Appraisal fraud creates civil and criminal liability. And it turns out that licensed appraisers are still uncomfortable with the current system of faking appraisals. So the investment banks, acting through their principal agents, Black Knight and CoreLogic, have turned to automation in order to do the calculation that results in the valuation of the property. Despite the very clear requirements of the law, nobody is responsible for this — at least not in practical terms. After 16 years of very clear warnings warnings from thousands of licensed appraisers, no government action has been taken by the Feds or or any state government.

At this point, it should come as no surprise that everything that Wall Street does in connection with homeowner transactions is designed to either avoid liability or conceal liability until the statutes of limitation run on claims that homeowners could make. The principal strategy utilized by investment banks is the automation of practically everything. Most documents produced in court or in response to a qualified written request or debt validation letter have never been touched by human hands until they are received. Unfortunately, that also includes the “original” documents.

Securitization has been a feeding trough for Wall Street since 1995. It is irresistible. There is virtually no risk, and the money keeps piling in by the sale of a virtually infinite number of securities. It has come to the point where you can hardly buy anything without being offered a payment plan with no interest for as long as five or seven years. Nobody seems to ask how anyone can make money on such a deal. The answer is that securitization produces far more money than the original transaction. The average vendor or tradesmen can offer search financing because they get paid upfront and they get a kickback from the investment banks who are operating through intermediaries and sham conduits.

But securitization requires a reference point. And the reference point in the credit market is the illusion of a loan. None of the securities convey any ownership interest in any obligation, legal debt, note, or mortgage. None of the securities involves a risk of loss arising from any consumer failing to make a scheduled payment. No such loss is possible. And that is why the fabrication of false documentation has become a mega-industry. But if you are going to fabricate false documentation for recording in the public records, you obviously don’t want it to be traced to you. So you hire intermediaries and make sure they use automated equipment so everyone in the chain has plausible deniability.

With homeowner transactions, the only way to keep the action going is by increasing appraisal valuations. This keeps consumers thinking that they are making a good investment. The fact that consumers are overreaching and that many are headed for disaster is merely gravy on top of the feast that Wall Street has already enjoyed. When the number of announced defaults goes up, more money pours in as a result of various credit swaps and insurance policies that are issued on the declared decline in the value of the securities issued to investors. Of course, the curious thing about that is that the proceeds of such contracts and insurance policies go to the investment banker, not to the investors.

From the beginning, the primary method used to incentivize consumers to sign “loan papers,” was the overvaluation of the property that was used as collateral to assure payment from the homeowner. Licensed appraisers were given two choices: issue an appraisal that was at least $20,000 over the contract price or never get another appraisal job. 8000 appraisers warned Congress that this was happening in 2005. And as we all know, people bought houses for $700,000 that turned out to be worth $300,000. The 2008 crash was devastating and continues to suck money out of the American economy.

Appraisal fraud creates civil and criminal liability. And it turns out that licensed appraisers are still uncomfortable with the current system of faking appraisals. So the investment banks, acting through their principal agents, Black Knight and CoreLogic, have turned to automation in order to do the calculation that results in the valuation of the property. Despite the very clear requirements of the law, nobody is responsible for this.

The appraisals continue to deviate from the standard practices of valuation resulting in overpricing which in turn produces a dollar increase in the amount of the transaction with homeowners. While the truth in lending act makes it very clear that the appraisal is the responsibility of the “lender,” the absence of an actual lender makes that requirement obsolete. Although the homeowner is free to sue the appraiser and the originator for appraisal fraud or other causes of action arising from the false valuation of the property, the homeowner will usually end up with nothing, even if they win. Often they discover the discrepancy after the statute of limitations has run, which results in a complete bar to bringing any claim for this practice.

But in judicial states, the homeowner can usually bring the same claim as recoupment in affirmative defenses, resulting in the judgment up to the amount demanded in the lawsuit seeking foreclosure.


Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.
Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.


Neil F Garfield, MBA, JD, 74, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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2 Responses

  1. Black Knight takes a holistic approach to the valuation process with unbiased solutions…

    To streamline the appraisal process, lenders and appraisal management companies (AMCs) need a trusted, one-stop resource to obtain cost-effective, transparent, automated and robust valuation solutions. To meet these needs, Black Knight offers a variety of proven options.

    “Our comprehensive valuation solutions are broad in range, deep in scope and include extensive data coverage. We take a holistic view of our client’s needs, and offer valuation solutions across the entire mortgage life cycle,” said Ben Graboske, president of Black Knight Data & Analytics.

    Black Knight’s valuation solutions draw from the company’s industry-leading, comprehensive public-record property database covering 99.9% of the U.S. population. Black Knight collects the data directly from the source, and updates and verifies each record to provide high-quality inputs to its valuation solutions.'s%20Complexity%20Profiler%20offers,a%20property's%20potential%20appraisal%20complexity.&text=The%20solution%20helps%20users%20identify,and%20estimate%20the%20appraisal%20fee.

  2. In today’s “hot housing market” “home value” does not even need an appraisal.

    Wall Street Banks orchestrated “bidding wars” where fixer uppers (which worth at most $50K) are sold to the highest bidder for $200K (!!!) over asking price. This determines “appraised value”

    And “independent lenders” are willing to finance it, under about 2% interest rate! in the midst of economic disaster, when people rely on unemployment and stimulus to survive!

    And the Government covers for it! Again!

    California is already a homeless swamp – but housing prices jump over $800,000. (a year later will be millions of new foreclosures)

    I cannot believe it happens in America in 21st century. Total lack of any laws and any supervision over Wall Street’s fascists.

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