Multiple indicators demonstrate that mortgage loan fraud, and specifically appraisal fraud, are not only an ongoing problem for the industry but continue to increase in numbers. The Financial Crimes Enforcement Network recently released a Mortgage Loan Fraud Update showing and 88% increase in mortgage loan fraud SARs filings over the same quarter last year including nearly 1200 appraisal fraud SARs in the second quarter of 2011 alone.
Recent lawsuits filed allege that parties did not conduct appraisal reviews within USPAP guidelines. Furthermore, the lawsuits allege that appraisal experts did not perform assignments ethically and completely, thus not being fully compliant with professional standards. Under USPAP guidelines, it’s stated in one lawsuit, “The appraiser must not render appraisal services in a careless or negligent manner, such as making a series of errors, that, although might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results.”
“These lawsuits and shocking fraud statistics enforce the need for leaders in our industry to follow good appraisal review practices,” said First Valuation’s Director of Client Relations, and Certified Residential Appraiser, Khristie O’Brient. “At First Valuation, we analyze the appraisal and determine whether the value was well supported and review key factors in the report that could impact value and marketability of the subject. Our review process mitigates risks commonly attributed to faulty appraisals.”
First Valuation is taking all of the necessary preventative measures to ensure quality, accuracy and consistency in every valuation; utilizing propriety information systems, designed and built in-house for BPO reports, and a state-of-the-
First Valuation President, Michael S. Richardson, knows first-hand about mortgage fraud and the toll it can take on consumers, having written the book, An American Epidemic, Mortgage Fraud – A Serious Business, after he fell victim to mortgage fraud. As Richardson stated in his book, “Until we stop fraud on a case-by-case basis, establishing significant penalties, and sobering preventative measures, fraud will continue to reach epidemic proportions in our industry. We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only stop it but also punish it.”
These staggering industry statistics and alleged poor quality practices highlight the need for a proactive approach to valuation quality. “The credibility of appraisals, the credibility of the valuation industry is at stake,” said Chris McLain, Vice President of Sales at First Valuation. “The industry needs companies who are willing to stand up and champion the cause of higher standards and First Valuation is up to that challenge.”
First Valuation will be at the MBA’s 98th Annual Convention and Expo in Chicago, October 9-12. Stop by booth 1304 to pick up your fraud defense pen and to learn about their “No-Cost BPO Challenge”.
About First Valuation
First Valuation is an industry leading valuation services provider. Launched from the foundation of its sister company BrokerPriceOpinion.com, which was founded in 2004, First Valuation provides highly customized nationwide valuation solutions that allow client specific rules and criteria to be included in its automated quality control process. The company offers both residential and commercial valuation products including BPOs, appraisals, automated valuation models (AVMs), photo and condition reports, retrospective valuations and review products. The company utilizes a combination of unique placement processes, local market experts, state-of-the art technology and expert quality review to provide the highest quality products in the market. For more information, please visit www.FirstValuation.com or call (303) 991-9919. The company’s social networking can be accessed on Linked In (First Valuation), Facebook (First Valuation) and Twitter (@firstvaluation)
Marketing Manager, First Valuation