Commentary and information about public safety and security, intelligence and counterintelligence, open government and secrecy, and other issues in northern Idaho and eastern Washington.

Location: Coeur d'Alene, Idaho, United States

Raised in Palouse, WA. Graduated from Washington State University. US Army (Counterintelligence). US Secret Service (Technical Security Division) in Fantasyland-on-the-Potomac and Los Angeles. Now living in north Idaho.

Friday, February 16, 2007

Appraisal Fraud in Real Estate

"You cannot participate in the real estate business without committing felonies."

That's a direct quote from former Texas real estate appraiser William J. Rose who resigned his state-issued appraisal license and complained successfully to the Federal Bureau of Investigation (FBI) about his state real estate board's attempt to stifle his efforts to clean up his industry. Mr. Rose's concern was raised in a Realty Times article titled The Appraisal Crisis and the FBI. In the February 2, 2005, article, Realty Times writer Blanche Evans quoted Mr. Rose as saying, "I complained to the boards, and they tried to stifle me. According to the FBI, this is the new Mafia."

Ms. Evans February 2005 article came just a month after another of her Realty Times articles titled Sickened By Fraud, A Real Estate Appraiser Turns in His Pencil.

The methods used by banks, savings and loans, mortgage brokers, credit unions, loan officers, and real estate agents to apply pressure to appraisers to submit fraudulent appraisals are outlined in another Evans article titled Appraisers Respond: Too Much Fraud In Lending. This article was in the January 19, 2005, Realty Times.

The FBI is not the only federal agency to take notice of appraisal fraud. In its 69-page report titled The Detection, Investigation and Deterrence of Mortgage Loan Fraud Involving Third Parties - A White Paper, the Federal Financial Institutions Examining Council (FFIEC) listed appraisal fraud at the top of a list of third party mortgage fraud schemes that included such intriguing names as builder bailout, chunking, double selling, equity skimming, false down payment, fictitious mortgage loan, land flip, phantom sale, and straw borrower.

One of the more comprehensive articles on appraisal fraud was published by Demos: A Network for Ideas and Action. The article's title, Home Insecurity - How Widespead Appraisal Fraud Puts Homeowners At Risk, succinctly and clearly summarizes appraisal fraud and its consequences to homeowners.

But we're fortunate in Washington and Idaho: Appraisal fraud can't happen here.