Good news for the real estate market place: The LexisNexis Annual Mortgage Fraud Report and analysis of the data shows that appraisal and property valuation fraud have declined significantly from last year.
The percentage of loans with appraisal or valuation fraud dropped to 15% of loans with mortgage fraud. In 2012, 26% of loans reported signs of appraisal or property valuation fraud, 31% in 2011 and 33% in 2010. As you can see, that is over a 50% improvement in 3 years.
You may wonder why there has been such a significant decline in appraisal and valuation fraud when overall mortgage fraud has grown over the past three years. Here is the opinion of Valuation Management Group President and CEO, Vicky Thompson:
“Prior to May 2009, there was very little independence in the appraisal process. Typically, the loan officer was selecting the appraiser and having direct and regular communication. The Home Valuation Code of Conduct (HVCC) changed who could order the appraisal for mortgage lenders. The Interagency Appraisal and Evaluation Guidelines followed in December 2010 as guidance for banks and credit unions. Dodd Frank became law and the HVCC was sunset, but Dodd Frank modeled the principal of independence from HVCC.
Today, the law of the land is that appraisers are not to be influenced. No one in loan production is to select, retain, recommend value conclusions or influence the appraiser. The proven result is that most appraisals are free of appraisal or property valuation fraud.
I would suggest that Fannie Mae providing Collateral Underwriter to its lenders and their providers of appraisals will assist in even less property/valuation fraud and also result in better overall appraisal quality.
Valuation Management Group assists our clients in true appraiser independence and quality appraisal reviews. We are proud to feel we have played a part in the decline of both property valuation fraud and appraisal fraud.”
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We take the process from ordinary to extraordinary.