According to the Eleventh Periodic Mortgage Fraud Case Report to the Mortgage Bankers Association, Mortgage Asset Research Institute, LLC 2009, appraisal fraud was the third highest type of mortgage fraud in 2008, right behind fraud in the application and misrepresentations in tax return/financial records. Almost 25% of the mortgage fraud cases reported for 2008 involved misrepresentations in the appraisal. Appraisal/Valuation fraud was involved in 22% of the mortgage fraud cases reported for 2008, as compared to 19% for 2007 and 16% for 2006, according to the report.
According to the Government Accountability Office (GAO), the U.S. Department of Transportation’s (DOT) Federal Highway Administration (FHWA) set aside $522 million in stimulus for Arizona. As of September 1, 2009, the federal government disbursed or agreed to disburse $293 million to Arizona.
But, as of September 3, 2009, Arizona had awarded 47 statewide highway contracts totaling only about $135. million. Arizona has granted only 2 contracts for local highway construction. Apparently, that is because of a lack of local “shovel-ready projects.” According to GAO, “the lack of projects was due to some localities not understanding the allocations that they would receive as well as their unfamiliarity with federal highway requirements.”
On February 17, 2009, President Obama signed into law the much anticipated stimulus package known as the American Recovery and Reinvestment Act of 2009. Under the $787 billion Act, $27.5 billion has been allocated for highway restoration, repair, and construction. According to some estimates, Arizona may receive as much as $522 million for highway related projects. [Read more…]
Effective May 1, 2009, Freddie Mac no longer purchases home mortgages from sellers that do not follow the Home Valuation Code of Conduct (HVCC). Sellers must also ensure that the appraisals obtained for such loans were made in compliance with the HVCC.
According to the HVCC Fact Sheet, the new HVCC:
• Prohibits lenders and third parties from influencing or attempting to influence the development, result, or review of an appraisal report. [Read more…]
It is expected that the Federal False Claims Act (FCA) will be used to combat false and fraudulent activity in stimulus projects. The current FCA, 31 U.S.C.A. § 3729(a)(1), broadly subjects any person who engages in the following to severe penalties and damages:
(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; [Read more…]
Federal, state and local governments understandably want to quickly implement stimulus projects to put people back to work, jump start the economy and avoid losing stimulus funding. The amount of money at stake, the cut backs in government office staffing and focus on speed heighten the risks for abuse and mistakes in the government procurement and bid award process. As explained by Massachusetts Attorney General Martha Coakley,
“The potential for mistakes is heightened because of the emphasis on speed. The focus of Congress and state governments is on putting people to work, awarding contracts, and placing shovels in the ground quickly. As we do so, we must take pains to balance speed with care. The public has reason to be wary. A recent wave of stories from various states about apparent corruption, fraud, and “pay to play” abuses in the awarding of government contracts and other benefits have shaken confidence in the ability of government to steward public funds wisely. Add to that the lax oversight and accountability at the root of the current economic crisis and it is perfectly understandable why people are so skeptical.”
Bid protests provide an important “check and balance”, especially now. According to Attorney General Coakley, “Speed must be balanced with critical public bidding protections necessary to ensure that contracts are competitively and impartially awarded based on the value and quality of the goods and services to be provided. The procurement laws that currently govern public projects generally strike the right balance. They ensure that contracts are awarded based on value and merit, not because of friendships, campaign contributions, fraud, or simple sloppiness.”
In this case, Berk Law Group, P.C. represented a group of owners of residential units in Northern Arizona. They regularly rented their units to short-term vacationers. Another owner later claimed that short-term vacation rentals violated the Covenants, Conditions and Restrictions for the development. The Navajo County Superior Court disagreed and found in favor of the firm’s clients. The other owners then appealed. The Court of Appeals affirmed that part of the trial court’s decision in favor of the firm’s clients.
In April 2010, the Mortgage Asset Research Institute issued its 2009 mortgage fraud report. The report gathered and analyzed various sources of data primarily regarding mortgage fraud in connection with federally insured loans. The statistics show a continued rise in mortgage fraud, even though less loans are being originated. [Read more…]
In Sage v. Blagg Appraisal Co., the Arizona Court of Appeals reversed the trial court’s decision dismissing the buyer/borrower’s lawsuit against the appraiser. In its decision issued April 30, 2009, the Court, for the first time in a reported decision, allowed the buyer/borrower to sue the appraiser, even though the appraiser was hired by the lender. The Court’s decision opens the door for buyers/borrowers to sue appraisers, even if they did not hire the appraiser or even pay for the appraisal.
On February 17, 2009, President Obama signed the 2009 American Recovery and Reinvestment Act. Under the $787 billion Act, the Federal Government proposes to spend over $100 billion on construction. According to current estimates, Arizona will receive over $700 million for construction projects. Click here for the Democratic Policy Committee current estimates for Arizona’s share of the $787 billion.