Fraud Identification Training Sept-Oct 2022

CASE STUDY 11

sheet reveals that a fee of $1,100 was paid for the appraisal, which seems higher than fees paid for other appraisals you have reviewed. There is no indication that an independent review of the appraisal was conducted. Although the Loan Policy section on appraisals mirrors Part 323 of the FDIC Rules and Regulations, the policy is silent with regard to appraisal review and approved appraisers. The file also contains an older appraisal for the same property. The appraisal, which is addressed to the institution c/o SVP Flaggall, was prepared a little over a year ago by B.D.B. Appraisers. The appraisal looks adequate. It is complete and conforms to USPAP guidelines. B.D.B. Appraisers assigned a value of $635M. A review of two other loans to Python Holdings, Ltd. indicates similar credit structures and “letter appraisals.” In each extension of credit to Python Holdings, Ltd., the originating officer was SVP Gladda, and the appraiser was D. Crabaugh & Associates.

You discuss your concerns with the Examiner In Charge (EIC). The EIC instructs you to further investigate the loans and the property acquisitions.

What course of action would you take?

Making use of bank records, public record searches, and county property filings, you develop a time line reflecting the following information:

A. The names of the previous owners and the dates they initially purchased the property. B. Identification of the previous owners’ mortgage lenders, the amount and terms of the acquisition debts, and the title documents evidencing property liens. C. The date(s) when the previous owners’ mortgage was paid and the lien released. D. The date the previous owners listed the properties for resale and the asking prices. E. The previous sales prices and dates of sales. F. The date Python Holdings purchased the property or acquired title to the property. G. The date the SVP approved the applications. H. The date the SVP presented the applications to the president for approval. I. The date the SVP presented the applications to the Board for approval. J. The date on which the directors approved the loan. K. The date on which the proceeds were disbursed and to whom.

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