Sunday, July 16, 2006

'Appraisers On Streroids' In Colorado

A pair of reports from Colorado. "Frank Finn Jr. thought his family was getting a great deal. He borrowed $102,500, the cost of the land, home and installation. The appraisal showed his home in West Valley Estates, a community of factory-made homes, would be worth $130,000. 'We were so happy,' he said. 'I was like, 'Right on; geez, I'm really making out on this. I've already got $28,000 in equity.'"

"Six years later, Finn is a foreclosed homeowner with ruined credit and monthly rent bills. So are his old neighbors."

"Of 65 homes in West Valley Estates, 28 were foreclosed from 2002 to 2006. Nine others were deeded to lenders without a foreclosure. The appraiser of Finn's home and others in the development lost his license. The sale price of Finn's home after his foreclosure: $57,700."

"Finn and many of his former neighbors believe they were victims of appraisal fraud. In Colorado, mortgage fraud is 'a significant factor' in the rising number of foreclosures, and 'bogus appraisals are a big, big part of it,' said Colorado Attorney General John Suthers."

"Lenders estimate 'as much as 15 percent of all appraisals are overvalued' though not necessarily fraudulent, said David Berenbaum, a board member of the national Center for Responsible Appraisals and Valuations. 'We're questioning a large volume of the loans today.'"

"An appraiser may boost the value of a house to benefit the seller, mortgage broker and real estate agent, who all gain from the higher sales price."

"Nationally, appraisers are feeling so much pressure to justify questionable home loans that nearly 10,000 have signed a petition calling on Congress to protect their independence. In a recent poll, they were asked how often they felt their peers succumbed to pressure. The leading response: 41 percent to 50 percent of the time."

"Some appraisers say corrupt mortgage brokers and loan officers have compromised the appraisal industry, which has long been considered the primary check against fraud. 'I am battling against appraisers who are on steroids; guys who are saying, 'What number do you want?'' said Matt George, a Littleton appraiser."

The pueblo Chieftain. "Colorado has been a holdout in regulating the mortgage industry. Local real estate appraiser Ivor J. Hill said mortgage fraud is so prevalent here that the federally established Fannie Mae, which oversees the flow of mortgage monies nationwide, red-flags all loan applications from Pueblo County."


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