California Real Estate Fraud Report

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Archive for the 'HVCC' Category

Appraisers Lose Out as AppraisalLoft CEO Agrees to Settle Ponzi Scheme

November 3rd, 2011 at 8:47pm

Appraisers all across the country are being stiffed out of their fees, as the company that ordered them to perform appraisals has ceased operations after its CEO settled with the Securities and Exchange Commission (SEC) for his involvement in a $35 million Ponzi scheme.

Aman Makkar, the CEO of AppraisalLoft, said he is merging his company with another and that his company’s debts will be paid once the merger is complete. Some appraisers are owed as much as $5,500 for their services.

AppraisalLoft was a middle-man that took orders from banks to have appraisals performed on properties. The Home Valuation Code of Conduct (HVCC), which was the brainchild of former New York Attorney General Andrew Cuomo, was supposed to stop collusion between banks and appraisers to fix prices on home appraisals by introducing intermediaries. Most real estate professionals have concluded that the HVCC has been a disaster and among other outcomes, resulted in lower fees to appraisers, the difference going to the intermediaries.

Read the original article in SignOn San Diego.

Dodd-Frank Act Aims to Stop Appraisal Fraud

January 5th, 2011 at 5:06pm

Appraisers have been swung like monkeys on a rope in the past 10 years.

When real estate prices were rising like roller-coasters, appraisers were pressured by Realtors®  and borrowers to get property appraisals at or higher than the amount of the offer. Banks like WaMu (Washington Mutual) also jumped in, especially when it came to appraisals where highly profitable subprime loans were at stake, and were later accused of threatening to blacklist appraisers who insisted on upholding the ethical mandates of their profession and refused to participate in what amounted to corporate appraisal fraud. See the article in the California Real Estate Fraud Report about WaMu and eAppraiseIt.

New York Attorney General Andrew Cuomo made a sweetheart deal with WaMu and other lenders that let them off the hook but skewered the appraisers, who don’t have the same lobbying clout that banks do with Mr. Cuomo. Appraisers were forced under his misbegotten Home Valuation Code of Conduct (HVCC) to work under third-party firms hired by the banks, supposedly to restore “independence”. The two outcomes were that these hiring firms sucked a significant amount of the appraisers’ fees, which in many cases resulted in sloppy appraisals due to the reduction in income. Thanks Mr. Cuomo, you really protected the consumer!

The Dodd-Frank Wall Street Reform and Consumer and Protection Act attempts to restore some sanity into appraising by imposing stiff fines on lenders who try to influence appraisals (appraisal fraud).
Read the full article in the Sacramento Bee.

Interthinx® rates California as top mortgage fraud hotspot

February 19th, 2010 at 3:40pm

Agoura Hills-based Interthinx® has just published its 4th quarter 2009 report on the risk of mortgage fraud. For those who live in California, the bad news is that the Golden State has been rated as the highest state for the risk of mortgage fraud, followed by Nevada (a previous 5 quarter winner, just nosed-out by California in the latest survey), Arizona, Florida and Colorado. All are at the top of the list for defaults and foreclosures.

Risk of mortgage fraud consists of several metrics. As reported in CNNMoney, the occupancy risk index rose 16 percent since the 3rd quarter measurement. Occupancy fraud is the term for when a borrower states on his or her loan application that s/he will be occupying the home. Owner-occupied homes are known by lenders to be less likely to go into default and therefore receive more favorable interest rate quotations. Non-cash buyers who “flip” properties often commit loan fraud / mortgage fraud on their loan applications in order to receive the lower interest rates. But – and here’s the catch – many lenders are now performing random drive-bys of properties for which the applicant owns more than one home in order to determine whether the applicant lied, in which case the legal and financial repercussions for defrauding the lender could be severe.

Another risk factor that is up sharply is property valuation fraud. Although appraisers are now bound by the Home Valuation Code of Conduct, aka HVCC, Interthinx® found evidence of schemes with both short sale and REO properties in which the the property valuation has been compromised.

Interthinx®, a subsidiary of Verisk Analytics, provides risk mitigation (risk reduction) and regulatory compliance tools for the financial services industries.

Read the full article on CNNMoney. The Interthinx® report can be found at The Mortgage Fraud Risk Report.

© Copyright 2007-2018 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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