A lack of enforcement at the state level is a major reason appraisals remain at the root of [tag]mortgage fraud[/tag], said panelists at a symposium sponsored by the Appraisal Foundation earlier this month. A third of the states “are doing a great job” at responding to cases alleging fake, false or [tag]erroneous appraisals[/tag], Mark Simpson of Fannie Mae told the conference. And another third are “so slow that we don’t know what to think. They sit on referrals for three years.”

[tag]Appraisers who commit fraud[/tag] need more than just slaps on the wrist, they “need to be punished” by having all their assignments taken away, the industry spokesman said. Valuations may be subjective, he explained, but fraud is not. “Fraud is an intentional and material misrepresentation. A faulty or even [tag]fake appraisal[/tag] is at the basis of most fraudulent [tag]mortgage[/tag] transactions.” Richard Powers, president of the Appraisal Institute, agreed that state regulators lack the money and the manpower to effectively oversee the business. In some states, he noted, a single agency polices “each and every license” granted within their borders, from hair dressers to contractors. They have so much responsibility, he added, that they can’t possibly be effective.

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