Fraudulent Inflated Appraisals and Foreclosure Causes

Appraisal scams involving inflated appraisals from property appraisers and kickbacks to buyers, investors, mortgage brokers, appraisers and title companies are all forms of mortgage fraud.

Inflated Appraisals and Fraud

Property appraisers complained that lenders, mortgage brokers and real estate brokers were putting pressure on them during the real estate boom to redo appraisals so that properties would appraise at higher values. Some appraisers felt that if they did not comply, they would not be able to stay in business.  In fact, during the boom, it was not uncommon to get a second appraisal which supported the inflated selling price. While some lenders were guilty of these practices, many more were victims of unscrupulous mortgage brokers, real estate brokers and others whose greed got the best of them.

Government Investigation on Inflated Appraisals

The government has been investigating and prosecuting mortgage brokers, real estate brokers, title companies and property appraisers recently who have taken part in appraisal scams and predatory loan practices involving home mortgages. Kickbacks are also a part of this investigation as well. As result, tighter and more stringent laws have been enacted to protect consumers against mortgage fraud and predatory loan practices.

Homeowner and Lender Losses Resulting in Foreclosures

While no one knows for sure how large a role these fraudulent mortgage practices played in the mortgage meltdown, millions of homeowners were affected because they now owned homes that were not worth the appraised values. Most of these homeowners were unaware that they were even victims of inflated appraisal mortgage fraud. When home prices started rapidly declining the past couple years, many of these homeowners lost their homes to foreclosure or were forced to sell them in short sale transactions losing their entire investment. Lenders lost millions of dollars in bad loans and had to be bailed out by the government. Everyone has been affected in one way or another by the declining housing market and the mortgage crisis.     

Can a Foreclosure Lawyer Help?

Mortgage fraud is a criminal offense and has severe penalties with 1 to 10 years in prison plus substantial fines. If you believe you have been a victim of mortgage lending fraud, you should consult with an attorney to find out your legal rights and remedies.