Mortgage Fraud Awareness
How to Detect Fraud in the Appraisal Process

In today's market, we should all be taking advantage of every opportunity to minimize the risk of mortgage and real estate fraud and I feel it is the key to prevention. As an industry leader, I feel strongly about the actions we are taking and am dedicated to the prevention of fraud.

In order to help my fellow Active Rainer , I have provided a list of red flags that may indicate fraud:

• Appraisal must be in the name of the Broker/Lender. An appraisal ordered by the borrower or other party to the transaction should never be used to establish value
• Tenant is shown to be the occupant on an owner-occupied refinance transaction
• Information is left blank (borrower, client, occupant, etc.)
• Address and legal description are inconsistent with file information
• Photographs do not match the property description
• Photographs or comparable sales reflect properties that are superior to subject property
• "For Rent" or "For Sale" signs appear in photographs on owner-occupied refinance transactions
• Photos reveal items not disclosed in appraisal (commercial property next door, railroad tracks, etc.)
• Comparables do not bracket the subject property relative to size of dwelling and size of lot
• Comparables are more than one mile from subject property (except rural properties)
• Comparables are all adjusted in the same direction
• Overall adjustments are in excess of 25%
• Map reflects that the distance between subject property and comparables sales is greater than disclosed in the description of the comparable sales Map reflects that major barriers are crossed to obtain comparable sales (i.e., divided highway, water way, railroad tracks, etc.)

If you have any other suggestions, feel free to add your comments so I can add them to the list.

Your Friend in the Business,

Ricardo Cobos