Appraisal Scoop

Identify Theft: Untangling The Web

By now, many of you have already read the The Columbian story by staff writer Stephanie Rice titled: Caught in ID Theft's 'Horrible Web' 

Rice's story starts out like this . . .

"In typical identity theft cases, the thief goes after a bank account or a line of credit. In Kathy Carpenter's case, the thief was even more bold. A woman took Carpenter's professional identity as a real estate appraiser, using Carpenter's name and license number. She even appraised commercial and million-dollar properties that Carpenter, a residential appraiser, isn't licensed to do. Jean Faye Dodge, former manager of a La Center appraisal company, is now in prison. But Carpenter's troubles aren't over."

Appraisal Scoop caught up with real estate appraiser Kathy Carpenter and asked her to tell appraisers a little more about her story.  I told her that I had been a victim of "minor" identity theft myself and had some idea of the frustrations she's encountered throughout this ordeal.  We hope her tale will alert appraisers, appraisal boards, appraisal organizations and federal agencies on the devastating consequences appraisers face from identity theft.

Kathy tells her story . . .

In these times where appraiser's jobs are difficult enough, mine not only got tough, but for all practical purposes went away.  In addition it forced me to spend "billable hours" sifting through the remains of this well woven web.

The problem was, I knew this person. I had contracted with her company for a few years after the major AVM she represented left town and she continued her appraisal network to funnel work to me and some other appraisers in the area.

The other problem, it was a "virtual" crime of sorts. No one physically took something, or came onto my property, yet the repercussions were farther reaching. There was no compromise of my software, or my computer. It was a simple copy, edit paste (and a bad job of it at that with a barely legible, fuzzy facsimile of my name). It was all too easy.

The renewal of my license every two years in OR/WA seemed to be a joke when I made a call to the Appraiser's boards in each state and they basically said "too bad". Since Jean Faye Dodge wasn't a licensed appraiser, they had no jurisdiction to sanction her or her actions. Yet, they also offered no advice to me, the "law abiding citizen" involved in this the scam.

Even my E&O insurance could give me no guidance. Unless it was an infraction that I had committed; then everyone would have been all over me! So I was forced to schlep off to each and every county (that I knew of) where the fraudulent appraisals were performed.

Time after time, I had to re-tell the story. Sometimes to deputies who had bigger fish to fry, and once to one that used to be a mortgage broker and really understood the plight I was now up against, acknowledging my frustration. I was directed to the FBI, but quickly realized I was a small fish in a large sea. They weren't opening new cases for investigation unless they tallied in the millions, not the thousands or hundreds of thousands.

Click here to continue reading . . .

Virginia REAB Holds "Special Meeting" on Appraisal Delivery Web Portals: Part 3 of 3 - FNC's Chief Legal Officer Responds

Appraisal Scoop reported previously (click here) on the May 22, 2008 Virginia State Board for Real Estate Appraiser's (VREAB) meeting to discuss among other things, a petition submitted by George Dodd, SRA.  Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf

The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare.  Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.

Click here for Part 1 and for Part 2.

July 23, 2008 - Richmond, Virginia

Mr. Olson, Chief Legal Officer for FNC, did in fact take several minutes to discuss some points, many of which are similar to the comments he had made at previous meetings.  Download Neil_Olson_FNC_Response.pdf   He did not prepare or use a power point presentation this time. He chose to sit at the Board’s table and comment and answer questions as they were asked.

Much of what was said can be summed up in a few sentences.

“The ENV file that is submitted is the true copy. Many recent improvements to the AI Ready format were made that allow for inclusion of more images. The limitations of the presentation and formatting of the reports in the ENV are done so because that is the clients’ wish for the reports to be presented in such a way. He did also say that the security given by the system is the biggest advantage of Appraisal Port.”

Personally, I must say that I respect Neil Olson, any one that is willing to travel this many times and essentially defend his company the way he has done, gets a pat on the back. The lack of interest, or perhaps the lack of presence by the other companies that convert reports, and the lenders that are allowing or requesting it, leaves Mr. Olson there to defend the concept all by himself.

The point he made regarding the lender/client’s wish to have the reports in such a format, I do think this needs to be examined closer. I think a more accurate statement would be that this is the system that Appraisal Port sells to lenders on the merits of rule set reviewing and quality control. The system essentially reads the file and if any of the data in the fields is outside of an established tolerance (example: greater than 10% line adjustment) it is flagged. What I assume happens from there is that a reviewer or otherwise trained person looks over the report and decides if further appraisal review is needed, or if the report properly explains the variance.

One can surmise from the absence of the lender/clients and the fact that the programs are so limited to exclude the appraiser’s intended forms and presentation; it may not really be the lender/client that wants the reports in such a manner.

It is likely that the lender/client was solicited on the benefits of the rule sets and review features. They are not here defending the right to do so, they are leaving that to FNC. I believe this is a reasonable assumption to make regarding Lighthouse and AI Ready. This means that it is likely that the lenders using these types of services may not realize that the reports they are receiving are in many cases, limited in what they can contain. If the lender/client is aware it can be assumed that no consideration is given to the appraisal process when a business decision like this is made.

This may also explain why there has been resistance from Mr. Olson when asked about allowing the lender to receive a PDF, then converting the PDF into an ENV. This would certainly prompt a lender to ask, “Why do WE need to do this?”, and I am sure the credibility of the converted report would then be at question.

There is a loop hole here that is being used to force appraisers to convert formats and then the appraiser be held accountable for what is essentially two different versions of a report. Most appraisers do not understand that the reports are limited, and from many I have spoken to, they do not read the converted report and compare it to the report in their forms package.

Is This What the Lenders Really Want?  Click here to continue reading . . .

Virginia REAB Holds "Special Meeting" on Appraisal Delivery Webportals: Part 1 of 3

To Convert or Not to Convert!  Is That a Real Question?

Appraisal Scoop reported previously (click here) on the May 22, 2008 Virginia State Board for Real Estate Appraiser's (VREAB) meeting to discuss among other things, a petition submitted by George Dodd, SRA.  Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf

The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare.  Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.

Woody Fincham has developed this series to chronicle his first hand account of the 7/23/2008 Virginia Real Estate Appraiser’s Board meeting.  These are the author's own opinions. They are not intended as an attack on FNC, INC or any one listed in the article. The article is intended to inform the general appraisal public of the landmark Virginia State Appraiser's Board policy process.

Virginia Real Estate Appraisers Board

July 23 2008

Special Meeting Regarding Web Portals

Today marked the second and final special committee meeting by the board.  The meeting was called in order to allow all the interested parties to make a case for their respective points of view.  George Dodd, the petitioner was there and gave a presentation.  Neil Olson from FNC, INC was also present to speak to the board and the gathered attendees.  Rob Fraiser, an appraiser from Core Logic gave a presentation regarding the data standard MISMO.  Strangely absent was anyone for ACI regarding their conversion software or and lenders who utilize conversion capable platforms. 

Mr. Dodd started off the meeting with a short presentation supporting his stance on why conversion software should not be allowed. (See below for downloads)  He had prepared a power point presentation that included some interesting information.  The highest ideal Mr. Dodd referred to was the Board’s job to protect the public trust, the very same being a part of the Commonwealth’s regulations.

He very clearly stated that the single most significant act an appraiser does is to place the appraiser’s signature on the report.  This is easy to concur with in that when one thinks about it, an appraiser states upon signing the report that all conclusions, statements and work are true and accurate.  It is the glue that makes the report stick. 

He also states that the appraiser has to have complete control to attach, control or affix the signature.  This is affirmed by the State Regulation that states “The signing of an appraisal report or the transmittal of a report electronically shall indicate that the licensee has exercised complete direction and control over the appraisal“in accordance with §54.1-2011 C of the Code of Virginia.

Click here to continue reading . . .

Download Appraisal_Board_Presentation.pdf

Download presentation_to_appraisal_board.ppt

Virginia REAB Hears Petition To Prohibit Use of Appraisal Delivery Webportals That Transmit Altered Appraisal Reports

Author: Woody Fincham:

This article is a first hand account of the 5/22/2008 Virginia Real Estate Appraiser’s Board meeting.  These are the author's own opinions. They are not intended as an attack on FNC, INC or any one listed in the article. The article is intended to inform the general appraisal public of the landmark Virginia State Appraiser's Board policy process.

May 22, 2008 - Real Estate Appraiser’s Board, Richmond, VA: Today the Virginia State Board for Real Estate Appraisers met to discuss among other things, a petition submitted by George Dodd, SRA.  Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf

The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare.  Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.

The fight to protect appraisal data was front and center in Richmond.  There were several people there to watch and learn, including Chief Legal Officer for FNC, Neil Olson and Mark Chapin, Vice President, Zone Sales and Business Development for ZAIO. Within the galley were several appraisers from across the Commonwealth of Virginia. From one-man shops to multi-appraiser/multi-area shops, everyone wanted to watch as Virginia bravely looked to change the playing field for the industry.

The meeting was mostly formal business as usual, licensing sanctions and the typical stuff. Traditionally, public comment is limited to 5 minutes. A motion passed to hear Mr. Dodd's petition and up to speak first was Mr. Olson. He spoke well and politely, agreeing that the issue was indeed serious in nature, and that appraisal report delivery has changed since the days of typing a report and sticking photos in the report and dropping it off at the bank.  Download Neil_Olson_FNC_Response.pdf

• He made it very clear that the conversions were done by the appraiser. It seemed he was very determined to make it known that essentially the liability of the conversion rested with the person initiating the conversion: the appraiser.
• He also compared the PDF format and the AI format as being relatively the same. Mr. Olson discussed how the major component of the AppraisalPort site was to check for viruses.

Many of you may be wondering why that is an issue. Really, it has always been the appraiser’s responsibility to make sure that all reports are sent in secure manners. There has always been the requirement that appraisers have complete control over signing their reports. So why should we be concerned with things as they are enough to try and see that a state board requires non-licensed companies to stop their business practices?

It has to do with the requirement of many of these companies to force an appraiser into either doing these things with their reports, or be forever blacklisted from receiving work.

They are asking appraisers to send in work in a format that essentially allows them to unlock your data, use it how they see fit. The data is essentially pulled out into sections, including your signatures.

Click Here To Continue Reading . . .

(Video) Investigators: The Case of the Unauthorized Appraiser - Identity Theft AGAIN!

For most of us, our homes are our most valuable asset. So when the housing market hits a slump....and prices drop...we all feel the financial pinch. You can blame the sub prime credit crunch, and an over supply of houses for much of the twin cities real estate woes. But there's another significant, contributing factor: fraud.

FOX 9 Investigator Jeff Baillon shows us just how bad it is, and one person who's made many homeowners unhappy. Click here for video.

Read how an unlicensed appraiser (Jennifer Penner) stole the identity of licensed appraiser, Melissa Zuniga, and continued appraising homes under the "assumed identity".  This after being barred for life from practicing in the real estate field by her state's regulators for inflating values and "having her licensed yanked and paying a $7000 fine"

Zuniga said "Penner would brag about how much money she was making." "She said she cleared $200,000 at one point."  "That's pretty good money!"

Our favorite excuse!  When contacted by the investigator about how Zuniga's name could have a appeared on Penner's appraisals? . . . "It's because of a computer software problem". 

Click here for video.  Thanks to Patrick Egger for the video link!

Appraiser Identity Theft - Just PART of this mortgage fraud scheme

Ken Rossman, a guest author for Appraisal Scoop, has been quoted in todays newsday.com story by Katie Thomas - Homeowners entangled in loan scheme. 

The story starts out as the typical mortgage fraud story of a mortgage banker writing loans that rely on faulty appraisals and exaggerated loan applications, leaving behind angry homeowners who are struggling to pay mortgages on overpriced homes.

But the interesting twist on this story are the detailed comments on the appraisals and appraisers!  Below are a couple of excerpts from the article. 

"There's a lot of data in that appraisal that was done in such a way to support the value that they were coming in with," said Ken Rossman, a Wantagh appraiser who began noticing the high values on Wider homes a few years ago and reviewed the appraisal at 1004 North Broadway at Newsday's request. "It bore no relationship to the market."

Rossman and other appraisers said that the prices charged for the Wider appraisals -- $850 and $1,000 -- were more than double the going rate for a report on such homes.

"I would say that's excessively high," said Dominick Pompeo, a Manhattan appraiser who sits on the New York State Appraisal Board, which regulates appraisers.

Once again . . .appraiser identity theft!

Another appraiser, Randall Jonason of Mount Sinai, said in an interview he has never worked with Aaron Wider and did not write the two appraisals on which his name is listed. He said he has hired a lawyer, was deposed in the GMAC lawsuit and said Mirando was one of his teachers at the Appraisal Education Network School in Bohemia. Asked about Jonason's name on the appraisal, Wider declined to comment.

Click here for the full article: Homeowners entangled in loan scheme.

Appraisal Firm Caught Allegedly Recruiting Appraisers Through The Internet As A Ruse To Steal Their Personal Identity

The Real Deal blog posted this story:

"A Whitestone real estate appraisal company and its CEO have been indicted for allegedly stealing identities of appraisers and inflating property values. D & T National Appraisals and CEO Donato Odato, 54, are charged with forgery, falsifying business records, identity theft, scheming to defraud and conspiracy.

Odato allegedly recruited appraisers through the Internet as a ruse to steal their personal identity and then allegedly forged their names on appraisals filed with residential mortgage applications. The alleged scheme was discovered after the appraisers were accused of inflating property values and lost work."

Now . . .I don't normally repost appraisal fraud stories, as there are usually plenty of folks that love to take shots at appraisers and there's no need for me to pile on so-to-speak.  But in this case, the appraisal firm was alegedly harming other appraisers! 

Mortgage Fraud Blog, indicates that these appraiser creeps were indicted on not one, not ten, not 100 but 397 counts! of the following: Click here

• second- and third-degree forgery
• criminal possession of a forged instrument
• first- and second-degree falsifying business records
• first- and third-degree identity theft
• first-degree scheme to defraud
• fifth-degree conspiracy

The alleged scheme came to light when financial institutions began reaching out to the appraisers who allegedly had their identities stolen and advised them that their services would no longer be needed due to their inappropriate and highly inflated valuations of properties based on falsified data. The appraisers, in turn, contacted the Queens District Attorney’s Office to report the identity theft.

Click here for the Queens DA Press Release: Queens Real Estate Appraisal Firm And CEO Indicted In Alleged Scheme That Inflated Real Estate Value

Thanks to Patrick Egger for this story tip!

MARI Report Released - Appraisal Fraud "Significantly Lower" Than Expected

Inman News reported (click here) that: "In its annual mortgage fraud report, the Mortgage Asset Research Institute (MARI) said the sharp increase in mortgage fraud is partially because lenders are finding more cases of fraud in loans originated in 2006. But the slowdown in the housing market has also helped reveal fraud cases previously masked by strong price appreciation."

MARI’s MIDEX system classifies the types of alleged fraud involved in each incident reported by its cooperating subscribers. These classifications are shown in the Table below for loans originated in the five-year period from 2002 through 2006. The numbers on 2006 loans are very preliminary since fraud perpetrated in 2006 will continue to surface for another two years or more.

The Mortgage Fraud Types Table shows each type of fraud as a percentage of all fraud cases submitted to the MIDEX database. For instance, 55 percent of overall fraud incidents reported to the database for mortgages originated in 2006 contained application fraud, while the subprime equivalent is significantly higher at 65 percent. These percentages are hardly surprising given that the application form is comprehensive in collecting personal identity, employment, asset and liability information.

The MARI report states:

Even casual observation [of the Table above] indicates that the amount of appraisal fraud reported is significantly lower than one might expect in each of the years, especially in 2005 and 2006. The low levels of reporting are typically due to the fact that reported incidents involve more than one type of fraud. If a reporting lender finds misrepresentation in, for example, the verification of employment and occupancy status, that lender is not likely to pay for the review appraisal to verify appraisal fraud, even if the appraisal appears to be inflated. But these numbers are likely to increase as the lengthy process of reappraisal and value-verification is completed in many investigations. The slowdown in real estate appreciation should also accelerate how quickly appraisal/valuation fraud reports are submitted compared to prior years’ reporting trends.

Click here for the complete MARI Report.

Identity Theft Is A Crime - New FDIC Web Site

Appraisal Scoop.com has reported many times on the problems that appraisers and consumers face with identity theft.   Today, the Federal Deposit Insurance Corporation (FDIC), a participant in the government-wide Identity Theft Task Force, announced that it will provide a direct link to the new, centralized government Web site on identity theft.

The new site, www.idtheft.gov, was launched today.  The ID Theft Task Force's Strategic Plan, which represents the input of 17 Federal agencies, including the FDIC, sets out recommendations to prevent identity theft, to assist identity theft victims in recovering from those crimes, and to prosecute and punish identity theft-related criminals. The taskforce was created on May 10, 2006, by Executive Order to strengthen Federal efforts to protect against identity theft.

For more information on the site, you can visit either www.idtheft.gov or www.fdic.gov

Web cast: April 23, 2007 - The President's Identity Theft Task Force Press Conference

Just How Secure IS your PDF Appraisal Report?

Recently, we received very disturbing news from one of our appraiser comrades who indicated that he was sent PDF copies of his own appraisals BUT, the final value had been modified upwards significantly. Pretty frightening stuff, no?

I’m writing this topic to dispel the myths that about document security, because quite simply, it does not exist.  Having been a top IT Consultant for many, many years prior to entering the appraisal profession, I say this:

"Every bank, every lender and anyone else that receives a copy of your appraisal has the ability to reverse engineer your document into their automated underwriting system. I was the senior designer for such a system and there was no file format that stood a chance against our team."

The file standard created by Adobe, the Portable Document Format (or “PDF”) has long been recognized as the defacto standard of cross-platform electronic document storage. Regardless of the operating system, a PDF document can be opened and read and for the most part, provides a level of protection from modifications. Although many assumptions are made regarding the security of this format, the PDF, indeed, any electronic (binary) file, is not truly secure.

If the file is password protected, it must be secure, right? While this meets the requirements of the GLB Act of ‘99, these feeble attempts at file security loll us into the belief that a) our documents are truly secure, and b) the file cannot be modified under any circumstance.

Do not be alarmed but: Under no circumstance is any file stored in electronic format truly secure nor is there existing technology now or planned for the next 10 years that will offer a level of security truly capable of total document security.

This is not the fault of the software maker but is the fault of nearly all commercially available computer operating systems sold in today’s market. Let me explain. . . .