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Mortgage Fraud: Customized Time Adjustments To Fit Every Mortgage [part 4 of a series]

Yesterday (and nearly every day) our appraisal firm received a fax from a mortgage broker with a checklist. This checklist included all aspects of the loan package that the bank felt needed to be corrected by the mortgage broker. There was only one item pertaining to the appraisal and it was the cryptic:

Appraiser is to remove time adjustments

It never ceases to amaze me how cavalier this type of request is. The underwriter generally has no concept of what they are requesting. Essentially they are asking us to misrepresent the market so that the mortgage can meet their own portfolio criteria by reducing the perceived risk associated with the collateral. Isn’t this fraud?

The sad thing is that many appraisers, in order to keep their relationship going, will simply comply. We see this frequently when we do appraisal reviews. The same appraiser will tell Bank A that the market is flat while Bank B gets a report on another property in the area that the market is rising. The adjustments are made up under other amenities so the value is the same and everyone is happy. Isn’t this fraud?

A few years ago, a local lender issued a policy forbiding time adjustments. I sent them a letter explaining that this was unethical and that this was an underwriting policy, not an appraisal matter and we were sorry but we would be forced to resign from their appraisal panel. Since we were their primary and most trusted appraiser, they exempted only us from the policy. Of course, other members on the appraiser panel complied so they could continue to receive work.

Just imagine if all appraisers withstood this systematic pressure? Of course its important to remember that it is unfair, unethical and probably illegal that we are put in this position in the first place.