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Washington, D.C. (AHN) - The Department of Justice and the Federal Bureau of Investigation charged 406 individuals on Thursday for allegedly defrauding homeowners, mortgage borrowers and banks of some $1 billion.
The suspects involved in 144 mortgage fraud cases and caught under the ongoing "Operation Malicious Mortgage" since March 1 consisted of housing developers, mortgage lenders and brokers, lawyers, real estate agents and appraisers, said Sharon Ormsby, section chief in charge of financial crimes for the FBI.
The sad thing is, is that it's probably only the tip of the iceberg. I was in the mtg industry in CA form about 1996 - 2005. During the early years the loan agents in the companies I worked for were serious people. They took their job seriously, the appraisers would give you the actual value not the value that was "needed" to make the deal work.
From 2000 -2205 when I left I was amazed at the crooks that were hired. When stated income, Alt A and all that craziness became the thing to sell it all went downhill and the "new loan agents" who jumped on the bandwagon of fast money just made a mess!!
Nothing was qualified, just made up. A bunch of new appraisers came out into the market and made some unbelievable adjustments to make a home appraiser at value.
Then all these wacky correspondent lenders that are just broker shops with a warehouse line funded loans and sold them without knowing how to underwrite, read a paystub or calculate income so it's all just a mess.
Then add to that all the borrowers that came out of the woodwork convinced that all they need is a nice smile to buy a house because so and so loan agent told them they could afford a house. When you know they all know basic math and could probably figure out on there own that they can't afford a house. Since the decision was made for them, why should they take responsibility?
Nothing was qualified, just made up. A bunch of new appraisers came out into the market and made some unbelievable adjustments to make a home appraiser at value.
I am painfully aware of this
My partner and I do mostly review work. Interesting thing is that lenders, generall speaking - there are exceptions, won't hire us for review work because we don't "rubber stamp" the original appraisal report. We don't nit-pick ..... we review based on USPAP and the market ..... frequently a report isn't written the way we would write it, but we look for USPAP compliance, data verification, and whether or not the adjustments and final value are suported by the market and whether or not the adjustments are explained with valid data, not "adjustments were made based on appraiser's experience".
We get the review work from PMI co etc, who want a retro-active review done.
Currently I am working on 3 reports where the appraisals have so many holes in them Hellen Keller could recognize them from a distance. It is disgusting that these things ever made it through Underwriting.
Appraisers like me don't keep many Mortgage Broker clients. First time we "don't come in at value" we are fired. Which is fine with us because generally speaking clients like that are more trouble than they are worth.
As long as lenders are looking for quick and cheap appraisals that will "make their loan work" there will be appraisers to supply them. And it pains me to say that because I believe that appraisers should be more professional.
Perhaps this whole mortgage mess will clean up my profession as well.
Here's my rant - What also stinks about this mtg mess is all the honest ones get shafted! I knew a few good appraisers that did the honest work but they would never get the business because of these yahoo's that would do whatever the agent asked. Not realizing it's an actual business not a fly by night operation. Drove me nuts how the standards went down.
I worked really hard as a processor to learn underwriting guidelines, to send out clean packages then I had these new loan agents just making up crap and saying "just send it in". I got into more than one battle with the broker that I worked for because I didn't want my name on it. No - they didn't fire me. I was a good asset, I knew what I was doing. So instead, they just hired a girl that used to bartend to push that paper. She handled all the stated income, stated assets couldn't find the appraised value on an appraisal. Fine by me! To this day she probably doesn't know how to caclulate income or read a credit report.
Yes, it boggles the mind. If people knew how ignorant and unskilled/untrained many of the mortgage "professionals" are they are entrusting with the largest purchase they will probably make in their entire life, they'd run off screaming.
Jan 1st, 2009....only wholesale/direct lenders will be able to order Conventional appraisals.
This doesn't apply to FHA/VA, but I'm sure will help out the industry.
It will hurt many appraisers who use brokers.
This isn't written in stone yet. This is actually a bad idea. It hurts those lenders/MB who actually use good appraisers and demand good reports because if this goes to a rotation schedule, they will end up with crappy reports as oftne, if nor more frequently, than good ones.
There is a lot of opposition to this plan, and rightfully so. I don't think it is going to fly.
The solution is fairly simple. Enforce the laws and regulations that are already in place. License all Loan Officers ...... fine or shut down those who falsify documents and put pressure on appraisers ...... and do te same with appraisers who give in to that pressure.
Nope, not completely. There are several groups lobbying against it.
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