HUD Fraud Alert: Appraiser Identity Theft

 Excerpt: Most of the schemes happened when an FHA roster appraiser provided his or her personal identification number (PIN) for the desktop appraisal software to a colleague or supervisor. Providing the PIN was often rationalized because

* It was needed to keep the process timely,
* A fast turnaround was requested by the lender, or
* It was a contingency for when the roster appraiser was away or unavailable.
While these actions may seem innocent enough, they raise severe risks for misuse because the appraiser can never be sure the PIN will only be used with his or her knowledge and for legitimate purposes. Over the last couple of years, OIG has received more than a dozen reports of identity theft by colleagues or supervisors. Following are some case examples of the various schemes.
The identity theft examples were in IL, CA and WA
Click here to read the 2-page Fraud Bulletin:

My comment: Read the bulletin for more info. There was a lot of this reported when trainees were used in the last boom. All the appraisers were sentenced to 3-5 years in prison.

How much value does a huge backyard shop add?
Another good post from Ryan Lundquist!!

The topics were:
  1. The market.
  2. Find something similar.
  3. Cost.
  4. Make something up.
What do you think? read the full blog post plus the comments and add your own comment.
My comment: I recently appraised a 1,300 sq.ft., 2 bedroom-1 bath house built around 1915 with a 3,000 sq.ft. commercial grade shop in the rear in commercial/residential zoning a few blocks from my office. The lot size was 5,000 sq.ft. Of course, it was for a tenant buyout so I did a lot of research and kept obsessing over the value. It was also next to a new fire station under construction. The other nearby uses were older homes and a newer infill subdivision. He did buy the home, after I explained all the issues, including obtaining financing. He wanted to do live/work. Fortunately, it was not for a lender ;> I used the method of: must be worth more than X and less than Y based on the data I had. No similar properties exist, of course ;> The highest and best use was residential, which sells for much more than commercial in my market. Our median home price is about $750,000 for a small 2 bedroom/1 bath built prior to 1930, 1 car garage, 1,000 sq.ft.
Which of the following activities do you spend the majority of your time? 
My comment: I guess they work very close to home. Driving is a big time waster for many appraisers. Or, maybe writing up has way overtaken driving time if you work for AMCs. Marketing definitely way down on the list of activities. No planning for the inevitable downturn?

Current poll you can take: “Have you ever directly supervised a trainee? I had two trainees in the mid-1980s. One got her CR license when licensing started but quit when the business went bad in the early 1990s. The other was laid off due to lack of business before 1990. I went out with them on all the inspections for the first few years. I would never have another residential trainee due to the volatility of lender appraising.


Residential Cost Approach: complying with USPAP when lenders require the Cost Approach – Part 1

By Denis DeSaix, MAI, SRA

Excerpt: Summary of important issues
* The Cost Approach is being required by more and more clients; even in cases where it isn’t necessary for credible assignment results
* The USPAP requires appraisers to complete each analysis in a competent manner
* The Cost Approach, even in cases where not necessary and not given any consideration in the final value reconciliation, can be completed and reported without creating a “misleading” report (See USPAP FAQ #290)
* The reconciliation is the section where the appraiser should communicate to the client his/her evaluation and ultimately the consideration given to the Cost Approach in concluding the final opinion of value
* The quality of data (absolute and relative to the other approaches) should be discussed in the reconciliation; the quality of data determines how much consideration the Cost Approach should be given.
Lots of practical advice, depreciation, data sources, using “appraiser files”, etc. Plus, case studies, such as an old home with few/if any land sales.
In the March 2015 issue of the paid Appraisal Today, available to paid subscribers.  
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Appraiserville by Jonathan Miller
Some interesting comments about:
– How America Lost Faith in Expertise – it’s not just appraisers
– More on Appraisal Institute issues
– FNC and AI database agreement “back in the day”.
– Yesterday’s Housing Wire webinar “What is going to happen to appraisers in 2017?”. Miller said it would be about the alleged “shortage”, which is what I thought also. But, I listened to it and the overall conclusion was that there is no appraiser shortage. Some very interesting graphs from Zach Dawson of Fannie Mae showing no shortage, using their data from 2012 to current – about 40,000 appraisers. Plus an interesting analysis by Matt Simmons, appraiser panelist, using ASC data plus MBA loan origination data since licensing started. The same data I include in each email newsletter. Brian Coester did not have much to say ;> I usually just sorta listen to webinars while I am doing something else, but this one was very good and only one hour. No time for lots of the questions so they plan on doing another one. Sorry, I don’t have copies of the data graphs. Just my scribbled notes ;>
Scroll down the page to Appraiserville and check out other interesting tidbits, such as a house Steve Miller did not buy.
HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to
Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to or send an email to . Or call 800-839-0227, MTW 8AM to noon, Pacific time.
Mortgage applications increased 5.8 percent from one week earlier
WASHINGTON, D.C. (March 1, 2017) – Mortgage applications increased 5.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 24, 2017. This week’s results included an adjustment for the Presidents’ Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week to its highest level since December 2016. The seasonally adjusted Purchase Index increased 7 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 5 percent lower than the same week one year ago, which did not include the Presidents’ Day holiday.

The refinance share of mortgage activity decreased to 45.1 percent of total applications, its lowest level since November 2008, from 46.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.3 percent of total applications.

The FHA share of total applications increased to 12.3 percent from 11.6 percent the week prior. The VA share of total applications decreased to 11.7 percent from 12.1 percent the week prior. The USDA share of total applications remained unchanged at 0.9 percent from the week prior. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.30 percent from 4.36 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to 4.23 percent from 4.29 percent, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.07 percent from 4.14 percent, with points increasing to 0.37 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.51 percent from 3.56 percent, with points remaining unchanged at 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.35 percent from 3.31 percent, with points decreasing to 0.29 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

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