Appraisal fraud crackdown begins in NY

From Bloomberg:

New York State Subpoenas Appraiser, Broker in Probe

New York State is investigating Manhattan real estate practices, seeking information about whether brokers pressured appraisers to inflate property values as prices doubled in the last five years.

Attorney General Andrew Cuomo issued a subpoena to Manhattan appraiser Mitchell, Maxwell & Jackson Inc., the company said. Manhattan Mortgage Co., a broker, also received a subpoena, Chief Executive Officer Melissa Cohn said.

“It’s a rather large, broad, sweeping request for enormous amounts of information on everyone we work with,” Mitchell, Maxwell & Jackson co-founder Jeffrey Jackson said in an interview today. The appraiser, which evaluated about 20,000 properties last year in the New York region, said it received the subpoena “about 10 days ago.”

Rising foreclosures throughout the U.S. have spurred state officials to propose consumer protection laws and mortgage refinancing programs to help homeowners. The number of homes entering foreclosure has hit an all-time high and the number of borrowers with poor or limited credit histories who are behind in their payments is the most since 2002, according to the Washington-based Mortgage Bankers Association.
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“It’s a rather large, broad, sweeping request for enormous amounts of information on everyone we work with,” Mitchell, Maxwell & Jackson co-founder Jeffrey Jackson said in an interview today. The appraiser, which evaluated about 20,000 properties last year in the New York region, said it received the subpoena “about 10 days ago.”

Rising foreclosures throughout the U.S. have spurred state officials to propose consumer protection laws and mortgage refinancing programs to help homeowners. The number of homes entering foreclosure has hit an all-time high and the number of borrowers with poor or limited credit histories who are behind in their payments is the most since 2002, according to the Washington-based Mortgage Bankers Association.
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Appraisers frequently face pressure to revise their findings, said Jonathan Miller, president of Miller Samuel.

“I would seriously doubt that there is one appraiser in the United States that has not been on more than one occasion pressured to make a number,” Miller said.
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Also today, Governor Eliot Spitzer announced a task force to analyze loan and foreclosure data and make recommendations to protect subprime borrowers including minorities and the elderly.

The group, led by state Banking Superintendent Richard Neiman, will also “pursue enforcement actions against those engaging in wrongful conduct and, where appropriate, coordinate these actions with other federal, state and local law enforcement agencies,” Spitzer said in a news release.