How the fraud works
There are several ways to exercise fraudulent behaviour in regards to home appraisals. The major participants may include appraisers, mortgage brokers, attorneys, real estate agents. All will work for a specific agenda, which is to hide the true value of your house, and in return pocket the surplus amount. The FBI has defined the fraud as "any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan."
Apart from inflationary factors, some time frauds can stem from the fact that the accurate appraisal reports are tampered or altered or the appraisers’ signatures are copied.
How to protect yourself
Appraiser’s background, qualification and experience
There are various measures you can take to protect your assets. The first is to perform a thorough check on the credentials of the home appraiser. Ask him or her specific questions relating to licensing or whether he or she belongs to any appraisal societies such as National Association of Independent fee Appraisers, the National Association of Master Appraisers or the American Society of Appraisers. Make sure you know the state where the appraiser got the license from.
Ask about other clients he or she has worked for and feel free to call them. Make sure the numbers provided are authentic.
After the appraiser has evaluated your house, it is important that you go over the notes he or she has prepared in order to avoid any misinterpretation or misrepresentation. If you can, obtain a copy of the final report, the one which will be submitted to the bank.
Contact your real estate agent, or bank and inquire about the reports. Just ask specific details and make sure the tally matches.