Recent reports have shown that cases of appraisal fraud have dropped dramatically, but mortgage fraud is on the rise.

The quarterly report from the U.S. Department of the Treasury Financial Crimes Enforcement Network released in January showed good news for the valuation profession. It stated that incidents of appraisal fraud plunged from 2013 to 2014, dropping from 7,641 cases in 2013 to 2,033 in 2014 [See Depository Institutions, Exhibit 5]. This was the sharpest percentage decrease of any other type of fraud tracked by FinCen.

According to FinCen, appraisal fraud now comprises less than 1 percent of filings of suspicious activities [See Depository Institutions, Exhibit 4].

The number of appraiser fraud filings also declined from 4,101 in 2013, to 738 in 2014, FinCen reported [See Depository Institutions, Exhibit 7].

In the December 2014 LexisNexis Risk Solutions Annual Mortgage Fraud Report, the Home Valuation Code of Conduct and the Dodd-Frank Act were credited as reasons behind the dramatic decline in appraisal and property valuation fraud.

However, in that same report LexisNexis Risk Solutions said that mortgage fraud remains a national problem despite improving economic conditions. In fact, it has grown over the last three years increasing 2.2 percent from 2013 to 2014.

Consumers and their lenders should consult professionals, such as Designated members of the Appraisal Institute, to protect themselves from potential fraud and errors that cost time and money. Appraisal Institute Designated members have met rigorous requirements relating to education, testing, experience and demonstration of knowledge, understanding and ability, and hold competence and ethics in the highest regard.

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