Below is an article from a central valley town in CA. The county has a Real Estate Fraud Unit in the District Attorney's office.
How do appraisers figure into the equation? They are used to help inflate values.
Are they Active or Passive participants and is there a difference when it comes to sentencing? Mostly passive, very few have been smart enough to ask for a kickback or bribe, just their $300.
How many cities is this happening in across America AND Canada? Well, Modesto is a city of 209,174 and RE Frauds have been discovered in much smaller towns, like Barstow with 23,943; so, there must be thousands of cities from small to large where it occurs. Maybe tens of thousands even.
Ever felt used by a lender client? Maybe that is why the DA's and the Justice Dept. and the Inspector Generals are taking action, it is happening on a wide spread basis.
It's happening with the help of the licensed appraisers shooting for predetermined values. Inflating values cannot be done to any large extent with an AVM, it requires that data be cherry picked to work, which is at the heart of the apprasial fraud issue and criminal liability and in opposition to the USPAP certifications, and good appraisal procedures.
Read the article, it might bring a whole new paradigm to doing lender appraisals for a living
Why were we licensed? To protect whom from what?
ARTICLE
Con artists try to get foot in the Door :[email protected]
Con artists are a clever and endearing bunch, and they're making a fortune ripping off homeowners and lenders through assorted fraudulent real estate schemes.
That's the message fraud investigators are trying to get out, along with tips for spotting scams.
"Real estate fraud is so prevalent, we can't even keep up with the amount of complaints coming in," said Marlisa Ferreira, the Stanislaus County deputy district attorney assigned to prosecute real estate fraud.
"These con men seem like lovable types. They're believable, very charming and they gain your trust," Ferreira warned. "They ingratiate themselves, especially with seniors … and with those who are unsophisticated and vulnerable."
Ferreira spoke recently to a group of real estate agents, but she isn't the only one warning about fraud.
A recent workshop during the Appraisal Institute's Northern California Chapter conference in Modesto focused on real estate fraud.
"There's all kinds of scams out there, and they're using appraisers to do them," warned Steven Smith, a real estate appraiser and consultant from San Bernardino. He said he's known as "the fraud guy" because he's beenr esearching it since 1999.
Smith said appraisers — knowingly or unknowingly — are used to inflating property values so larger-than-deserved home loans can be obtained. Those loans usually aren't repaid, triggering foreclosures.
"The purpose of fraud is to rob the bank," Smith said. He said there are organized real estate fraud rings throughout California, including Modesto. "There's a lot of guilty hands out there."
Ferreira said there are assorted "get rich quick" schemes that involve what some con artists call "gifting." For instance, the owners of a home worth $250,000 get an inflated appraisal saying it's worth $350,000. Then they get a loan for $100,000 more than the home is worth. She said the extra funds often go a middle man, and the loan isn't repaid.
"The loser ends up being all of us," Ferreira said, "because such fraud drives up the rates we all have to pay for home loans."
In another type of real estate fraud, it's unwitting homeowners who end up losing everything, according to Ferreira. She said people who have fallen behind on mortgage payments are a favorite target of those who pretend they are trying to help.
Homeowners sometimes are tricked into signing over a home's grant deed when they thought they were refinancing their loan.
"The grant deed is like the pink slip to your house," Ferreira said. Homeowners who mistakenly sign it or who have their names forged can lose title to their house.
To protect against becoming a fraud victim, Ferreira said, people never should buy or sell property without going through a title insurance company. She said buyers also should insist on getting independent property inspections and appraisals.
"There are people who buy property in other states sight unseen," she said. "Then they find out the property's worth was not represented accurately."
Ferreira said a buyer never should let a seller pick the appraiser: "You need to get an independent appraisal. It's going to cost you a few hundred dollars, but it's money well spent."
But honest appraisers can be tricked, too, according to Todd Stevens, an attorney who specializes in real estate fraud.
Stevens warned appraisers to be wary of unknown clients who try to get them to rush through a job or appraise property outside their regular region or specialty.
He said "funky financing" can be a sign of trouble, as can names on lending documents that don't match those on property records.
"If you don't look for those red flags and you aren't defensive," Stevens said, "you can be sucked into a fraud case."
Stanislaus County residents who think they have been a victim of real estate fraud can report it to the districtattorney's office by calling 525-5550.
Bee staff writer J.N. Sbranti can be reached at [email protected] or 578-2196.
WARNING SIGNS OF FRAUD:
- Power of attorney used without explanation.
- No property inspection.
- Seller procures appraiser.
- Request to avoid escrow.
- Request to avoid title insurance.
- Cash payments made outside escrow.
- Disparity in document dates.
- Recent liens on property.
- Post office box listed for borrower or employer.
- Sudden changes to escrow.
- Escrow instructions not sent to lender.
TIPS FOR AVOIDING IT:
- Know exactly what you are signing.
- Get an attorney or neutral counselor to explain documents.
- Avoid pressure to sign anything quickly without reviewing it.
- Never sign blank documents or those with missing details.
- Understand promised mortgage terms and check them against actual documents.
- Check references of real estate professionals.
- Conduct business only in an office or bank.
- Beware of business people who are "mobile" with no office.
- Beware of telephone solicitations.
- Check comparable home sales in area.
- Review ownership history of the property.
- Beware of promises of outrageous profits.
- If it sounds too good to be true, it is.
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