The Coalition of Appraisers Against Fraud - California Appraisers Fight Back!

I received an email yesterday from a member of the Inland CA Appraisers (California) Yahoo Group forum with a post from Dennis Jorgenson under the topic: Fraud/Appraiser Action. The thread was intesting because, as far as I know, this is the first time that a "Band of Brothers" has formed a coalition to fight back against pressure and coercion of unethical Lenders, Loan Officers, Brokers and Agents. They're also targeting unscrupulous and unethical appraisers that are willing to commit fraud or who have become susceptible to lender pressures.

Real-Life Examples:

Example 1: I’ve just had a talk with a close appraiser friend who has lost yet another customer because he mentioned in an appraisal that a 1,500 s/f addition was incomplete (permitted, but not finished); the report was written “Subject to completion as per plans and specifications”.

The broker found anotherappraiser (a trainee) that was willing to overlook the incomplete addition and the loan funded. Example 2: Recently, our company developed an appraisal for a property out in MorenoValley and found at least 30 comparables of similar properties in close proximity indicating a value of between 365k and 385k. We were told by the broker that the homeowner disagreed with our value so they found another appraiser wrote the value at 400k; the appraisal passed underwriting even though the comps were over 1mi. from the Subject. We haven’t received anorder from this broker since. Example 3: In another recent example, we were asked to review an appraisal that would potentially become a new order as the homeowner wished to refinance again. Comparable sales used in the appraisal obtained for review were $850k, $715k and $710k; The appraiser added over $150k in positive adjustments to each ofthe comparables including about $150/sf. lot size adjustments and $30k-50k due to “inferior condition” of each of the comparables; the appraiser arrived at a value of $925k. When we developed the appraisal, the value for the Subject came in around $780k and once again, we never received another order from this broker. These cases are becoming more and more commonplace. It appears to us now that following the rules and developing well supported opinions of value is bad for business. The trend in the real estate market now seems to favor the appraiser willing to commit fraud, to over-inflate, to ignore conditions and to create misleading opinions of value resulting from the poor selection or deliberate misuse of market data. In the past few weeks, our volumes have dropped as a direct result of losing customers more interested in “getting the deal done” as opposed to obtaining a well-supported opinion of value. We feel the appraiser industry is in jeopardy and to some, this means our livelihood. Enforcement of bad appraisers has been inadequate and efforts to prevent the coercion of Lenders, Loan Officers, Brokers and Agents have been non-existent. This is resulting in a shift of appraisal work to the unscrupulous, unethical appraisers that are willing to commit fraud or who have become susceptible to lender coercion. We’ve heard lenders state “If you can’t get a reliable value from an appraiser, we may as well take our chances on an equally unreliable value from an AVM.” While marketing ourservices, we’ve even been told by mortgage brokers “We push for inflated values here, so – if you don’t write the high-end, we’re not interested. ”It’s as though they are untouchable. Certainly, individuals such as this are operating above the law. We’ve had enough. We are currently in the process of forming a coalition of appraisers with the common objective to combat real-estate fraud in the State of California. Our GOAL is:

• To identify,
• To establish proof and
• To prosecute lenders, loan officers, brokers, agents and appraisers that have been and are actively engaging in real-estate fraud.

We will seek sanctioning of our project with OREA and the CA Governor’s office and we have already established an appraisal review team which has already reported several appraisers to OREA for USPAP violations and have also reported several licensed real-estate agents to the DRE for ethics violations. Our current operational name is The Coalition of Appraisers Against Fraud. If you are a licensed appraiser and are interested in learning more or are interested in participating or becoming a member, please write to us at CAAF, 7375 Day Creek Blvd. Ste. 103-149, Rancho Cucamonga, CA 91739. The buck stops here or it will soon stop for all for us. Appraisal , Real Estate , Appraiser , Blog ,USPAP , RESPA , Regulation