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Appraiser News: Fannie and Freddie Delisted, “Flopping,” Fraud & BPOs

June 21st, 2010 by Bill Collins Leave a reply » Announces Launch announced Monday that they are officially accepting new listings from Business Appraisers and valuation experts for their new online directory,  “While there is a vibrant community of business appraisers and valuation experts in the U.S., we found that there was no comprehensive directory by which new clients could find them quickly and easily” said Bill Collins, one of the developers of the site.  

The site serves a number of purposes for both business appraisers and their customers.  For the business appraisers, it provides a professional and easy to use venue to connect with new clients, and create a comprehensive web presence complete with full contact information and even a place to publish articles and share them.  For the prospective client, it provides valuable education tools to help acquaint them with the business valuation process, teaches them what to expect, and finally, helps them to find the right business appraiser for their needs.

Any business appraiser interested in learning more can visit to find out more information.  Special introductory pricing is available until July 31, 2010

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“Flopping,” Fraud & BPOs

On June 10th, published a hard-hitting report about “flopping” (which they described as a “…scheme” in which “…investors or home buyers hire brokers to assess a home for less than its market value and convince banks to accept a sale at that level. The buyer conceals from the lender that he has lined up a higher offer and then quickly resells the property for a profit…”. 

Bloomberg quoted Ann Fulmer, vice president of Interthinx (a California company that sells mortgage fraud detection software) as saying that: “Investors often use real estate broker opinions, which may rely on drive-by inspections instead of full appraisals, to persuade lenders to sell at a low price”.  Ms. Fulmer illustrated her point by suggesting an Internet search for “How to influence a broker price opinion”.  The article suggested that this search yielded 74,800 results.  When we made this search on Google, it yielded 54,600 results; however, when we made the search “How to influence a BPO” it yielded 188,000 results!

The article noted that the special inspector general for the Troubled Asset Relief Program (TARP), Neil Barofsky, reported to Congress that by allowing BPOs, taxpayers were exposed to $49 billion of government bailouts for housing.  Bloomberg quoted Mr. Barofsky as saying that: “As constituted now, the program permits home valuation, the key vulnerability point for a flopping scheme, without a true appraisal…No program of this type and scale can be considered well designed without robust protection of taxpayer funds against the predation of criminals, particularly given the inconsistent treatment of home valuation.”

The article describes a Connecticut case in which two real estate agents pled guilty in a fraudulent scheme and the entire article can be viewed by clicking on the following link:

Banks Face Short-Sale Fraud as Home “Flopping” Spreads

Once again, we at Appraiser Help want to note our support for the positions taken by the four appraisal organizations which authored the March 8th and April 20th letters that we have previously discussed opposing the use of both BPOs and BOVs (Broker Opinions of Value of Commercial Real Estate).  Read the April 20th letter here:

Letter to State Appraiser Board Chairs

We also again request that Andrew Cuomo take one final action as Attorney General, before his coronation as Governor of New York, to read our letter dating back to August 4, 2009 (go to to see) and use the powers at his disposal to help bring an end to these unseemly financial practices.

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Subprime Lending and the “Working Poor:” Many Financial Institutions are Profiting Nicely with “Payday Loans” and Similar Products

The Huffington Post “Named Names” and provided details on the growth of this industry, now estimated at $40 billion per year, in an article on June 16th.  A link to this article can be found here: Naming Names: Every Bank and Business That Is a Subprime Lender

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Sketch & Photo Addenda, Subject/Comp Arrows, FHLMC/FNMA Forms & Addenda, Books, Printer & Copier Cartridges, Report Covers & Spirals….everything you need for a professional look! 

Debt Settlement Firms Putting Debtors in Bigger Holes, Including Some Appraisers

Lots of attention has been given to some of the unsavory practices of many debt settlement firms and action is being taken by a number of consumer protection agencies and state attorneys-general.  An article in the New York Times on June 18th discussed the case of Linda Robertson, a former appraiser licensed in Arizona, and how the collapse of her real estate appraisal practice led to a bankruptcy filing, with the “assistance” of a debt settlement firm.  A link to this article can be found here: Peddling Relief, Firms Put Debtors in Deeper Hole


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Continuing Concerns Regarding the Commercial Real Estate Market

In a commentary on Moody’s on June 15th, Ed Friedman wrote about how the difficulties obtaining financing would delay recovery of the commercial real estate market.  In the article he noted that:

-“Low prices, high vacancy rates, and rising delinquencies will curb lenders’ appetite for commercial real estate.

-Major sources of CRE investment face problems of their own, further limiting funding.

-A revival in commercial mortgage-backed securities is on hold until Washington reforms financial regulation.

Commercial real estate faces continued difficulty obtaining financing despite the U.S. economic recovery. On the demand side, borrowers are less able to show economic fundamentals that would be acceptable to lenders, and this situation will persist for a long time. On the supply side, sources of funding that were abundant over the past decade are now limited, and this too will not reverse in the near term. As a result, commercial real estate will lag the rest of the economy longer than it otherwise would have.

A tidal wave of corporate bankruptcies, takeovers, and simple corporate downsizings has led to a huge decline in office use. This has been particularly apparent in the financial industry, where two major investment banks vanished forever and two of the largest deposit-taking institutions were taken over, with many branch offices closed around the country. Additionally, mortgage lending companies large and small went out of business or were taken over. The financial industry was not alone, moreover, with consolidation occurring among airlines, business IT services, and other industries.”

Mr. Friedman noted that because of this, the declines in the commercial real estate market have been greater than those in the residential real estate market.  This article can be viewed by clicking on the following link:  Finance Will Delay Commercial Real Estate Recovery

Commercial Real Estate Brokerage Firms Struggling in Wake of Declines in Commercial Real Estate Market

On June 15th, the New York Times discussed the difficulties and challenges facing commercial real estate brokerage firms in what they called a “Post-Boom World”. In particular, they noted the problems facing Cushman and Wakefield, the world’s third largest commercial real estate brokerage.  A link to this article is found here: Commercial Firms Fight Back in a Post-Boom World

Rates & Dates

Freddie Mac reported that rates for 30-year fixed-rate mortgages were at 4.75% for the week ending June 17th, essentially unchanged from 4.72% during the previous week.

The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending June 11th reported that the average rate for 30-year fixed-rate mortgages was also basically unchanged at 4.81% after the previous week’s rate of 4.82% during the prior week.

The MBA, in their Mortgage Finance Commentary for June 2010, noted the fragility of the housing market saying that:

“Early data from MBA’s Weekly Application Survey continue to suggest a fairly sharp pullback in home sales following the expiration of the homebuyer tax credit.  We expect that sales will revive, putting the housing market back on track for a long, slow uphill climb to a more normal pace of activity.  In the meantime, the steady additions to supply from foreclosed properties, coupled with the minimal number of new units on the market, and the occasional bursts of listings from current owners, will be sufficient to keep downward pressure on home prices for the near term. Given a gloomier macroeconomic outlook, we expect that national home prices will now bottom towards the end of next year before seeing some stabilization in 2012.  We also expect greater differentiation in markets, with the strongest markets showing increases in prices this year.

On a seasonally adjusted basis, purchase applications declined by 18.1 percent over the month.  Refinance applications increased by 34.8 percent relative to the prior month.

We predict that mortgage originations will fall to $1.4 trillion in 2010 from an estimated $2.1 trillion in 2009.  Purchase originations will fall slightly to $725 billion, as home prices continue to fall and the effect from the homebuyer tax credits wane.  Refinance originations will fall to $717 billion in 2010 from $1.4 trillion in 2009, but we continue to mark up our refinance origination forecast given the sharp drop in mortgage rates.”

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

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

Fannie Mae & Freddie Mac Delisted From the New York Stock Exchange

The Federal Housing Finance Agency (FHFA), conservator for Fannie Mae and Freddie Mac, announced on June 16th that shares of the two companies would be delisted from the New York Stock Exchange.   This move was not considered to be a surprise since shares of Fannie have been below $1 for 30 trading days and the NYSE requires companies to take action to boost their shares or delist. discussed this matter on June 16th and a link to that report is found here:

Fannie, Freddie Stock To Be Delisted from NYSE

Ask Angie

We want to congratulate our two most recent winners: Virginia Buchanan-Furr, a Certified Residential Appraiser with Ginny Furr Appraisal Service in Trinity Center, California, and Donna K. Jones, a Certified Residential Appraiser with Donna Jones Appraisals, Hickory Creek, Texas.

Today’s questions:

Question 1) Who said:

“A well-functioning market economy can make a huge contribution to the growth of incomes and living standards. In the absence of sensible regulations, the market can also yield a complete disaster. What we have to work for now is to seek an appropriate combination of activities of the market and of the state.”  

1. Paul Krugman, New York Time columnist

2. Adam Smith

3. Amartya Sen, Nobel laureate in economics

4. Timothy Geitner, Treasury Secretary

5. None of the above

Question 2) Who said:

“I am, or I was, an expert in kissing on stage and on screen. How did I prepare for this? Well most of my preparation took place in my suburban high school, or rather behind my suburban high school, in New Jersey.”  

Meryl Streep

Dick Cheney

Liz Cheney

Lindsay Lohan


The first person to respond with both correct answers wins a choice of either:

One Free Trade Show Pass or $199 off a Full Conference Pass to Valuation 2010 or

A Free Copy of the Directory of Appraisal Management Companies for FHA Appraisers

Angie’s Hall of Fame: Those who have been crowned winners more than once during the past two years and who have been retired from competition for the rest of 2010:

Suzanne Fahien

Pat Reass

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!

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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