Inflated appraisals occur when a borrower acts in concordance with an appraiser to provide a lender with a misleading appraisal report.
Reported incidents of Mortgage Fraud in the United States have increased by 45 percent in the second quarter of 2008 when compared to 2007, when appraisal fraud comprised approximately 16 percent of all reported mortgage fraud cases.
Most loan originators are paid on commission, and at times may pressure appraisers to inflate the estimated property value of a home. Even in the best of circumstances, an appraisal is still only based upon an appraiser's subjective evaluation under current market conditions. An appraiser may fail to use comparable properties to establish property values, or may rely solely on these comparable property values in making the appraisal, paying little attention to the actual condition of the property being appraised or other relevant factors.
Appraisers must have a license, but there is no ethics course required to become a licensed appraiser. In light of this, home appraisal reform may be forthcoming. Recent settlements with Fannie Mae and Freddie Mac were the result of efforts to combat what New York Attorney General Mario Cuomo has called "rampant appraisal fraud".
If unchallenged, appraisal fraud allegations can possibly lead to substantial compensatory and/or punitive monetary damages. An appraiser can also lose his or her license, and can potentially face jail time. This is why it is of such importance to obtain the best legal defense team immediately. Mortgage Fraud Attorneys at The Blanch Law Firm can protect you against appraisal fraud accusations in and out of the courtroom.
Contact one of our experienced appraisal fraud attorneys today by calling 888-984-5579 . Your initial consultation is both free and confidential.