FWIW, Not Related

There has been quite a bit more traffic on this site recently. That has prompted a number of questions. Interestingly enough, the most common question does not concern anything remotely related to appraisal or mortgage fraud. Here's my answer:

For what it's worth, the person in the picture to the left, Chris Gregoire, is not related to me. Her kin are in the northwest. The "real" Gregoire clan (my folks, grandparents, uncles and aunts) is from the northeast. We are all better looking, and my parents had the good sense to get me out of the cold weather and move from New Hampshire to Florida in 1957.

Here is my family

Left to right: Kemrie, Cale, Jacques. Frank is the graybeard in the center.

MyTechnologyLawyer Radio Show

On Thursday, February 26, 2009, Frank Gregoire was a guest on the My.TechnologyLawyer.Com Radio Show. Host Scott Draughon teamed up with State Certified Appraiser Marco Ruiz for his weekly one hour show on appraisal topics.

The main topic of discussion was the need to regulate Appraisal Management Companies (AMCs). If you missed the show, use this LINK to either download the show or listen to the archive.

Appraiser Facebook Page

There are plenty of facebook pages for appraisers. I'm a member or fan of at least half a dozen. However, today, the Grandaddy of them all, the National Association of REALTORS® created a page for REALTOR® - Appraisers.

Justin Morton says: (at least I think he wrote this)

NAR has set up a Facebook page for appraisers. This will allow appraisers to network with each-other and hopefully help the profession stay cohesive. You can access the Facebook page, by clicking the link below:


Appraiser Facebook Page


For those who are not members of Facebook, I would encourage you to sign up. It is a great, fun way to stay in touch with friends, relatives and co-workers. Also, for those appraisers who are clamoring for a
union, this is a great place to start. I'm reminded of a song from the musical Newsies, "We're a union, just by saying so."

Some of the NAR Appraisal Committee Leadership and Staff are already participating. In addition to visiting the NAR Appraisal Blog, Appraisal Insight, it's another way to keep informed.

Thanks to Justin Morton and Carol Kairis for their efforts.

Frank - On the Radio (Live Stream)

(UPDATE ) That was FUN!!

On Thursday, February 26, 2009, Frank Gregoire will be a guest on My.TechnologyLawyer.Com Radio Show. Host Scott Draughon teams up with State Certified Appraiser Marco Ruiz for a weekly one hour show on appraisal topics at 4:00 P.M. each Thursday.

We plan to discuss efforts to regulate Appraisal Management Companies and the Home Valuation Code of Conduct.

The show is streamed live. Just visit MyTechnologyLawyer.com and follow the links to listen LIVE. If you are not able to get in front of your computer at 4:00 P.M on Thursdays, follow the same LINK and download or listen to the archive when time permits.

.....at the very least, you'll learn how to pronounce my name!

UTAH-Legislators Crack Down on Appraisal Management Companies

Florida is not the only state interested in the regulation of Appraisal Management Companies (AMCs). The NPR station in Salt Lake City:

Legislators Crack Down on Appraisal
Management Companies

(KCPW News) Utah legislators are cracking down on appraisal management companies in an effort to help the housing market. The Utah House of Representatives passed a bill yesterday that would create a Real Estate Appraiser Licensing and Certification Board. Bill Sponsor Michael Morley said some appraisers are not disclosing the market value of a home, but what the lender or mortgage broker wants the home to be valued at.

"This would simply place a new industry that has a great deal of power over the values that are being placed on real estate under the same requirements that mortgage brokers, and lending institutions, and appraisers are already subject to," Morley said.

Morley said appraisal management companies often hire inexperienced appraisers who are susceptible to influence from lenders or mortgage brokers. And Representative Jack Draxler said regulating appraisers is important to the integrity of the housing industry.

FULL STORY

BILL TEXT

VOTE TABULATION

For those of you in Utah, how about giving your State Representative a call or email to express your appreciation. Representative Morley deserves a special THANK YOU!

NAMB Files Lawsuit Over Controversial HVCC

Back in January we discussed the Home Valuation Code of Conduct (HVCC) in THIS POST. Additional information about opposition to the HVCC from Federal Bank Regulators was provided HERE.

Now, we provide this release from the National Association of Mortgage Brokers:

The Home Valuation Code of Conduct Severely Limits Market Competition

McLean, VA – The National Association of Mortgage Brokers (NAMB), with the support of Baker & Hostetler LLP, filed a lawsuit today with the United States District Court for the District of Columbia against the Federal Housing Finance Agency (FHFA) Director James B. Lockhart over the controversial Home Valuation Code of Conduct (HVCC) included in the appraisal agreements between the FHFA, Fannie Mae and Freddie Mac (GSEs), and New York Attorney General Andrew Cuomo.

“The HVCC does nothing but drive up costs for consumers and push small businesses out of the market,” said NAMB President, Marc Savitt. “The HVCC will drastically reduce the ability of mortgage brokers to provide consumers with an efficient and cost-effective means of obtaining a mortgage.”

FULL STORY

Copy of the suit - CLICK HERE (23 pages, pdf)

THANKS to the National Association of Mortgage Brokers for stepping up to the plate and taking action!

Litigation is expensive. You can make a contribution to their efforts to fight the Home Valuation Code of Conduct by visiting their website and making a CONTRIBUTION.

Bureau of Financial Investigations

Every day, it seems, there is another story about mortgage and valuation fraud somewhere in Florida or another part of the country. It's reasonable to wonder what is going on and if there is any effort to rein in the wrongdoers and bring them to justice. It's an overwhelming task, but there are several agencies in Florida stepping up to the plate. One of them is the Office of Financial Regulation and their Bureau of Financial Investigations.

Yesterday, February 17th, 2009, I had the pleasure of participating in a segment of a training program for Investigators for the Bureau of Financial Investigations, Office of of Financial Regulation. Over 60 Financial Crimes Investigators assembled for an annual three day training program. Yesterday's program consisted of an update from the Florida Attorney General's Office about their efforts to curb abuses related to mortgage lending, foreclosure rescue, equity stripping and other financial crimes along with a panel of individuals representing mortgage origination, real property appraisal and valuation, mortgage loan underwriting, real estate and mortgage closings.

It was my honor to join the panel consisting of Richard Peek, the current Vice President of the Florida Association of Mortgage Brokers, Rebecca Chase, Regional Trainer (underwriting) for MGIC, and Virginia Semon, Business Development Representative for Fidelity National Title Group. Each panelists spoke about mortgage fraud in Florida, as viewed from their particular industry's prospective.

To set the stage, our hosts Mark Mathosian, Financial Administrator for the Bureau of Financial Investigations, and Robert Rosenau, Chief, Financial Investigations, provided us with an overview of the group in the audience and their current activities. There are over 500 open investigations being worked by the investigators. About 170 of those involve mortgages or mortgage related fraud. Over 1500 consumers are directly affected by the active mortgage investigations. Last year, the investigators closed over 160 cases and collected in excess of $380,000,000 in settlements from wrongdoers.

Each of the panelists talked about their experiences with mortgage fraud; straw buyers, false verifications of employment, false statements of income, false statements concerning occupancy, payments to unrelated third parties at closing, forged W-2s, false income tax returns, requests to prepare false HUD-1s (closing statements) and countless other examples. My appraisal examples had to do with bogus comparable sales produced by builders and condo converters, along with those produced by churning. I also alerted the investigators about the practice of mortgage brokers sending mass faxes to dozens of appraisers, fishing for the "pre-comp" that fits their need for a value to close a fraudulent loan(s).

The pending impact of the Home Valuation Code of Conduct was briefly mentioned, along with the nearly universal belief that the current fraud schemes of choice seem to be Foreclosure Rescue scams and Fraudulently Negotiated Short Sales and Flips of Short Sales. Real Estate Brokers, Mortgage Brokers, Real Estate Closing Agents and Attorneys are being drawn into these schemes.

Unfortunately, the time went much too fast, and the time for our presentation ended. Most of the panel and several investigators stayed nearly one hour past the scheduled time to ask and answer questions and discuss ongoing cases. Mortgage and valuation fraud is a major problem, but there are folks interested in enforcing the law and seeing the perpetrators punished.

From left to right: Frank Gregoire, Rebecca Chase, Virginia Semon, Richard Peek, Robert Rosenau

Florida Quality Council

Please take a minute and visit the Florida Quality Council website. This group of mortgage and real estate professionals meets quarterly in the Orlando area in the interest of fulfilling their mission to be a voice for quality and awareness of fraud in the mortgage profession, promoting best practice, and providing exceptional service to its members.

Their meetings are open. The next is Friday, February 20, 2009 near the Orlando Airport. The cost is only $50.00 and that includes lunch. It would be GREAT to see you there.

You may register for the meeting online right HERE!

BusinessWeek - About the HVCC and AMCs

Appraisal Management Companies, the HMOs of the Valuation Profession, are not regulated by any state or by the Federal Government. The article below describes, in part, how the Home Valuation Code of Conduct came to be and that one of the major impacts will be the funnelling of thousands of appraisal assignments through these unregulated enterprises.

Housing Appraisals: Still Blowing Bubbles?

Third-party appraisal managers are supposed to eliminate pressure from Lenders to inflate housing values. But unscrupulous subprime players are Crowding into the market

by Chad Terhune

Home appraisers played one of the less well-known roles in pumping up home values and contributing to the current financial crisis. Retained by Lenders or brokers, they frequently colluded—explicitly or tacitly—in Overestimating the worth of houses to justify large mortgages and the Lucrative fees each member of the real estate food chain received at Closing.

Faced with investigations and lawsuits, the home-finance industry has Agreed to a government-approved code of conduct for appraisals that takes Effect on May 1. The new rules promote the use of middlemen between the Nation's 60,000 freelance appraisers and the lenders and brokers. The Middlemen, known as appraisal management companies, or AMCs, are supposed to prevent lenders and brokers from pressuring appraisers to exaggerate assessments. But among those joining the swelling ranks of this formerly niche business are some of the same subprime players that helped inflate the real estate bubble in the first place.

(FULL STORY)

Here, Chad explains what prompted the investigation of the relationships between Appraisal Management Companies and Lenders.

The new rules grew out of an investigation by New York Attorney General Andrew M. Cuomo. His probe found that one of the biggest companies in the appraisal business, First American (FAF) in Santa Ana, Calif., allowed the huge savings and loan Washington Mutual to exert pressure for higher valuations. Cuomo sued First American's eAppraiseIT unit in November 2007 for fraudulent and deceptive practices. The suit, which is pending in New York state court, spurred the drafting of the Home Valuation Code of Conduct. Mortgage finance giants Fannie Mae (FNM) and Freddie Mac (FRE), now controlled by the federal government, helped negotiate the code with others in the industry and have said they won't buy loans after May 1 that don't adhere to it. Fannie and Freddie have wide influence because they purchase a large share of all U.S. mortgages, providing fresh cash to lenders.

Right here in Florida, an Appraisal Management Company is owned and operated by an individual that surrendered his Certified Residential Appraiser credential for permanent revocation.

Larry Holzer surrendered his Florida appraisal license (page 3) in April 2007 after regulators there found he had made numerous misstatements in an appraisal report for a $250,000 home. In a letter to Florida regulators, Holzer agreed there were some "data discrepancies in the body of the report." He said he was distracted at the time by personal issues.

Now Holzer is back in business, running an AMC in Clearwater called Global Appraisal Solutions. The company promises same-day inspections and delivery of a report within 24 hours. In an e-mail, he defended his credentials: "Appraisers and former appraisers are among the more qualified people in appraisal management," he wrote. "When or if such time should come where appraisal management companies are regulated, I can assure you that Global Appraisal Solutions shall be compliant."

Joni Herndon, chairwoman of the Florida Real Estate Appraisal Board, which handled the Holzer investigation, says a revolving door is allowing dubious characters into the AMC market. Speaking generally, she says: "It is not serving the public to revoke their license for dishonest conduct and then allow them to have an appraisal management company. We need to close that loophole.".

Hopefully, bills will be introduced in the 2009 Florida Legislative session to require the regulation of Appraisal Management Companies. Lenders, borrowers and consumers need protection from folks with a record of illegal behavior

Class Action Suit Filed Against Wells Fargo and Rels Valuation

Appraisers in Florida are seeking legislation to require the registration and regulation of Appraisal Management Companies (AMCs). While the claims in the article below and the lawsuit are allegations and not proven, plenty of appraisers and property owners have had the same experience and made the same claims. These allegations are among the reasons AMCs must be regulated to protect the public.

Hagens Berman Files Class Action Against Wells Fargo and Rels Valuation

2009-02-02 18:15 ET - News Release

Homeowners claim companies duped consumers with grossly inflated charges.

Two homeowners in Phoenix recently filed a lawsuit against Wells Fargo and its appraisal subsidiary Rels Valuation, claiming the mortgage giant illegally rigged the appraisal process and referred appraisal business to its subsidiary in a scheme to boost profits at the expense of homeowners.

The lawsuit, filed under the Racketeering Influenced and Corrupt Practices Act (RICO), the Real Estate Settlement Procedures Act (RESPA) and state law, claims that Wells Fargo requires homeowners to use Rels Valuation for appraisals. In return, Rels Valuation gives Wells Fargo visibility into and control over the appraisal process.

The suit claims Rels Valuation subcontracts the work to independent appraisers, demanding large price concessions then charges homeowners more than double the actual cost of the appraisal.

FULL STORY