Appraiser Found Guilty on All Counts

admin —  March 5, 2009 — 4 Comments

Lavon Ivy, 38, Orange Village, Ohio, an appraiser, was found guilty after an eight-day trail on charges of mortgage fraud. John Ivy, 70, Orange Village, Ohio, Lavon‘s father, who did rehab work on the house, their rehab company, PTOT Enterprises, along with a mortgage broker, Phillip Stevens, and his company, M & S Investments, were collectively found guilty of all 23 of the mortgage fraud offenses pertaining to a house at 25349 Tyron Road, Oakwood Village, near Bedford, Ohio.

Lavon Ivy was found guilty of Theft by Deception, Securing a Writing by Deception, Forgery,Communications Fraud, Receiving Stolen Property, and Falsification. She faces a maximum prison sentence of 26 1/2 years. John Ivy was found guilty of Forgery and Receiving Stolen Property, and he faces a maximum prison sentence of 4 1/2 years. Mortgage broker, Phillip Stevens, was found guilty of Theft by Deception, Securing a Writing by Deception, and Falsification, and he faces a maximum prison sentence of 10 1/2 years. Sentencing is scheduled for March 26, 2009, at 1pm in Judge Hollie Gallagher’s courtroom.

Appraiser Ivy was the key defendant in this mortgage fraud scam that started with 7 other defendants. She acted as an appraiser and deal maker, and she fraudulently
submitted an inflated appraisal of the property. An expert testified for the prosecutor’s office that Ivy‘s appraisal of $165,000 was inflated by at least $30,000, that she failed to disclose known violations, and that she failed to disclose that she and her father and their rehab company got money at closing to repair the house. In her deal making role, Ivy was also found guilty of deceiving the lender to make a $132,000 loan by submitting false documents, including a bogus $165,000 purchase agreement, which was needed in order to match the bogus appraisal to obtain a larger loan for the buyer. The actual purchase price was $90,000 with the buyer to fix all of the
housing violations.

Also, Lavon Ivy and her father, John Ivy, deceived Kenneth O’Neal, 51, Warrensville Heights. At the loan closing, they diverted money that was to be used to rehab the Oakwood, Ohio house from O’Neal to themselves. Although a victim of this deception, O’Neal falsified his loan application when he relied on Lavon Ivy to take care of the financing documents. As a result, he accepted a plea because he signed a false application that contained an inflated income amount and an inflated bank balance of $42,000 to cover fake document of a $42,000 down payment. The mortgage broker, Phillip Stevens, 52, Akron, Ohio, and his company, M & S Investment, is fraudulently processed the loan.

After O’Neal signed the purchase agreement, he contacted Lavon Ivy, a licensed mortgage broker as well as a licensed appraiser, to close the deal. Lavon fraudulently substituted O’Neal‘s $90,000 purchase agreement for one with a purchase price of $165,000 to enable her to get a larger loan, a $132,000 loan from New Century Mortgage Company, Columbus, Ohio, which is now out of business. In addition, she acted as the appraiser and submitted a false property appraisal, as well
as assisted in submitting a false loan application and a fraudulent down payment scheme.

O’Neal and the seller, Eugene Jones, 42, Highland Hills, signed a closing document stating that he paid $42,000 to cover the difference between the false $165,000 purchase agreement and the $132,000 loan. But, this payment was never made because Lavon Ivy and Stevens, the mortgage broker, deceived the lender into believing the fake $42,000 down payment was made, when it was not. Like O’Neal, Jones accepted a plea because of this falsification. Both O’Neal and Jones
testified against the defendants.

Finally, Lavon arranged for her father’s repair contracting company, PTOT Enterprise, Pepper Pike, Ohio, to receive $25,581.48 for rehab work on O’Neal‘s house that was never completed. O’Neal has not been able to move into his house because existing code violations, which were supposed to be fixed by PTOT, were never rectified. O’Neal contacted Beachwood Police Department, and a detective uncovered this series of scams during his investigation. The house fell into in foreclosure and O’Neal lost the house.

Cuyahoga County Prosecutor Bill Mason made the announcement. 

Prosecutor Mason said, “Successfully prosecuting an appraiser for fraudulently inflating the value of a home is an important step in our fight against mortgage fraud. The jury rejected this appraiser’s bogus defense-that appraisals of homes are primarily based on opinion. This sends a strong message that all parties in these mortgage fraud scams will be prosecuted for their crimes.”

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4 responses to Appraiser Found Guilty on All Counts

  1. Mortgage fraud continues in full force. The Fannie Mae program is just weeks old and it’s the same mess. My neighbor just modified her loan using the program. The program states it is not for people who lied on their original application and buyers must be able to afford the terms of the new loan. My neighbor Melanie Palmer lied on the original loan and the new loan. She also lied stating she was not married. She’s married to Robert Turbeville. They’re both connected to Carolyn Turbeville who was just indicted for mortgage fraud in Solon, Ohio. She is employed as a nurse. How does a nurse get approved for a $400,000 home? When the lender is still using the same practices that got us into this mess. Lenders get incentives to deal with these deadbeats, while taxpayers get stuck with the bill.

  2. I beg to differ with the misguided soul who states “…that every appraiser is guilty of…hitting the number”. Granted there are dishonest appraisers – I have seen their work product, but I believe there are far more honest appraisers.

    Stephen’s statements would have been more accurate if he had zeroed in on one of the biggest problems facing residential appraisers in the recent “hot home market”. (May it rest in peace.) In an effort to churn out more loans (more is better when you are paid a percentage of the loans you make) some mortgage lenders chose to put undue pressure on appraisers to “meet mortgage underwriting guidelines”, which run the gamut from hitting the sales price to misrepresenting defects to not reporting necessary repairs to making up comparables, etc.

    It doesn’t take a “rocket surgeon” to understand how greedy people can easily take advantage of the economics of appraising houses (more is better), and they also know that you cannot “disappoint” your lender clients if you want to keep a steady flow of work coming in the door.

  3. In response to Stephens post 3/5/2009

    This is not true. I am an appraiser and I work with many appraisers that are totally honest and will tell both the good and bad things about a property, regardless of who may or may not like it. I agree that we have dishonest appraisers, as well as dishonest bankers, mortgage companies, title companies, attorneys, builders and others involved in real estate. Please don’t lump all of us into this category of theives, because some of us will do the right thing regardless of what it may mean to our continued business relationship. I have found that if you are honest, it pays dividends in the long run.

  4. Every appraiser is guilty of the same thing. You can’t be an appraiser without hitting the number you are given, and don’t dare mention anything negative about the subject property.

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