The Appraisal Institute urged the U.S. Sentencing Commission to require the use of real estate appraisals when calculating loss in mortgage fraud cases. Section 1079A of the Dodd-Frank Act requires the U.S. Sentencing Commission to review and, if appropriate, to amend the federal sentencing guidelines applicable to mortgage fraud and financial institution fraud offenses and to consider whether the guidelines appropriately account for the potential and actual harm to the public and the financial markets from those offenses.
Appraisal Institute President Sara W. Stephens, MAI, testified at a recent hearing, “We believe the Commission should adopt a special rule for determining the fair market value of real property if the mortgaged property has not been disposed of by the time of the sentencing. However, this rule should require use of real estate appraisals prepared by qualified appraisers in accordance with the Uniform Standards of Professional Appraisal Practice, as opposed to tax assessments, to ensure fairness and consistency.”
The Appraisal Institute, the American Society of Farm Managers and Rural Appraisers oppose proposed amendments to the federal Mortgage Fraud Sentencing Guidelines which propose using tax assessments, and not real estate appraisals, to determine fair market value. Stephens said that assessed value may not conform to market value. She also advocated that the Commission establish a special rule relating to the qualifications of real estate appraisers.