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CUOMO ANNOUNCES SANCTIONS AGAINST NJ APPRAISER, NY COMPANY IN CONTINUED CRACKDOWN ON WASTE, FRAUD AND ABUSE
WASHINGTON – Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has suspended appraiser Joseph Paccione and his employer, DePetro Appraisal Services, Inc., of New Jersey from participating in HUD programs for a year for submitting inaccurate and misleading appraisals to the Department.
In addition, Cuomo said HUD has removed the ability of Mortgage Acceptance Corporation of Floral Park, NY, to endorse loans insured by the Federal Housing Administration without HUD approval, because the firm engaged in improper lending practices involving loans to homeowners receiving appraisals from Paccione and DePetro.
The actions are the result of an investigation by HUD’s Philadelphia Homeownership Center into cases where appraisals on houses in Monmouth County, NJ -- particularly those in Asbury Park -- were grossly inflated. Most of the loans were made by Mortgage Acceptance Corporation. HUD’s Office of Inspector General is continuing to investigate Paccione, of Brick, NJ.
“We want to make sure that hardworking families who want to buy a home aren’t victimized by unscrupulous appraisers,” Cuomo said. “We want to protect the investment of the American taxpayer by wiping out waste, fraud and abuse in all HUD programs.”
During field reviews last month of four appraisals conducted by Paccione on houses in Monmouth County, HUD found that Paccione had violated several of The Uniform Standards of Professional Appraisal Practice guidelines, including overvaluing homes, incorrectly identifying neighborhoods, basing the value of homes on houses in sections of the city that command higher prices, and failing to report prior sales of properties that had occurred within one year of the appraisals.
Other infractions Paccione was found to have committed included: not requiring insect infestation certificates, a requirement for all FHA appraisals; failing to list exterior damage such as peeling paint; and improperly describing the houses he appraised.
In reviews of the mortgage underwriting practices of Mortgage Acceptance Corporation, HUD found that the company did not collect downpayments in several transactions, loan files included incorrect statements, borrowers in some instances had signed blank applications, and applications were accepted by individuals not employed by the company.
In addition, HUD found cases where mortgage payments were returned to homeowners for repairs, landlord references and pay stubs were inaccurate, bills were paid in full for applicants, termite inspections were not done but certified as having been performed, and at least one case in which the closing attorney failed to collect closing costs and other fees from the homebuyer.
As a result of Mortgage Acceptance Corporation’s loan processing deficiencies, HUD has prohibited the company from approving appraisals, underwriting mortgages, and closing loans without HUD review. The vast majority of FHA lenders are allowed to process and approve FHA loans before they are submitted to HUD for endorsement. The suspension will remain in effect until the company can demonstrate that it has corrected all of its underwriting deficiencies.
Cuomo launched the “Get Tough” initiative to crack down on waste, fraud and abuse I HUD programs in March 1997 in partnership with the Justice Department.
A recent report on HUD’s Get Tough Initiative found that:
Content Archived: January 20, 2009