When appraisers become prey: fighting identify theft and fraud starts with knowing how scams work and protecting critical appraisal information

Valuation Insights & Perspectives, Summer, 2007 by Rich Heyn, Dawn Molitor-Gennrich

However, the world is not perfect. Given the quick-turn mentality of clients, appraisal firms find it much more efficient to review and edit the report transmitted by the supervised appraiser and quickly "get it out the door." Sending the report back to the supervised appraiser is viewed as too time-consuming, especially in cases where the supervised appraiser may be out on inspections or otherwise not immediately available. What subsequently happens in this scenario is that the supervisor requires the supervised appraiser to provide a copy of their signature file and password (often as a condition of employment) so that the supervised appraiser's signature can be applied in the supervisor's office.

Some people would view this scenario as a USPAP violation, saying it's difficult to argue that the supervised appraiser has "sole personal control" over his or her signature. Others would argue that while the supervised appraiser may have made a risky business decision, it was still a specific, controlled decision and the supervised appraiser has authorized the supervisor to sign the report on behalf of the supervised appraiser.

Business decisions and USPAP aside, the major problem with giving a copy of a (traditional) signature file and password to another party is that it is irretrievable.

If the supervised appraiser dissociates himself or herself from the supervisor, there is little that can be done to prevent the supervisor from using (forging) the supervised appraiser's name. The supervised appraiser may change the password on his or her personal computer, but copies of the signature file, such as those on the supervisor's computer, can still be activated with the old password.

This is the Achilles' heel of conventional signature file programs and procedures. The signature file resides on the computer, needing only a simple password to be activated. Like most computer files, it can be copied and placed on additional computers. Once password security is breached or voluntarily compromised, control may be lost and, if so, cannot be regained.

Appraisal Report Tampering

In the old days, it was not all that difficult to alter an appraisal report. A bottle of correction fluid and a copy machine would get the job done. Appraisers may think that with the advent of computer technology and portable document file (PDF) security, it is much more difficult to alter an appraisal report today but no type of electronic file is completely secure. PDF security is an illusion

Recently, programs called "PDF crackers" (as in "crack open a PDF file") have emerged. A Google[R] search for "PDF crackers" brings up literally dozens of choices, most of which can be purchased for under $50. Some are offered as freeware or shareware. Ostensibly, the programs are offered to facilitate editing of "your own" files after they have been converted to PDF. However, most recently these programs have become the preferred method to alter appraisal reports.

Altering an appraisal report is much like appraiser identity theft. It's actually easier. Rather than taking the time to create a report and forging a signature, the evildoer simply opens up a file and changes the data to suit their needs.