According to a report prepared by the Office of the Inspector General for the Department of Housing and Urban Development, the agency said that it has identified cases of fraudulent property appraisals being used to increase the loan amount for the refinancing of HUD’s Home Equity Conversion Mortgages, HECM.
The purpose for the run-up in appraisals would be to extract higher loan amounts from lenders, which would include loan backers Fannie Mae and Freddie Mac. Some of the appraisals were inflated as much as 60% to 100% over the true market value of the property.
In response, HUD-OIG has issued a warning to appraisers, loan officers, originators and sponsors that the consequences for those who engage in fraudulent HECM transactions will be severe and range from criminal, civil prosecution, or administrative sanctions “as appropriate.”
Read the original article in HousingWire.