In one case, the license board has complaints on 30 appraisers who hit the sales prices on flips, all within a three-block radius. There have been no indictments yet but when they come they will be against multiple parties to the transactions, including the notary, escrow company, loan agents, loan processors, real estate agents and appraisers. While there are many types of real estate fraud that do not require the participation of an appraiser, mortgage fraud always involves an inflated appraisal. It can be performed by a willing appraiser, altered by someone or forged. Each of these scenarios is played out daily.
Scams can involve reverse mortgages, home improvement and sub prime loans, just to name a few.
The perpetrator often targets neighborhoods where there are seniors, minorities and the poor. Appraisers are pressured to inflate values in these types of cases because the perps are jamming 15-20 points into the loan. In the next cycle we will see more appraisers arrested than in the whole history of the profession. I have been surprised that things have moved as slowly as they have but investigations at this level apparently take quite a long time. In my opinion, the fallout from this rampant mortgage fraud will be far more punitive for appraisers.