Category Archives: Mann Overboard

After a 2-year hiatus, the Mann Overboard blog is back. This blog will cover anything and everything that comes to mind. There will be market forecasts. Suggestions regarding interesting web sites, books, or topics I think readers should check out. My continual diatribe on the real estate appraisal industry and all of its wrongs. My support for a new real property valuation profession, adopting Mortgage Lending Value in America, creating Real Property Risk Ratings in America, and introducing readers to the concept of Socionomics. Other topics will surely arise.

Feedback will be limited to approved site visitors. This is not to limit disagreement – different ideas are needed for us to advance any concept we discuss. I just want to keep the content professional. Replies whining about old subjects like AMCs and what banks have done to the industry and such don’t get us anywhere. And simpl

Many Thanks To All

October 15, 2015 – Since the announcement that I had a hand in making 5/3 Bank pay an $85MM fine, I have received over a 100 emails of support. First, I must thank all of my family and friends that sent emails and supported me over the past 7 years, and longer.

Also, a special thanks to my former staff that sent congratulations.  It was with your buy in of my program that we were able to receive a Best In Class in the Nation rating from bank examiners.  We could not have achieved that without everyone believing that things can be done 100% ethically with no caving in ever.

The emails I received had similar themes:

  • You are Da Mann!
  • Good for you for fighting the good fight, and that you were vindicated. I just can’t believe their shareholders didn’t take this a little more seriously.
  • Wow!  A resounding vindication and testament to your integrity.  Well done.  You are a man to admire.
  • Wow George!  Congratulations!! And BTW as a taxpayer thank you!
  • congrats george.  thanks for winning one for the good guys
  • Glad that you are finally able to get this out in the open and be vindicated.  They certainly picked on the wrong guy back in 2008 didn’t they?!
  • Your ethics and patience are admirable.
  • It warms my heart to see 5/3 hand over $$ for their many abuses.
  • Congrats Mr. Mann. Thanks for having the guts to step up and take a rip at a monster that is out of control.

I wonder how many emails of support 5/3 received?  LOL

I will write more over the next few months.  Nothing in the settlement requires my silence.  I went the route I did because I would never agree to be silent.  It was a long, tough route, but it was worth it.  Everyone deserves to know the full truth.

For now, I leave you with the song that got me thru many tough situations over the past 20+ years.  Give it a listen any time someone wants you to compromise your ethics.

Til next time….

I Won’t Back Down

Tom Petty

Well I won’t back down
No I won’t back down
You can stand me up at the gates of hell
But I won’t back down

No I’ll stand my ground, won’t be turned around
And I’ll keep this world from draggin me down
gonna stand my ground
… and I won’t back down

Hey baby, there ain’t no easy way out
(and I won’t back down…)
hey I will stand my ground
and I won’t back down

Well I know what’s right, I got just one life
in a world that keeps on pushin me around
but I’ll stand my ground
…and I won’t back down

Fifth Third Bank Settles False Claims Act Case for $84.9 Million

PHILADELPHIA, PA, October 6, 2015 — The United States Department of Justice announced today that Fifth Third Bank will pay approximately $85 million to the federal government to settle claims under the False Claims Act (“FCA”) relating to the Bank’s practices in connection with loans insured by the Federal Housing Administration (FHA).  The settlement also resolves a whistleblower lawsuit filed by Kenney & McCafferty in June, 2011 in the Southern District of New York.

Kenney & McCafferty filed the whistleblower complaint on behalf of a former chief appraiser at the Bank, who alleged a broad range of commercial and residential mortgage violations, including fraudulent appraisal practices, which resulted in significant losses to the federal government. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act.  These provisions permit private parties to sue on behalf of the United States when they believe an individual or company has submitted false claims for government funds.

Fraud on the government’s mortgage programs has become a major source of False Claims Act recoveries in the wake of the mortgage crisis, and the Fifth Third settlement marks another significant victory for both the government and the taxpayers in this line of cases.  According to George Mann, the former Fifth Third employee who blew the whistle, “the culture of the Bank at that time emphasized profits over compliance with federal regulations.  This type of behavior is exactly what led to the financial crisis and, no matter what the outcome, I felt it was my responsibility to speak up and do the right thing.”

“We were fortunate to represent Mr. Mann in this case.  He is honest, ethical, and informed, and was willing to step forward under difficult circumstances,” said Kathryn Schilling, a whistleblower attorney at Kenney & McCafferty.  “Mr. Mann raised concerns about Fifth Third’s compliance issues internally, but no one listened to him.  He is thrilled that the government has recouped significant funds from Fifth Third to restore taxpayer dollars,” Ms. Schilling said.

Mr. Mann and his attorneys expressed great appreciation for the work of the Department of Justice, and the US Attorney’s Office for the Southern District of New York, particularly Assistant US Attorneys Pierre Armand and Jaimie Nawaday.  Mr. Mann also thanked his family, friends, former colleagues who supported his compliance efforts at Fifth Third, his co-relator John Ferguson, and the law firm of Kenney & McCafferty.

For inquiries, please contact:

Kenney & McCafferty, P.C.

Kathryn Schilling

(215) 367-4333



Adding value to the appraisal of the future – by Ed Pinto

August 24, 2015 – Ed Pinto of the American Enterprise Institute was a closing speaker at the Appraisal Institute’s national conference in Dallas a few weeks ago.  One of the new items he presented is summarized below.  As the title suggests, the idea is to make the appraisal of the future value-added – instead of simply providing Market Price as has been the case for the past 80 years.  The primary focus of Ed’s comments is residential appraising.

His ideas follow.  I will not add any commentary.  Just sharing the perspective from an independent party that is in contact with FHA, FNMA, Freddie Mac, etc – Ed was a prominent FNMA employee in the 1980s.

Determine (methodology):

–Market cycle history*

  • Create and review 10-year nominal and real home price trend to determine current position in market cycle relative to equilibrium
  • If the real price trend currently at equilibrium, robust comparable sales approach is likely appropriate.
  • If the real price trend currently elevated or depressed, the lesser of investment and replacement cost approaches is likely appropriate.

–History of buyer’s (>6 mo.) and or seller’s market (<=6 mo.) for existing homes**

  • Determine whether a buyer’s or seller’s market based on months of home inventory divided by listings/sales rate; determine whether a buyer’s or seller’s market
  • If real prices are increasing, it is almost certain that a seller’s market is present
  • Market disequilibrium more likely the longer an uninterrupted seller’s market continues

–Buying power due to change in power leverage**

  • AEI’s Center on Housing Risk plans to incorporate into its Mortgage Risk Index by year end

–Land value and change in land share trends**

  • Calculate land value by extraction using exchange value minus replacement cost

–Whether real price change due to leverage growth or improving utility or a mix

  • Evaluate role played by income leverage vs. fundamentals (i.e. job & real income growth)

*For the MSA, the subject property’s market area and price tier,(zip code or below), and the subject property

**For the MSA and the subject property’s market area and price tier (zip code or below)


The 2nd Housing Bubble of the 21st Century is well underway

July 29, 2015 – I just finished attending the Appraisal Institute’s AI Connect national conference in Dallas. Thankfully, these are inside as it has been 100+ degrees outside all week.

Ed Pinto of the American Enterprise Institute ended the conference with a great presentation that addressed the current status of the housing market. Some highlights follow:

From 9/1993 to 1/2006 housing was in a Seller’s Market, as defined by NAR, for 140 out of the 152 months. Not too many things that NAR puts out are worthwhile, but in this case, their definition of a Buyer’s and Seller’s Market has been very accurate for many decades. The 1/2006 end of the Seller’s Market ended with a streak of 99 consecutive months. Housing prices quickly tanked when the monthly supply of houses for sale changed to a Buyer’s Market.

Although we had a significant decline in home prices, we never did get below, or much below, the long-term average price of housing. i.e. house prices never did become a bargain like a normal bear market would entail. As the government did in the early 2000s, it implemented policies that stopped the decline before it could run its course. Thus, this second false bull market in house prices has occurred.

According to NAR, the current Seller’s Market is now 34 months old. Home prices in some markets are back to record highs. In fact, NAR just reported that the national home price average just hit a record high. The government has succeeded at re-inflating the market and getting nominal home prices back to high levels so the general public will think everything is fine again.

Since income for the general population is not increasing, the government will need to pull some strings to increase buying capacity to keep nominal home prices going up. Thus, you can be sure that leverage will continue to increase right thru the next peak in prices and for awhile into the next bear market. We will make sure people buy overpriced houses with record leverage so they can once again incur significant losses when the downturn occurs. That’s The American Dream apparently.

This top does not, and likely will not, be as extreme as the 2006 top. The 1937 downturn occurred from a much lower level than the 1929 top. But, a top is forming. The difficulty with tops in financial markets (my next white paper will show why residential real estate is a financial market and no longer an economic market) is they can take years to form. Bottoms in financial markets are very easy to call as they are usually ‘V-shaped.’

An interesting item Ed mentioned was about seller concessions – a topic that I am hearing about almost daily for some reason. Anyway….when seller concessions are above 3% up to 6%, default rates are 90% higher than when there are no seller concessions. Yikes!

A second interesting item he mentioned was from the FHFA. Their record of home prices going back to 1975 shows that the REAL (not nominal) rate of return on home prices has been an anemic 0.35% per year. This is in agreement with Shiller’s finding that real home prices have not changed since 1890.

As I have been telling people since I was a teenager, other than a car, the WORST investment you can make is buying a house. If prices aren’t going up, think how much you are really losing on a house. Sales commission at the end of your holding period. Maintenance, utilities, insurance, real estate taxes while you live in it. The biggest expense – mortgage interest. Even with the tax deduction, 70%+ of the mortgage interest is still an expense. No wonder in Germany 50% of the houses over $1MM are rentals! Some rich people have figured this out and realize the advantage of renting.

That’s it for now….I wanted to get my very first post out to the Mann Overboard blog. The Reviewer’s Tips blog has 2 posts to date. For now, if you have any comments, email me directly at GeorgeRMann@Aol.Com.

I will post when my 2nd White Paper is uploaded to this website…..soon hopefully.