An insidious real estate fraud known as "flipping" is victimizing both home buyers and lenders in Maryland. In the spring of 2000, HUD and the U.S. Treasury held public forums on predatory lending. By the summer of 2000 the mortgage fraud problem was so large in so many major cities, that HUD put a moratorium on lenders from foreclosing on homes in the "hot zones"; from Baltimore to Los Angeles the predatory lending in urban locations was huge to stop foreclosures. Legislation was being drafted.
Lenders are keenly aware that this is an issue. Appraisers are in the middle of the issue because lenders need the appraiser to "help make the deals work." However it plays out, the appraiser is a part of the problem.
The Predatory lenders have been stalking neighborhoods throughout the country virtually unchecked for the past several years, consumer advocates and legal experts say. Within the past 1 1/2 years however, the practice has mushroomed into a crisis as largely unregulated mortgage brokers cash in on the confusion and mounds of paperwork surrounding a home loan.
"The predatory lenders who are basically seducing people and ripping them off," says Rachel Robinson, an attorney with the Ohio State Legal Services Association in Columbus. Ned Wilson says he never realized he was committing to paying out $753 a month. Only the dollar amounts change from city to city. In Los Angeles, it might be a $200,000 property that ends up with $250,000 in loans. All of these require the help and assistance of an appraiser.
With regard to the predatory lending and mortgage fraud issue, appraisers have been playing the role of co-conspirator, but there is little record of appraisers demanding bribes or taking kickbacks. The Mortgage Bankers of America (MBA) issued a press release on the subprime topic .
In 1999 the Ohio Organized Crime Commission began investigating these mortgage issues as a form of Organized Crime which they are exploiting people who are in need of stopping foreclosures of their properties. Florida has its own Communications Fraud Act, which has already been used against an appraiser. In 1997, because of dramatic increases in predatory lending and mortgage fraud between 1993 and 1996, funding for the Housing Fraud Initiative began with investigations in 50 cities. Arrests began in 1998 and the first appraisers were convicted in 1999. This joint funding effort allows cooperation between the U.S. Department of Justice (USDOJ) , HUD Inspector General (IG), FBI, and Postal Inspectors.
Neil
