SHARE:
Home Fraud Starts with Crooked Appraisal
Fraud often involves a real estate appraiser, who uses location, comparable sales and other factors to determine value and help a lender decide how much money to loan on a property.
More than 100 appraisers and other real estate professionals attended last week's Appraisal Fraud Conference in St. Petersburg, where the Times talked with Tampa appraiser Joni L. Herndon. A native of Alaska, Herndon is a member of the national Appraisal Institute and incoming chairwoman of the Florida Real Estate Appraisal Board, which oversees Florida's 12,400 active appraisers.
How big a role do appraisers play in mortgage fraud?
In most cases, you can't have mortgage fraud without an appraiser. A fraudster is not going to pay cash for a home. They have to get a lender, who hires an appraiser to inflate the value. The appraiser is key to mortgage fraud.
What's an example of a fraudulent appraisal?
In Pinellas County on Snell Isle, there are canals, harbor and open bay - three sets of sales data you'd use. If you want to pump up the value, you might compare canal front to open bay and not disclose any difference to the lender, who's in California.
Sellers and developers are offering all kinds of incentives, including closing costs and prepaid mortgage payments. How does the appraiser deal with these in valuing a house or condo?
We are required to get a copy of the contract and all the addendums and any change orders from the builder so we know what we're appraising. Sometimes the builder doesn't want you to know because they're afraid it will affect the value.
Of the nation's 102,000 licensed appraisers, 37,000 have been in business only three years. Is that a problem?
When everything is going up, the new appraisers come in and they don't have good mentoring or good training. In Florida, you only have to train for two years until you get to be state certified, and then you can bring on trainees yourself. What the heck can you learn in two years? Unfortunately, there's been no change.
