Jury returns guilty verdict on all counts against appraiser in mortgage

[Robbien]

Source: The Plain Dealer

CLEVELAND - In what officials are hailing as an important step in the battle against mortgage fraud, a Cuyahoga County jury Friday afternoon found an appraiser in a mortgage fraud case guilty of all nine counts of mortgage fraud offense.

This was the prosecutor's office's first case to go to trial against an appraiser. Appraisers have been charged in other cases but have entered pleas.

"Successfully prosecuting an appraiser for fraudulently inflating the value of a home is an important step in our fight against mortgage fraud," said Prosecutor Bill Mason. "The jury rejected this appraiser's bogus defense--that appraisals of homes are primarily based on opinion. This sends a strong message that all parties in these mortgage fraud scams will be prosecuted for their crimes."

Read more: http://blog.cleveland.com/metro/2009/02/jury_returns_guilty_verdict_on_1.html

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First case in Ohio! It took them long enough. Everyone in the fraudulent mortgage chains throughout the country should be prosecuted.

[xchrom]

1. recommend. -- hope this turns into something other than a one at a time prosecution.nt

[TwilightGardener]

2. I am suspicious of the appraisal process. The last two houses I've bought, the appraisal

always comes miraculously close to where it needs to be to complete the deal. Something smells about it.

[ejpoeta]

3. i've heard stories of how people have inflated values of properties

i'm glad someone is finally doing something.

[davsand]

4. This was WAY more than just a "bad" appraisal!

Any time I see a headline about an appraiser getting convicted I dig a little deeper. I had to read the full article for a bit more information before I offered comment here, and I'm glad I did.

This appraiser had several violations of the professional standards for appraisers in that one assignment (based on info in the story) and this was way more than just some mistake or mess up. This really was fraud that she was actively a participating in. Sounds to me like the jury felt the same way and they probably did the right thing.

As appraisers, we are required to take regular classes regarding ethics and professional standards, and I can't imagine that there is a licensed appraiser anyplace in the US that is NOT aware of the expectations and laws we are subject to. I'll grant you, it is a personal choice to follow the laws or not, but I just don't think it is possible to be licensed and NOT be aware of them.



Laura

[No Elephants]

7. Being aware of them is one thing. However, a lot of the work of real estate

appraisers comes from banks. And the appraisals do so very often come out right where the mortgagee bank needs it to come out. I am sure many appraisers follow the highest of standards and I am also sure another group just finds ways to keep banks happy.

[davsand]

12. Banks frown on appraisals that "kill" deals.

I want to establish right away that I don't do fee appraisal work--I work for local government and I deal with property tax issues. I maintain my appraisal license as a part of the credentialing for the office I hold. My interest in this is not so much a personal one as it would be if I earned my income as a fee appraiser--OK?

Having established that, I will tell you that I do not know any appraiser that has been at the business for too long that has escaped the situation of telling a lender a house is not worth what the loan applicant has signed a contract to pay for it. Seriously. That scenario happens and it is not pretty when it does.

Sometimes lending officers will argue and ask the appraiser to "re-do" the appraisal. Sometimes they will simply hire a different appraiser to do a "different" (more favorable) appraisal. There are appraisers that are willing to "hit the number" irrespective of the indicated value, and that is a sad but true fact. It is a part of the reason we are in the current situation with real estate in this country, but it is only ONE part of the problem.

I know one local appraiser that has the reputation that he doesn't ever ask what the "contract" price is on an property, and he TELLS the banks up front that he doesn't want to know so he's not aiming for a value. He stays busy, but there are a lot of banks that will not use him because he has "killed" loans for them. He won't massage his numbers and he won't write an appraisal with a predetermined value in mind. If you are picking out a local bank to invest your money in--you want the banks that use that appraiser because you know the loans they have written are solid.

By the same token, I know a woman that does appraisals and she is busy all the time. Her FIRST question when the lenders call is, "What is the contract price?" Do you really want to invest YOUR money with the banks that use her? I sure as hell don't--but to be fair, I have reviewed her work and it sucks. Most people do not have the advantage of seeing this stuff and they have NO idea.

Appraisers are usually small business people, and they depend on the relationships with the lenders. There are a lot of them that are in fear of losing that relationship if they are too opinionated or too independent. There is a very real pressure there that our mortgage system has fostered. Appraisals, by their very nature, are subject to a lot of variables. Usually, there is room to justify a given value and a lot of appraisers just kind of ignore that gut instinct that says a value is too high. The really big liability comes when appraisers give a value that there is NO justification for, and that is pretty much what it sounds like this lady in Ohio did.

Appraisers "hitting the value" is not anything new--it has been happening for a very long time. It is, however, something that is finally getting some attention given all the other problems in the real estate market.



Laura

[No Elephants]

16. Yep, which is why I agree in general with Post # 5, even though the specific

case in this story does not fit the general pattern. The banks are the ones who had the power in the stituation. If all that happens to them is the bail out and the appraisers get prosecuted, then the system is as Post # 5 says

[roseBudd]

9. Tony Soprano had a fraud going on that involved inflated appraisals

[No Elephants]

15. And now he sleeps with the reruns.

[2Design]

5. going after the peasant and not the bank demanding the numbers for continued work

this is like rumsfeld getting off scot free while the few bad apples take the fall

[No Elephants]

8. Did you read the story? This one was not just an appraiser who submitted an

inflated appraisal. It was a bunch who did some very shoddy things, including concocting documents to deceive the lender.

The prosecutor said they are going after all parties in these cases, so I hope he meant banks, too, where appropriate.

[No Elephants]

6. Those here who ralk about "liar loans" will no doubt now acknowledge that the banks and the

appraisers whom the banks hired were the liars.

[Vinca]

10. My husband is an appraiser so I have some strong feelings on this story.

While I am sure there are crooked appraisers, over the past few years many honest appraisers - including my husband - have been getting the shaft. During the peak of the mortgage feeding frenzy, lenders were bypassing professional appraisers in favor of "drive by guessimates" done by anyone with a pulse who would work for a very small fee. Some lenders didn't even bother with that and would lend money based on whatever a home was valued for by the tax assessor (even if the tax assessor had never stepped foot in the place). Honest appraisers have been dropped from "approved appraiser" lists when they come in under value or divulge important information such as the presence of mold or noting that a property is in a flood plain. The past 3 years have been - income wise - the worst of my husband's 25+ year career. Now that the chickens have come home to roost, his popularity is on the rise. He's now getting so much business he's just keeping up with it. Still . . . one lender recently sent out a request that appraisers "not bother filling in the box" that indicates whether a property is in the flood hazard area. Right. They've been dropped from my husband's "approved source of business" list.

[Robbien]

11. I am so glad to hear your story

I hoped that that was the case and that the faux appraisers were finally being dropped from the mortgage system.

So sorry that you and your husband (and other real appraisers) had to suffer through all the years of greedy madness.

Isn't there a way to report the guy who asked your husband not to fill in the flood hazard box?

[No Elephants]

13. Glad to hear that your husband's business is on the rise because he is honest. That is

fantastic, especially when most other business are as far south as Antarctica. Good karma.

[davsand]

14. You gotta love the "drive by" stuff.

It is not worth the paper it is printed on.

I can't vouch for your local market, but I know that the banks that are the most solvent in my area are the ones that actually listened to the stand up appraisers.

We saw a lot of crap coming thru from appraisers that are not from even anywhere near here. Like those guys would have a clue about the neighborhoods for the comparable sales! Those lenders screwed themselves with some of this stuff, and there are a LOT of underwriters out there that should probably be facing charges.

I took a USPAP class a couple of years ago (Professional Standards, for anyone outside the appraisal community) with a national company. The instructor was from someplace out east--just a heck of a nice guy--who had been writing appraisals for years. Anyhow, he was talking about how so many appraisers have "given away" our profession over the years, and how angry it made him. I have to agree with him--but I am insulated from the worst part of it given the fact that I am doing government work rather than independent fee appraisals.

Hope you and your hubby hang in there. Sounds like he's been doing it right.



Laura