Discovering Fraudulent Appraisals During Foreclosure

Without a doubt one of the catalysts in many false mortgage lending schemes have been a crooked appraiser willing to give a property of any value to the estate agent, mortgage broker or lender wanted. The real estate bubble could not have been pumped up to such a high level without the involvement of many assessors who threw all the conservatism out the window and began to give ridiculous values for the properties to help secure loans.

Now, with the housing market collapses all around us, these values have to go back to valuing homes at more reasonable levels. But this leaves many homeowners out in the cold, after receiving inflated ratings just a few years ago and now find their homes were never worth that amount. With use, however, these borrowers have, especially when they fall into foreclosure?

The degree of score inflation and fraud have proved to be astronomical in too many cases already. Homeowners have discovered that their home values were inflated to 1000% of its non-price bubble. The typical mortgage insured by the Federal Housing Administration (FHA) is inflated with 30-50% in order to raise prices of property on first time home buyers and low income borrowers.

So clearly, there is a problem with a large number of reviewers, but homeowners may have trouble keeping the individual appraiser and his company liable for the inflated value. There are however a number of different requirements which may be brought against an appraiser who grossly misrepresented the actual fair market value of a home, especially if borrowers have relied on that assessment in their decision to purchase or refinance.

The most obvious requirement borrowers may be able to bring against an appraiser is fraud due to misrepresentation of the home value. While valuing a home is sometimes as much art as science, of course, using inappropriate comparable sales or make unreasonable adjustments to justify a higher value may be a clear case of fraud.

The only problem with this claim that homeowners can find is that the conditions can be difficult to meet. For example, borrowers need to show all nine elements are present for a fraud claim to be made. Unfortunately, it may be easier said than done, and homeowners want to contact a lawyer to discuss the possibility of a fraud case in depth. These nine elements are:

1. representation of an existing fact.

2. The fact is significant.

3. representation of the facts, is false.

4. the speaker knows it is false.

5. the speaker intends the listener is about knowledge.

6. the listener is unaware of the falsity.

7. listener based on the truth of the fact.

8. listener has the right to invoke it.

9. damage is sustained by the listener.

Far more promising as a claim against valuers, the state is unfair or deceptive acts and practices (UDAP) statutes. This claim is also somewhat easier to do. The reliance on the misrepresentation need not be wise, and some of the other conditions are also loosened.Homeowners should contact a lawyer or do some research on their state UDAP laws, however, to find out all the relevant information.

There are also a number of other requirements that may be made against an appraiser, either within or outside the shielding. Depending on the circumstances of the case, some of which include violations of state licensing laws, civil conspiracy, fraudulent concealment, and civil RICO claims. Again, it may be the homeowners' best interests to talk to lawyers or to research these issues carefully before making a claim.

Too many homeowners were most expensive mortgage they qualify for, and their home values were inflated, to justify large loans. Appraisers played a role in these transactions, and many of the most corrupt may be involved in acts which carries significant legal liability. Especially in cases where a lender, pushing homeowners into foreclosure, do some research on these issues and keep the appraiser responsible may be called for.