Chicago Swans

Appraisal fraud is a component of many mortgage fraud schemes. This type of fraud is one of the more sophisticated techniques being used to commit mortgage fraud. As one of the fastest growing financial crimes in U.S. history, counter measurements to mortgage fraud are required. One of these measurements involves targeting the appraisers and verifying the appraisal is accurate. Fraudulent appraisals are leading to lenders and buyers suffering billions in losses in the U.S. The expansion of the real estate market in recent years, combined with easier access to credit has resulted in additional attention needing to occur to help mitigate risk from appraisals. How Appraisal Fraud Works: There are a variety of ways that an appraisal can be fraudulent. This type of scam can occur from a variety of people participating in the fraudulent activity. For example, unscrupulous appraisers can artificially inflate the value of a prop quick house sale erty so they, along with mortgage brokers, property flippers, real estate agents and attorneys can profit from the higher appraisal. This fraud can also be found in markets where appraisers are pressured to inflate property value estimates. Importance of Due Diligence: There are several steps that can help mitigate the risk of appraisal fraud. It begins with working with legitimate lenders and buyers. These lenders and buyers must verify the mortgage originators, real estate professionals and appraisers involved in the real estate transaction. On the surface, this can seem to be a difficult task, but there are industry tools that exist to help with due diligence focused around preventing this type of fraud. To mitigate the risk caused from a fraudulent appraisal, use the following steps. 1. Appraiser License Verification: The first step a lender should take is to perform a check on those conducting the appraisal.