Appraisals may be a part of all fraud loans.
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A faulty or even fake appraisal is said to be at the basis of every fraudulent mortgage transaction. But not every appraiser is at fault, or at least willingly so. James Blaydes of Blaydes & Associates, a Peru, Ill., appraisal firm says that in many cases, appraisers can’t stand up to pressure put on them by mortgage brokers. Either they “hit the numbers” as instructed, he said at the Mortgage Bankers Association’s National Fraud Issues Conference in Chicago recently, or they are blackballed. |
Speaking for the Appraisal Institute, which has been calling on lawmakers to address mortgage fraud since 1981, when the problem was believed to be in its infancy, the Illinois appraiser said there are plenty of ways to fudge a valuation besides packing the final number. Among other things, appraisers can ignore the best comparables, or use properties in better neighborhoods as comps, he said. They also can mis-describe a property, such as labeling a commercial building as single-family. Or they can fail to mention physical problems. But appraisers aren’t the only ones who commit such flagrant fouls, Blaydes told the conference. Sometimes loan brokers do their own dirty work.
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