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HUD Archives: News Releases

HUD No. 98-461
Further Information:For Release
In the Washington, DC area: 202/708-0685Tuesday
Or contact your local HUD officeSeptember 15, 1998


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:

  • HUD dramatically increased the number of debarment actions against bad landlords to 122 in 1997 - an increase of over 300 percent from 1996, when just 30 landlords were subject to debarment action that stopped them from doing business with federal agencies for varying numbers of years.

  • HUD and the Justice Department worked with HUD Inspector General’s Office, the Treasury Department and state and local governments to nearly double the number of civil cases and settlements resulting in recoveries against landlords of HUD-assisted housing last year. The number of such cases grew to 46 in 1997 - up from 24 in 1996.

  • HUD and the Justice Department recovered nearly $25 million in money owed to HUD by landlords as a result of the above actions in 1997 - up from about $18 million the year before.

Content Archived: January 20, 2009

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