prices to reach the level of mortgages, and that is WITH inflation.
  7. Negative amortization loans usually allow the principal to rise even above the falsely inflated appraisal amount. If that happened, then they knew at the time of the loan that even if the appraisal was not inflated, it still would not be worth the amount of the principal due on the obligation. For example, if your loan is $290,000 and the interest is $25,000 per year, but you were only required to pay $1,000 per month for the first three years, then your Principal was going up by $13,000 per year compounded. So that $300,000 appraisal doesn’t cover the $39,000+ that would be added to your principal balance. The balance at the end of 3 years will be over $330,000 on property APPRAISED at $300,000. No honest appraiser, mortgage broker, or lender, would be complicit in such an arrangement unless they were paid handsomely to do it and they had no risk because they were not using their own money for the loan.

26 Responses

  1. I seriously believe I am a victim of appraisal fraud. What can I do about this?

  2. Thanks for the post Neil. Again, you hit it the bullseye. Check out the Antelope Valley Home Builder Scam. http://www.wix.com/presenting/drhortonfraud

  3. REPLY TO THE SEC FILING INFORMATION LINK.

    THIS IS TYPICAL THE 15 D FILING IS MANDATORY AND IT WAS A SCAM IT IS THE REPORT OF THE STATUS OF THE PERFORMANCE OF THE TRUST. IT CAN BE OBTAINED ON THE WEBSITE OF THE TRUSTEE AND THE SERVICER.

    THE 15D REQUIREMENT IS ONLY NECESSARY AS LONG AS THEIR ARE I THINK 200 INVESTORS. WHEN THE NUMBER IS LESS THERE IS NO REPORTING.
    THE OTHER CONVERSATIONS ARE ON THE CONTENT OF THEIR FILINGS. THAT IS THE DISCLOSURES AND THE DEFINITIONS OF THE PROSPECTUS AND THE PSA WITH THE SEC OFFERING DOCUMENTS.
    IT APPEARS THEY ARE TRYING TO MAKE IT EASIER THAN IT WAS AT THE TIME. THE SEC NOW IS MAKING THE MBS DISCLOSURE MUCH MORE –RIGOROUS AND DEFINED AS IN THE RECENT PRESS RELEASES FROM THE SEC.GOV.
    THIS WAS SUCH EASY MONEY FOR THESE OFFERINGS. ESPECIALLY IN 2004-2007.
    IT APPEARS THAT THERE COULD BE ISSUES WITH DEUTSCHE BANK AND THE POSSIBILITY OF MULTIPLE TRUSTS BEING PAID MONEY AND CERTIFICATES ISSUE FOR THE SAME LOAN.
    THE DEPOSITION OF RENALDO REYE OF DEUTSCHE BANK CONDUCTED BY APRIL CHARNEY IS SUGGESTIVE THAT THE ASSIGNMENT FROM THE SELLER TO THE DEPOSITOR MAY NOT EVEN BE AN ASSIGNMENT AND SALE. READ THE DEPO ONLINE AND ALSO THERE IS A GOOD ONE ON MERS THAT WAS DONE BY NICK WOOTEN. SLOWLY BUT SURELY WE ARE GETTING THERE.

  4. Brian and anonymous can you take a look on this filling by the US Bank and see if can help us

    http://www.sec.gov/rules/proposed/s72104/thormodsgard070904.pdf

    thank you

  5. Anonymous–you are right on the discovery questions it is in the pooling and servicing. Mine is Indymac (Onewest) Bank FSB Master Servicer and Deutsche Bank National Trust Company as Trustee and Custodian of Documents as well as indenture trustee.
    See discovery DBNTC Set 3 California—http://www.scribd.com/doc/31123765/Dbntc-Set-3-Request-for-Production-of-Documents-DISCOVERY-NDEX-WEST-ONEWEST-FRAUD-Onewest-Set-2-Production-of-Document-Set-2-Admission

    And Does Amendement for Lennar and the Appraiser.
    Values off 67% from sale price 11-17-2006.

    http://www.scribd.com/doc/31292786/Does-Amendments-Lennar-James-J-Scarcella-5-13-10

    COMMENTS WELCOME ANONYMOUS–B.DAVIESMD@GMAIL.COM

  6. MARIA: In California we do “Foreclosure Autopsies” to uncover breaks in the chain of title and find fraud, missing assignments, wrongful substitutions and notarization defects in the recorded documents for your APN … for possible post-sale financial recovery… McCarthy/Holtheis has no SOUL!!

    Call Charles Koppa, 760-787-9966

  7. 2 Alina, perhaps you now understand the true impact of this man made catastophy.. the very foundation of your country, your future and those that will come after you, have been and will be systematically used, abused. That is if we the people let it happen.

    While the flipper’s and speculators ( and that includes shill’s for the builders) cry foul for being under water , that where somehow culled into so called liar loans, no doc crap etal. There is a large swath of Americans out there , lets call them “innocents” that are suffering from all of this. Job loss, loss of a small business, loss of investment income when they thought they were able to retire simply and quietly… after working for 40 some odd years… what happens to them?

    Obviously the No-Doc signers and their facilitators, etal… gave that no thought at the time.

    It is quite clear that the “Fab” @ GS and all others involved have the wherewithal and means to cull through the liar loans and sedentary S@*T at the bottom of the loan pools that used other peoples quality equity to sweeten the deal… Where is the voice of those that had or continue to have their equity and property stripped from them by no action of their own?

    Apparently it is quite easy to split the wheat from the chaff, the “FAB” @ GS and his buddies all over the “investment community” were provided the wherewithal and means to inspect and dissect “mortgage obligations” for their toxic CDO’s…. Why are we the people not allowed the same inspection to see who is undermining our communities?

  8. When I refinanced my home in 2005, the appraiser asked me what number I wanted. I had no idea what he was talking about so I asked what he meant. He asked how much money I wanted to get in the loan.

    I told him that I was refinancing only the remaining balance of the mortgage and I did not know what that payoff number was. He told me he would call the lender and get the number from them.

    Until I started researching all this, I never really realized what the appraiser was referring to and why the lender was pushing me to take more money.

  9. While “appraisal” fraud may well be rampant in certain states where builder’s benefitted, from building now “gated ghetto’s” states like NY that had minimal “speculative” building… although albeit ruled by an entrenched Kleptocracy of tax and spend progressives… property appraisal’s none the less followed right along with the housing bubble, perpetuated by so called “certified appraisers” that held and (still hold) court with the local elected officials during the “boom years”.

    Unsuspecting average people, young and old , across the board where hit by the so called “escalating” value of real estate… people living in their modest homes who had no intention to sell or use their property as an ATM were being appraised far over the actual value of their property.

    Hardest hit, retired seniors, and young families just starting out in “starter homes” not Mc Mansions… end result a brain drain of young families and scared senior citizens that have to choose between paying falsely exzorbinante inflated “property taxes” or eat cat food on toast to stay in their homes.

    That is “appraisal fraud” of another stripe that has yet to be discussed…

    Personally prefer (and have advocated for) to have and live in a neighborhood of diversity, young, old and everyone in between, having that generates vibrance, connectivity and dialog among residents , while some might not always agree dialogue passes on hope for the future and respect for the past…

    Personally I have witnessed small business owner’s close… the very same people that once sponsored a “little league” or were the anonymous sponsor of a soup kitchen or temporary shelter.

    These are the people that have “met triumph and disaster and treat those two impostors just the same”.

    These are the very same people that the current “WS/DC IN Crowd” would like to dispense of, and they seem to be doing so systematically.

  10. A properly done appraisal, performed under the USPAP requirements, is as of the date of inspection. It is a point value, only valid on that date. A crystal ball approach would not work for an appraisal. It does not consider negative amortization loan problems, that decrease equity and increase the debt, all at the same time. The fault in most cases is not the appriasal, unless there is fraud. Fraud acn be made up comps or comps too far from the subject, used to make a certain value. See USPAP at http://www.uspap.org/2010USPAP/index.htm

  11. The laws of this land enslaved the borrower so Wall Street and it’s gang of banksters can collect unjust enrichment. Your home now offers nothing in return. Do not be a subject for bargaining. Time to fight or get on your knees and walk away.

  12. But wait a minute everyone!! The Home Valuation Code of Conduct (HVCC) is supposed to STOP this kind of thing. Andy Coumo assured all of us that taking our residential appraisers out of the clutches of the big-bad mortgage brokers would solve the fraud problem.

    Goodness, could it be (and I started posting about this from the start) that the AMCs have even more of an incentive to control the appraisal process than the big-bad mortgage brokers???????????????

    (Sarcasm is intended, by the way)

    I belong to two on-line appraisers forums and our residential members post about being forced to deliver in 24 hours after seeing a property, and being forced to hit “the” number. We have a lot of members who have been black listed by such big guys as RELS & Landsafe (Wells Fargo and Bank of America/ Countrywide) for not hitting a number and facilitating a loan. Appraisers are being forced to accept fees of $125 when the Borrower is is still charged $450+.

    Who do you think pockets the remainder. Holy Profit Center Batman, do you think that the AMCs are making money for the big banks? Do you think they will be giving up this cash flow without a fight??

    The problem is getting worse folks, not better.

    As for the person who posted about a Forensic Loan Audit & Review – contact a Client of mine. Mr. Brian North @ 619-955-7956. He is an Expert Forensic Loan Auditor and I conduct the Forensic Appraisal Reviews for him in So. CA.

    John C. Carlson
    CA Certified General Real Estate Appraiser
    Diamond Bar, CA
    www,jccrea.com

  13. When we refinanced our home in 2006 to take advantage of a lower interest rate, our mortgage broker only asked for 2 years of income tax and 2 months of bank statements. We never got a copy of our appraisal. We had an idea of what the house was worth but he said he could get the house appraised for more. The loan application has very little or no info on it. They requested no info for bills so there was no way they could get and acurate income to debt ratio. Thought at the time that this was strange. Asked the mortgage broker how he could give us a loan with what little info he requested. He said that he had investors. This conversation has always bothered me. The broker said he would send us the check for the whole amount and he did not care what we did with it. I thought he was joking but I am not so sure now. Told him we wanted him to pay the other bank off instead of sending us a check. We did get some cash back after all said and done. My gut told me that something is not right here and I still feel that way. The broker was a good friend to a friend of ours so my husband trusted him completely.

    We had to file BK because our construction business went under and could not find jobs. We did not fight for our home because our BK attorney said what would be the point since we could not afford the payments. We just lost our house to foreclosure in January 2010 and we now feel like we should have done something but we don’t know that we could have done. We could see the dollar signs coming out of the realtor’s eyes as he kicked us out of our home. We kept our home is excellent condition.
    We did the cash for keys where were to be out of the house 2-14-10. On 1-27-10, we got a letter from the attorneys McCarthy & Holthus who represent the bank calling us criminals because we were still in the house. And we better be out by 1-28-10 or they would have the sheriff personallly remove us. The realtor seem a little put out when we asked him what was going on. We thought we had a deal. A couple of days later we received an eviction notice. The realtor said he would take care of things and the attorney should not have sent us anything because he is the one in charge.

    Our house is on the market now for a lot more that what was asked for at auction or that we ever owed. Someone put a bid on the house within days of it being on the market. We had to talk the to realtor because Waste Mangement wanted their gargage containers back. We had to ask him to make the containers available so they could be picked up. My husband made a comment to him that they surely are going to make a hefty profit on the sale of our home. He told my husband to mind his own business.

    Has anyone been able to get their house back or is it still possible to be able to get a forensic audit, TILA audit etc.? Still feel something is wrong here. Northwest Trustee Services, Inc. did the foreclosure and Wells Fargo was the servicer. Northwest Trustee Service sent us a default letter dated 12-3-08. Wells Fargo and Northwest Trustee Services were not registered on the Register of Deeds until 12-29-08. Is that legal? We live in a non-judical state. Wish I had found this site earlier. We would like to put this to rest to move on but we still feel so cheated. I have so many questions and do not know where to turn. I truly feel we have been robbed.

  14. Anything decent comes out of New York. Old law school adage was – how goes California, goes New York, goes the rest of the country. But what happened to California????? Root cause of bad decisions.

  15. http://www.mmdnewswire.com/gmac-robert-bozdin-8262.html

    Here’s the link to the story (above). The case referenced in the story is the previous case so the case number is wrong. The case number you want is GMAC Bank v. HTFC Corp., No. CV–00106-ER, Doc. 29, filed 5/6/10. The judge hasn’t ruled yet.

  16. Appraisers are given the number needed on the appraisal order and if they don’t hit it, they either get out of the business or go back and rework the appraisal.

    This is systemic. The Appraisal process is designed to facilitate mortgage fraud.

  17. Diane Barker
    the link doesn’t work.. can you ck it and repost it if not correct.
    if it is correct & it got deleted.. what a surprise [not]

  18. Someone at livinglies needs to check out this post about a pro se “crucifying GMAC”. It is a bit choppy to read, but gives the names and the court to look up the decision. http://www.mmdnewswire.com/44wide-8888344.html

  19. BSE ,

    What allowed that to happen was the fact that in AZ,NM,CA,CO and other western states that the Federal Government owns the vast majority of land and the state and local governments restrict zoning in the rest… they create a situation where individuals generally cannot buy building lots and must rely on builders that have the political clout and money to free up land for development. You’re right in saying that there were no free market forces in play. In the east this only really happened in fully developed areas such as the Philly to NYC corridor , Wash D.C. and greater Atlanta, and in what the politico’s call “flyover country” it just didn’t happen.

    Based on East Texas land prices , with the same topography and distance to a major city I’m sure you could find “comps” that are far lower, half or less … I would say that the difference is the price of political corruption and the government land monopoly.

  20. The real problem. This was never a free market. The builders controlled the lots, the inventory and the price. They created a panic. If you did not buy now, then next lot release was going to cost $ 30,000 more.

    The builder was Ashton Woods, The banks was Wells Fargo the mortgage Company was Ashton Woods Mortgage, an affiliated of Wells Fargo. After investigations I found there is a Joint Adventure (JV) between all 3 above.

    I live in a pocket of 55 homes N.W. of Phoenix. There are about 8 of us left. . I figure I am about $ 300 k upside down this includes, my deposit, renovations and improvemnts. I refuse to make one more payment. Further I doubt the neighborhood will ever recover as it is no fantom homes or rental property to most occupants. No doubt I was fleeced….and these scum bags knew what they were doing.
    Someone needs to go to jail.

    BSE>

  21. I was able to obtain some appraisals from the neighborhood before the occupants decided to foreclose or short sale. The same appraiser was used, same pics, same comps. Only the numbers were changed.

    Wells Fargo had the dirty fingers on this deal. Someone needs to go to jail.

    BSE

  22. BSE,

    Check the appraisers bank accounts for cashed checks and deposits that are out the norm and seem consistent from those bad years dates, and there you have the kickbacks and proof they lied.

    Most were quite stupid back then, and left a nice paper trail, all you need is the supena for personal documents and account records. Something the FBI should do i think.

  23. I spoke with several appraisers that I have known for many years. All who I consider fair and honest.
    Accordingly, it is difficult to prove appraisal fraud. The problem is within the banks not caring about the values as the money was not theirs to loan. The goal was only to collect fees as a conduit to create the security. Why do you need appraisers if the banks do not care to review. It is only just another piece of paper to attract the borrower’s signature to create the security and used to substantiate the collateral. Now that the market has gone south, they just claim the appraisal was based on market conditions during the time. How to fight this ?

  24. That is exactly what i was duped into.

    Took my broker 3 appraisals, “to get the number we needed” for my loan, his words!

    However i was never given a copy of the appraisal, so how can i possible prove anything against it? And that was almost 5 years ago! 🙁

    Any help greatly appreciated, as my loan is about to “recast” in october this year!

    Rich

  25. LEHMAN BROTHERS PARTICIPATED IN LAUNDERING DRUG MONEY.

    http://www.latimes.com/news/nationworld/nation/la-na-cartel-20100511,0,6289209.story

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