Rigdon said some mortgage companies overlook certain things. Many victims Equally troubling is the number of victims the schemes have. When appraisers increase the value of houses fraudulently, it creates discrepancies for tax assessors, who set tax assessment levels based on their analysis of property values. If the house is later foreclosed, that buyer's credit is ruined. The mortgage company that made the loan in the scheme is forced to absorb a loss and pick up a foreclosure.
Consumers pay higher interest rates as banks and lenders try to offset their losses.
The residents of a neighborhood are forced to deal with foreclosed homes that devalue the overall property values for the neighborhood and often become an eyesore. Prosecution is best left to the federal government, like in the Pendergraft case, Rigdon said. His department has to prioritize cases of fraudulent appraisals and has two investigators with limited resources. The department, if it suspects fraud, can make its case and revoke licenses from lenders and brokers. The feds really have the power though, because they can cross state and county lines.