Reading this a clarification is needed, I am not a liason to the California OREA but have
spoken to memebers of that committee.

Finally, "Forge your tongue on the anvil of truth and what flies up thought it be but a
spark, it shall have weight." Pindar

When you buy property do you walk around its perimeter? Do you make an interior
inspection? Appraisers used to do this after the S & L bailout. But under pressure from
the lending industry for fast and inexpensive work, residential appraisals became “drive
by walk thrus” then just “drive bys”. The game becomes how many can you see in a
day and still remember which photo goes to what. If you miss one, well just use the MLS
photo and claim you saw it. And now we have a desktop appraisal. The appraiser doesn’t
look at the property but relies on MLS, county assessor, and other data. And in this
declining market! Fannie Mae and even professional appraisal organizations have
sanctified this and CREATED THE VERY FORMS FOR THIS EXCEPTIONALLY WEAK ANALYSIS.

Further, having worked for two county assessors offices and accessed MLS data for years in
the two counties where I work, the data from these sources are unreliable.

Lenders pressure appraisers to cover up non permitted construction, toxic issues, any
other property related issue, and to consistently hit the target value. Or they get no
more work. In many cases appraisers are asked to make a quasi value commitment through a
“comp check process” prior to knowing even what the collateral is.

This is now my opinion, the cause of this weakness is broker greed and the greed of the
intermediate lenders they serve. The CEO’s of these lenders deserve NO pay and should
be held financially accountable for losses.

Further, Congress should compare the default rates on Veteran Administration loans and
credit union loans with other lending systems. Finally, the best appraisal program to
emulate is the relocation appraisal company process.

Sources: Appraising for almost thirty years, designated MAI, Member of the Appraisal
Institute, designate SRA, Senior Residential Appraiser Member of the Appraisal Institute;
Working Real Estate Magazine as well as other publications; and the liaison between the
State of California Office of Real Estate Appraisers and the professional organizations
which already warned about undue influence.

Hi Stockpickers: Here's the second installment of the mortgage fraud story. Again, I was
not involved but am just relaying the story. - Brian

Don Gossman is the Managing Director of the IRR-Residential office in Kansas City.
Following is the second part of a two part series that discusses a 2006/2007 assignment he
was involved with that resulted in a number of mortgage fraud convictions. Part one
described how he was contacted by a lender to appraise a home for $1,473,000 which was
then listed for $699,000. Mr. Gossman contacted the FBI and under their direction
conducted the inspection and completed the appraisal, all under wiretap.

THE GRAND JURY
I was contacted by Assistant US Attorney Linda Parker Marshall who asked me to come in so
she could describe the events that would take place in the Grand Jury. I met with her and
the FBI agents at the US Courthouse in late December 2006. It was finally sinking in that
this was really going all the way. I had been hoping for guilty pleas so I wouldn’t have
to testify, but that was not to be the case.

When the January 4, 2007 Grand Jury date arrived, I went through my morning like it was
any other day. I completed two appraisal inspections then went home to put on a suit and
tie. I wasn’t hungry for lunch that day for some reason. I drove to the courthouse and
parked in the FBI lot as instructed by Agent Shaffer. I took a deep breath and said to
myself “Don, let’s do this.” I walked into The U.S. Courthouse knowing that if the
Federal Grand Jury believed me, they would hand down indictments on 11 people and charge
them with Federal crimes.

I waited for almost an hour before Assistant US Attorney Marshall came to get me. I walked
into the room and told my story. I cannot reveal anything about what happened in that room
or the people that were there. This was our government working at the basic level of the
criminal justice system. I was in there for about an hour then left. I walked out to my
car knowing I had made the right choice to get involved when I called Agent Jensen that
first day.
On my way home I turned on the radio and switched channels to talk radio. The announcer
broke in with a news update stating “A Federal Grand Jury in Kansas City has handed down
Mortgage Fraud indictments against 11 people including the Jackson County Executive and
her lawyer husband.” When I arrived home I turned on the TV. The charges were being
reported on all of the local stations. I watch the news but had never been a part of the
news.

The trial was set for February but was delayed until June after the election. The County
Executive did go on to run for the Mayor’s office, but only received 1.5% of the vote.
The same day her TV ads for Mayor came out was the day the mortgage fraud indictment was
brought against her and her husband as the sellers. I found it interesting that no one was
talking about the buyers who were part of a larger fraud group that had committed over 100
cases of mortgage fraud in the Kansas City area in the prior 18 months causing millions of
dollars in losses.