Archive for the ‘Valuation Fraud’ Category
U.S. Home Prices Show Three-Month Gain
U.S. home prices rose by 1.6% from June to July, according to The Standard & Poor’s Case-Shiller Home Price Index, which tracks the value of residential real estate in 20 metropolitan regions across the United States. Prices increased in 18 out of 20 of the cities tracked by the Index, one more than in June. This is the third straight monthly increase, indicating a sign of stabilization in the real estate market.
Many believe that the $8,000 first-time home-buyer tax credit that was part of February’s stimulus package has contributed to these gains. Currently, the tax credit is scheduled to expire on November 30, 2009. If it is not renewed, market prices will likely decrease.
Experts, however, urge caution when praising the three-month gain. Some analysts are concerned that there could be more foreclosures on the horizon and fewer home purchases, given the uncertainty of the reauthorization of the first-time home-buyer tax credit and the reported decrease in the Conference Board’s consumer confidence index, which decreased to 53.1 in September from the 54.5 reading in August. And, home prices are still 13.3% lower than this time last year.
As we discussed earlier this year, real estate appraisal fraud is more of a threat in times of economic uncertainty so it is important for potential home buyers, owners, CPAs, and attorneys, faced with the challenge of accurately appraising real estate assets, to find appraisers who have experience in their specific regions.
By: Present Value
Potential for Increased Valuation Fraud in Down Economy
In this time of economic hardship, many people are looking to or are being forced to liquidate their assets. The potential for scams regarding asset valuation will only increase, as will the number of individuals who fall victim to these schemes. In addition to individuals being taken advantage of, other larger-scale problems can arise from valuation fraud. Schemes that involve artificially inflated real estate appraisals drive up property tax assessments, and foreclosures resulting from fraud lower surrounding home prices. To prevent being taken advantage of by less-than-reputable appraisers, it is important to find an appraiser who will conduct a fair and accurate valuation.
The FBI recognizes that valuation fraud, specifically with regard to real estate, is a growing problem. During Fiscal Year (FY) 2008, mortgage fraud Suspicious Activity Reports (SARs) increased more than 36% to 63,173. The total dollar loss attributed to mortgage fraud is unknown. However, 7% of SARs filed during FY 2008 indicated a specific dollar loss, which totaled more than $1.5 billion. Only 7% of 2008 SARs reported dollar loss because of the time lag between identifying a suspicious loan and liquidating the property through foreclosure and then calculating the loss amount.
Currently, most of the mortgage industry is not required to participate in any mandatory fraud reporting, and there is presently no central repository to collect all mortgage fraud complaints. However, SARs from financial institutions have indicated a significant increase in mortgage fraud reporting.
Increased monitoring and enforcement would be helpful in preventing mortgage fraud because many mortgage fraud schemes include an appraisal component. A joint task force between the FBI and the Department of Justice – the Mortgage Fraud Working Group – has been created to investigate these issues, but there has been little agreement on exactly how to best fight this type of fraud.
To help combat valuation fraud, it is important for individuals, including real estate owners, CPAs, and attorneys, who are faced with the challenge of accurately appraising real estate assets to find appraisers who have experience in their specific regions.
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