I am sure they have a system for determining rough value for properties in a given area and then they just flag certain transactions for manual review if they think it is worth investigating.

Your loan file probably fell behind the copier against the wall and they lost it :(Won't admit it and gave you a line about owning so many properties.....hog wash, all the underwriting information needed is in your tax returns and credit file, you don't investigate each property or each loan.

The local DA is investigating the lawyer actively on that matter and we expect an indictment soon.

When issuing insurance to a brokerage insurance companies have them fill out a form saying what percentage of business will be regular sales, short sales, REO, construction, property management etc.If a company lies to get a lower annual premium when a claim happens and E and O company investigates they will DENY the claim. 12% fee sounds like you have a property in a rougher area which is common to be more expensive due to collection efforts.

Note the reference in the second case is the NY Supreme Court's conclusion. http://caselaw.findlaw.com/ny-supreme-court/1569743.html I'd really like to know if they spent more than 10 minutes looking at this case and if they did any investigation to the reference cases provided.

On the same note, I spoke to RE investigator today from the Department of Commerce if I could pay somebody to drive the neighborhoods and look for abandoned houses?

The copy I bought came with a CD that also had all the forms you could need for rentals in MA and they were editable, but some of the reviews said their copy did not have the CD, so some further investigation may be required. 

Just like all other forms of investing, use your head investigate, and decide whats best for you using all of the information available.

I was surprised to find that they were apparently told the house was purchased with funds they are now investigating the source since was cash. 

I have never investigating owning there.