Appraisal-related lending misconduct at an Illinois bank has led to the prohibition of the institution’s former chief lending officer, the Federal Reserve said Thursday.
The Fed said James Burns, the former chief lending officer of Heritage Bank in Lawrenceville, Ill., consented to the prohibition.
According to the Fed, Burns in 2016 “caused the bank to approve at least four loans supported by appraisals that were altered to reflect higher property values than the values included in the original appraisal document transmitted to the Bank by the appraiser.”
The Fed alleged that at least 25 times before the bank merged with another (The First National Bank of Carmi, Carmi, Ill.; FNBC) in 2020, Burns failed to ensure that loans and loan renewals were supported by appraisals conducted by appraisers who were licensed in the state where the appraisal was conducted, and “ignored inconsistencies and irregularities in the appraisals that should have called into question their accuracy.”
For each of the 25 loans, the Fed alleged, the supporting appraisal valued the collateral at levels significantly higher than the values determined when those same properties were re-appraised by FNBC after the merger. FNBC – which acquired the loan portfolio of Heritage — then foreclosed on certain of the 25 loans and the sale of the collateral yielded substantially less than the original appraisal value, causing a loss to FNBC, according to the Fed.
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