Appraisal Fraud in Maryland: What Real Estate Investors and Lenders Need to Know

Date: July 2025
Author: Prospera Real Estate Loans

At Prospera Real Estate Loans, integrity in lending is our cornerstone. That’s why we believe it’s essential to talk transparently about one of the most concerning developments in real estate finance this year: the recent appraisal fraud scandal impacting Baltimore and surrounding areas of Maryland.

Several Non-QM (non-qualified mortgage) lenders have recently halted lending activity in parts of Maryland due to allegations of widespread appraisal manipulation. These developments serve as a powerful reminder of how essential accurate property valuation is to the stability of the real estate ecosystem—and what investors, borrowers, and lenders should be doing right now to protect themselves.

What Happened in Maryland?

According to national mortgage reports, a number of appraisers in the Baltimore area were allegedly involved in a scheme to artificially inflate property values—in some cases by thousands, or even tens of thousands of dollars. These appraisals were often connected to investment properties purchased through LLCs, many of which were financed using Non-QM lending products.

Here’s what was uncovered:

  • Appraisers were allegedly offered or accepted “tips” or undisclosed payments (e.g., $444 via third-party channels) to overstate property valuations.
  • Certain Appraisal Management Companies (AMCs) were involved in coordinating or facilitating the activity.
  • Overvalued properties led to mispriced risk in the lending process and increased exposure for lenders and investors.
  • As a result, dozens of appraisers and borrowers have been blacklisted, and major lenders have paused new loans across the Baltimore region, including city and county jurisdictions.

Why It Matters — Especially to Investors

If you’re an investor leveraging private or Non-QM financing, inflated appraisals may sound like an easy win. In reality, they’re a ticking time bomb.

Overvalued properties distort the real cash flow, equity, and exit strategy of your deal. If the market corrects or an audit occurs, you’re left over-leveraged with limited options. Worse, you could become entangled in legal action or have your reputation permanently impacted in lending circles.

At Prospera, we advocate for long-term, sustainable growth—not short-term shortcuts that can cost you everything.

Red Flags Lenders Are Watching For

As responsible lenders, we’ve taken proactive steps to fortify our underwriting process in light of these developments. Here’s what we’re closely monitoring:

  • Unusual appraisal fees or “tip” amounts not disclosed through standard billing.
  • Repeated use of the same AMC or appraiser in a short period, especially within a narrow region.
  • Significant valuation discrepancies between appraisals and BPOs, AVMs, or market comps.
  • Properties owned by newly-formed LLCs with minimal or no prior real estate activity.
  • A lack of on-the-ground rental performance data or inconsistencies in condition reports.

We are committed to working only with certified, ethical appraisers, and we regularly audit both internal and external data to ensure compliance with industry standards.

What We’re Doing at Prospera to Protect Our Clients

Our clients count on us not just for access to capital—but for responsible lending practices that preserve long-term equity and trust. In response to the Maryland fraud developments, we are:

  • Implementing enhanced appraiser vetting, including geographic restrictions where necessary
  • Using AI-powered AVMs to compare third-party valuations against our in-house data
  • Requiring additional documentation for appraisals in flagged regions
  • Increasing scrutiny of LLC-owned properties and seller relationships
  • Enforcing zero-tolerance policies on all forms of appraisal manipulation

A Word to Real Estate Borrowers and Partners

If you’re purchasing or refinancing in Maryland—or any high-growth, competitive market—now is the time to:

  • Double-check your appraisals: Review the comps, confirm property condition, and challenge suspicious valuations.
  • Work with ethical AMCs and appraisers with a history of independence and reliability.
  • Avoid backchannel deals or “tip” arrangements—they put your financing and credibility at risk.
  • Partner with a lender that values transparency and knows how to navigate today’s regulatory environment.

📞 Let’s Talk: Lending You Can Trust

At Prospera Real Estate Loans, we believe in building wealth through transparency, structure, and strategy—not shortcuts.

Whether you’re investing in Baltimore or beyond, we’re here to guide you with reliable lending solutions, deep market expertise, and a commitment to your long-term success.

Ready to finance your next investment with confidence?
Call us today or visit www.prosperaloans.com to get started.

Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Always consult with a licensed professional regarding your specific transaction.