The Mortgage Bankers Association, at its National Mortgage Fraud Conference, called for legislation that would require appraisers to carry “fidelity” insurance to cover instances of mortgage fraud and for mortgage appraisals to be submitted to a central database to increase transparency. Details of the proposals were unavailable but are under development by an MBA mortgage fraud task forceThe fidelity insurance requirement would apparently be different than errors and emissions insurance in that it would cover fraudulent activity. Currently, most errors and emissions policies cover negligent, but not fraudulent, activity.
Other items of note from the conference include:
- The Mortgage Asset Research Institute previewed their 2007 Mortgage Fraud Index, which indicates that appraisal fraud declined from 2005 to 2006. The Index also cites Utah and Florida as the No. 1 and No. 2 ranked states respectively for mortgage fraud activity last year.
- Greg Harding with the California Office of Real Estate Appraisers spoke about appraiser licensing enforcement in his state, where some 30 percent of cases pending before the board involve forged appraisals.
- The MBA and the FBI announced and signed a memorandum of agreement for the two organizations to work together to promote the FBI’s Mortgage Fraud Warning Notice. The FBI’s Mortgage Fraud Warning Notice states that it is a federal crime for any person to make any false statement regarding income, assets, debt or matters of identification or to willfully overvalue any land or property in an effort to influence the action of a financial institution. The Notice reminds the reader that fraud is investigated by the FBI and is punishable by up to 30 years in federal prison or a $1,000,000 fine or both.
Click here for links to the MBA Conference presentations.
Thanks to Steve Smith, MAI for the article summary.
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