Many first-time homebuyers and homeowners who refinanced are at risk because of mortgage appraisal fraud, according to a report from Demos, a nonpartisan, public policy group headquartered in New York.The report, "Home Insecurity: How Widespread Appraisal Fraud Puts Homeowners At Risk," said countless homeowners have borrowed more money than their homes are really worth. The author of the report, David Callahan, said, "As home prices have continued to increase above inflation, even nearing 20% per year in some cities, American homeowners are vulnerable as never before to financial ruin if home prices fall to their natural market value." He said between 2001 and 2004 Americans borrowed $485 million against the equity in their homes. "It is beginning to look like the American dream of financial security through homeownership is becoming a myth for far too many." The data for the report were based on a number of sources including a National Association of Realtors statement before a U.S. Senate subcommittee in March 2004 claiming increasing lender pressure and appraisal fraud; a petition sent by the appraisal industry alleging the lending industry had pressured them to produce inflated values and testimonials of individual appraisers.

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