Updated Higher-Priced Mortgage Appraisal Rules

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Mortgage loans are considered higher-priced mortgage loans when interest rates above a certain threshold and they are secured by a consumer’s principal dwelling with a first or second mortgages. At this point the property must have specific type of appraisals. 

  • Appraisers-licensed or certified and compliant with USPAP and FIRREA. They must visit and inspect the interior of the premises and submit written report.
  • Obtain an additional appraisal at your own expense if the property’s seller acquired the dwelling within the past 180 days and is reselling it for a price that exceeds certain thresholds.
  • Provide a disclosure within three business days of application explaining the consumer’s rights with regard to appraisals.
  • Give consumers free copies of the appraisal reports performed in connection with the loan at least three days before consummation of the transaction

REMEMBER: Even if it is a business transaction using a single family property as security, the borrower must be given notice of right to appraisal pursuant to ECOA. The rule however does not cover junior liens. This rule under ECOA is effective Jan. 18, 2014.  See 12  CFR Part 1002.

  • Require creditors to notify applicants within three business days of receiving an application of their right to receive a copy of appraisals developed.
  • Require creditors to provide applicants a copy of each appraisal and other written valuation promptly upon its completion or three business days before consummation (for closed-end credit) or account opening (for open-end credit), whichever is earlier.
  • Permit applicants to waive the timing requirement for providing these copies. However, applicants who waive the timing requirement must be given a copy of all appraisals and other written valuations at or prior to consummation or account opening, or, if the transaction is not consummated or the account is not opened, no later than 30 days after the creditor determines the transaction will not be consummated or the account will not be opened.
  • Prohibit creditors from charging for the copy of appraisals and other written valuations, but permit creditors to charge applicants reasonable fees for the cost of the appraisals or other written valuations unless applicable law provides otherwise. Show citation box

Keep reading and rereading anything to do with CFPB. The more you read, the more you will remember and the less likelihood you will violate the rules.



The Housing and Urban Development Department will be using disparate impact analysis to enforce fair lending laws and ECOA on the one hand, and the CFPB’s Qualified Mortgage standards on the other hand may give the appearance of disparate impact.

None of the agencies involved have stated that they are not going to pursue lenders for disparate impact violations that result from a decision to only fund QM loans. 

The regulators for each of the agencies involved should modify the rules to ensure no conflict exists. If they do not clear up the confusion before the CFPB’s Jan. 10 compliance date then lenders doing only qualified mortgages pursuant to CFPB can arguably be in violation of HUD via ECOA and the FHA. Because of this all lenders should document the business justification for each loan and especially loan denial very carefully.  If done properly, then the file should speak for itself.


Document the reason why a person is not qualified very carefully and do the same for qualified loans. Failure to document could lead to action by the CFPB or HUD via ECOA and FHA.



On June 25, Tara Denise Bonelli was sentenced to 37 months in prison by United States District Judge Edward J. Davila in San Jose, Calif. for defrauding investors of over $3,000,000.

Bonelli pleaded guilty in federal court to wire fraud. She admitted that, beginning no later than May 2006, and continuing to at least until October 2008, she promoted false and fraudulent real estate investments by knowingly making false promises about how investor funds were to be invested and repaid.

In May 2004, Bonelli founded Vista Holding Co., a holding company that owned and operated eight entities.

Bonelli told investors that their money would be used to purchase properties for resale or conversion to condominiums and to engage in the business of foreclosure assistance. In some instances, to lure their investments, Bonelli promised a return of up to 1000%. Rather than use investor money for the stated purpose, Bonelli used some of the investor funds to pay for her personal expenses.

Under the plea agreement, Bonelli pleaded guilty to one count that encompassed the loss due to fraud in all of the counts, which was over $3,000,000. The sentencing court also ordered that Bonelli pay restitution.

The prosecution is the result of a two-year investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division    (usattynd62713)


Starts her company in 2004. Fraud runs 2006 to 2008. Criminal investigation starts 2009 and continues to 2011 when indicted and now goes to prison for a little over three years and there is no parole in the federal criminal system. As I have explained the federal criminal investigations take about two or more years but the prosecution has 10 years to file the criminal charges from the date of the last event. This is why anyone that suspects they are under investigation should consult with their attorney immediately rather than wait it out. There are many sound defense reasons for doing this. So if anyone suspects they are under investigation see an attorney now!



Roger Howard pled guilty before U.S. District Court Judge R. Brooke Jackson to three counts of wire fraud and one count of money laundering. Howard, who is free on bond, is scheduled to be sentenced by Judge Jackson on Aug. 26. Howard’s co-defendant Oai Quang Luong to three counts of wire fraud on May 22, and is scheduled to be sentenced on Aug. 15.

They were indicted on Jan. 25, 2012. In 2006 and 2007, Howard devised and participated in three similar but separate mortgage fraud schemes. The first and larger scheme involved the sales of 26 town homes in a development known as Oliveglen Villas on East Princeton Place in Aurora, Col. The second scheme involved the sale of a residence in Castle Rock, Col, and the third a house in Denver. During the relevant times, Howard operated Spring Creek Mortgage Real Estate Services and Open Range Development LLC. Howard controlled bank accounts in the names of both companies. Also at the relevant time, Howard’s co-defendant, Oai Luong, worked for a company that processed mortgage loan applications on behalf of potential home buyers. Both Howard and Luong had offices in the same building in Centennial, Col.

By the middle of 2006, the developer of Oliveglen Villas had accumulated an inventory of unsold town homes. At that time, two real estate agents attempted to obtain the right to buy some of the town homes, but they were unsuccessful. The agents then were referred to Howard, who told them that he could arrange for individuals, whom he described as investors, to purchase the properties. In August 2006, Howard asked Luong to obtain the $250,000, and Luong did so using funds loaned by another individual. Howard persuaded 17 individuals, his so-called investors, to purchase the town homes.

Howard arranged for the individuals to obtain the mortgage loans, and, in doing so, he knowingly caused the applications for those mortgages to include false or misleading information or omit material information. Many of the applications overstated borrowers’ monthly incomes, often claiming incomes were more than double the actual amounts. Loan applications also contained false information about borrowers’ assets, usually bank account balances. As part of the mortgage application process, a borrower obtained from his or her bank a form known as a Request for Verification of Deposit, which verified the balance of an account. In this case, VODs were misleading because Howard and others working at his direction arranged for bank account balances to be inflated temporarily; that is, money was deposited into the accounts and, after the balances were verified and the VODs were completed, the money was withdrawn. All the town home sales prices were supported by appraisals, most of which were done by an associate of Howard’s, which he told the appraiser the amount he wanted.

For each closing, the closing agent prepared a settlement statement reflecting that the disbursements of loan proceeds included a payment “from Seller’s Funds at Settlement” to Open Range Development. These payments were the “service fees” mentioned in the contract with the developer; they ranged from $85,700 to $117,204. After the closings, Howard used some of that money to make payments to all but one of the buyers, but those payments were not disclosed to the lenders or their underwriters. Howard for a time wrote checks payable to the borrowers to cover the differences between rental incomes and mortgage payments, but he stopped doing so on April 19, 2007. A few borrowers thereafter used their own money to make mortgage payments, but eventually all the mortgages went into default and the lenders foreclosed. At that point, there were about 12 different lenders holding the mortgages on the town homes, and they lost approximately $7,609,729.31. 

Wire fraud carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000 per count. Money laundering carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000 per count.  (usatty62813co)


You will notice the time line. Discovered in 2006? Indicted six years later in 2012.



On June 24, two former loan officers for a now-defunct Saratoga Springs, N.Y. mortgage brokerage run by felon-turned-philanthropist David B. Silipigno have been indicted on federal bank fraud charges.  The ex-loan officers, John Nazarian and Jon Yusaitis, are accused of inflating the income of mortgage applicants on applications in order to scam banks while working for First Guarantee Mortgage. The business was operated by Silipigno, who in 2003 pleaded guilty to scamming lenders of more than $5.6 million in a scandal involving his former company, National Finance Corp. of Halfmoon.

On Aug. 26, 2003 Nazarian "knowingly and willingly overstated" an applicant's income as part of the application to obtain a $144,800 mortgage loan from Wilmington Finance, a mortgage lending institution, that was paid by AIG Federal Savings Bank, according to the indictment that was unsealed June 13. Yusaitis allegedly "knowingly and willingly overstated" an applicant's income on June 18, 2003, to obtain a $250,400 mortgage loan through Wilmington Finance and AIG. The defendants remain free on $20,000 unsecured bond.

The indictment alleges the defendants' actions were part of an ongoing scheme between 2001 and 2007 in which "officers, employees and agents at First Guarantee Mortgage entered false and fictitious information on (applicants') mortgage loan applications, knowing the information was false and fictitious, in order to qualify the applicants for the mortgage loans, or otherwise enhance the chances that the mortgage loan applications would be accepted and funded and intending to defraud the financial institution that ultimately financed or purchased the mortgage loans."

That money received, in turn, would allegedly be transferred to an account associated with First Guarantee Mortgage, and the mortgages would be resold, the indictment said.

The Albany (N.Y.) Times Union reported in February that the investigation of the former brokerage had been dormant for several years and that U.S. Attorney Richard Hartunian’s office had reopened it.

In December 2003, Silipigno was sentenced to probation for his federal conviction that could have carried nearly five years behind bars. (timesunion52513)


I would like you all to note two things: 1- Every e-Alert without fails has mortgage fraud indictments, convictions and sentencing in it and these barely scratch the service of all of them that goes on. 2-As stated here, this started in 2001 so the federal prosecutors went back 12 years to to get to these two gentlemen. So just because some people did questionable loans over nine years ago, does not mean they are in  the clear and they should consult with their own legal counsel now, if for no other reason, than peace of mind.



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