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Archive for January, 2010

Fresh Investigations of Mortgage Fraud

January 29th, 2010


FHA Launches Investigation of 15 Mortgage Companies With High Rates of Failed Loans

In a press release dated January 12th, HUD Inspector General Kenneth M. Donohue and FHA Commissioner David H. Stevens announced “…an initiative focusing on mortgage companies with significant claim rates against the Federal Housing Administration mortgage insurance program.” The press release quoted Inspector General Donohue as saying: “The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved. We aren’t making any accusations at this time, we have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud. We are members of the President’s Financial Fraud Enforcement Task Force and today’s activities reflect our commitment to seeking information on red flags that may arise from data analysis.”

The press release indicated that the “…initiative was prompted, in part, by the FHA Commissioner, David Stevens, who was alarmed by the incidence of claims against the FHA insurance fund by a number of poor performing companies and reached out to the HUD OIG for assistance.”

A listing of the fifteen mortgage companies and the entire press release can be viewed by clicking on the following link: HUD Inspector General Probes Mortgage Companies With Significant Claim Rates

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FBI Investigating 2,800 Mortgage Fraud Cases, Up From 534 in 2004

In testimony before the Financial Crisis Inquiry Commission January 14th, Attorney General Eric Holder said that the FBI was investigating more than 2,800 mortgage fraud cases, of which 1,842 involved more than $1 million in losses with federal charges related to mortgage fraud pending against 826 defendants.  This was reported in the New York Times on January 15th and a link to this article is as follows: A Call for More Regulation at Fiscal Crisis Inquiry

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Gloomy Summary of Status of the Housing Market summarized a number of concerns on January 7th in the following article: Still Hunting for a Bottom in Housing

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The Dilemma of an Underwater Mortgage

“Underwater” homeowners are increasingly considering walking away from mortgages in situations where they owe significantly more than their property is worth.  An article in the New York Times on January 7th discussed this:

“Such voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?

Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials.”

A link to this article in its entirety follows: Walk Away From Your Mortgage!

On January 17th, the Huffington Post added to this discussion of the morality of walking away from said mortgages and a link to this follows: Demanding that Homeowners Make Good on Underwater Mortgages Is the Height of Moral Hypocrisy

The overall slow pace of mortgage modifications was discussed a week earlier in the Huffington Post and a link to this follows: Nine Months Later, Obama Plan to Help 1.5 Million Struggling Homeowners Yet to Launch

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Delinquency Rate Rises for Commercial Mortgages

On January 8th, the Wall Street Journal reported that more than 6% of commercial loan borrowers had fallen behind in their payments, according to data provider Trepp LLC; this rate is reported to be the highest delinquency rate since the advent of commercial-mortgage-backed securities and is a big concern with $40 billion of commercial-mortgage-backed bonds coming due this year.  In the same article, the analysts Jefferies and Co. reported that delinquency rates on loans for hotels, shopping malls and other commercial properties could rise to between 9% and 14%.  The article also cited research by Barclays Capital which forecasts less than $20 billion of new commercial-mortgage-backed securities this year, compared with over $230 billion issued in 2007.

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Blowing Bubbles: How Does the Now-Popped Residential Real Estate Bubble Relate to the Commercial Real Estate Market?

An interesting article in the New York Times on January 13th compared the similarities and differences between the residential and commercial real estate markets. The article can be read at the following link: Was There a Commercial Real Estate Bubble?

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Rates & Dates

The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending January 8th reported that the average rate for 30-year fixed-rate mortgages was at 5.13%.  The MBA also reported a significant jump in refinancing for the week ending January 8th. Freddie Mac reported that the average rate for 30-year fixed mortgages was 5.06% for the week ending January 14th, down from the previous week’s rate of 5.09%.

Additional information from the Mortgage Bankers Association can be found by going to their site at: MBAA – Research and Forecasts

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey

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Graphical Map of U.S. Credit Conditions

Overall credit conditions throughout the United States are graphically illustrated by the Federal Reserve Bank of New York on a map found on their site, a link to which is here: US Credit Conditions

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Appraisal Practice Tips

As always: Continue to work on building your private appraisal practice not only as a safety net for periods when mortgage appraisal work is slow but as a long term goal for a more healthy practice.  There is always lots of non-lender work performing appraisals for divorce, bankruptcy, other legal, estate, trust, etc.

We are now approaching the beginning of the period where appraisals will be needed for tax grievance and appeal in many parts of the country.  In many assessing jurisdictions, it is anticipated that the number of tax grievances and appeals will be booming due to the large number of over-assessed properties along with the sensitivity of property owners to tax payments which may be grievously incorrect.  Reports are beginning to come in from numerous parts of the country documenting the increases in the number of tax appeals and grievances.  An example of this is an almost doubling of grievances filed this year in Deschutes County, Oregon in relation to last year, as reported on January 11th in the daily newsletter, The Bend, which services Central Oregon: Deschutes Property Taxes Get Twice the Appeals

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End BPOs Now!

We would like to welcome Jeff Bradford of Bradford Technolgies to the effort to End BPOs Now!  In the January 11th issue of Appraisal Buzz he stated that “The appraisal industry and residential appraisers in particular are under siege!… Today, we are issuing a Declaration of War against BPOs.”

We would like to welcome Mr. Bradford to the battle!

Please go to if you would like to read what we have previously had to say on this important matter.

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TAVMA Publishes Standards of Practices for AMCs

On January 6th, TAVMA (Title Appraisal Vendor Management Association) published “The Standards of Good Practice for AMCs”. A link to this document follows: The Standards of Good Practice for AMCs (link opens a .PDF document)

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Angie’s Question of the Day

First, we want to congratulate the winner of the last contest:  Tom Armstrong, a Certified General Appraiser and MAI, of Armstrong Appraisal & Consulting in Holderness, New Hampshire.  Tom is also the owner of Narrative1 Appraisal System commercial appraisal software. Not only is Tom an early riser who had the first correct answer (Albert Einstein) but he is also an advertiser with Appraiser News and is kindly turning back his prize winnings. Our winner (who had answered correctly at 8:25 A.M., four minutes after Tom), therefore, is Peter N. Thompson, a Certified General Appraiser licensed in both Maryland and Pennsylvania.

Today is a two part question: First, who said

“Softness triumphs over hardness, feebleness over strength.

What is malleable is always superior to that which is immovable.

This is the principle of controlling things by going along with them,

of mastery through adaptation.”

The choices are:

1. Socrates

2. Confucius

3. Lao-Tzu

4. The Dalai Lama

5. None of the above


“We’re enjoying sluggish times, and not enjoying them very much.”

The choices are:

1. Calvin Coolidge

2. Jimmy Carter

3. George W. Bush

4. George H. W. Bush

5. None of the above

The winner of this week’s contest receives a free copy of the Directory of Appraisal Management Companies for FHA Appraisers.

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: with your thoughts!

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at


Bill Collins, Appraiser Help Inc.

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