Home Appraisal Fraud Top Priority

Whether you are trying to defraud a lender or just trying to get a higher valuation for your property, the appraisal that you get can be an indication of what your net worth is.
Some homeowners are definitely trying to get an unrealistic value of their home in order to get more money on a 'cash out' loan. Others are trying to get it so they can sell for super high profit. Whether they commit fraud usually is judged by their relationship with the appraiser that does the appraisal. Some times in the past a lender or broker, needing to 'make the deal', would ask the appraiser to 'get me a value' so the deal can be done. Then most 'sub-prime' lenders (see the next article to explain that term) began the 'review appraisal process' as a matter of course. They assumed that the value would be inflated by the brokers appraiser and would order a 'desk review' at the very least and if that didn't verify the value assigned by the brokers appraiser they would commission a 'field review' whereby the reviewer would actually visit the subject property.
They assumed that there was always 'collusion' of some sort by the parties involved. This is, in my experience, rarely the case. However, their are some "carsalesmen" loan officers that are only in this business for the short term and don't really care about the borrower or the future hardship that an unrealistic appraisal puts on the borrower. It is because of these 'part timers' that the lenders have become disenchanted with most appraisers hired by brokers. The best and most experienced appraisers have learned to say "no" to inflated values. The professional ones know that they MUST be realistic in their valuations for a variety of reasons. The most important one is that they need to keep their license and reputation for future earnings. The secondary reason is that they need to keep their insurance premiums low. Yes, they pay what is the equivalent of malpractice insurance they call it errors and omissions insurance but it amounts to the same thing. Once a lender formally accuses an appraiser of false or inflated values it kicks in the Errors and Omissions insurance attorney. That DOES cost the appraiser money --often twice or three times the amount they make from one appraisal so it behooves the appraiser to not manufacture values.
So why do lenders automatically think that there is a falsified value in most sub-prime loans? Because the foreclosure rate has gone through the roof. In some cities it is 400% over last year. Why does that inplicate the appraiser.. (more to come)