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A new one to me.

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CJHNV

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Joined
Nov 6, 2005
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Certified Residential Appraiser
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Nevada
Ok, I'm the first to admit that I tend to be a little naive :blush:, and a lot to trusting in the basic goodness of my fellow man, but today I learned a new *twist* on this down market... and I frankly would never in a million years have even considered this....

Doing an REO in a still developing subdivision - you know the drill - those that bought in phase I are upside down and some are in foreclosure while the last of the build out is still being sold and *everything* is included and the price is STILL $100,000 less than the Phase I models...
Anyway - the sales office agent tells me that one of the original purchasers called her and after finding out that his model was going for $100,000 less than he paid - fully loaded - he tells her that he is going to buy a new home in a different subdivision at the new great deal, and walk away from the home he's in and the 2 OTHER HOMES he bought as investments!
Basically, while his credit is still good, he's going to buy something to live in for the 7 or so years it takes his bankruptcy to clear and he's walking away from 3 mortgages!!!

I don't know about y'all, but I was shocked that someone would even think of this! :huh:

Talk about slimy....
 

Frederick

Senior Member
Joined
Nov 2, 2005
Professional Status
Certified General Appraiser
State
New Jersey
I think it will likely dog him for more than 7 years. If he stays put and can handle the payments he will might recover his loss before then. Bad plan.
 

kerrylanger

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Joined
Sep 6, 2005
Professional Status
Certified Residential Appraiser
State
Wisconsin
I've seen it here. I have seen several peoples names that keep showing up on foreclosures. I checked out one and found they up and moved to Arizona. They had three or four properties that were foreclosed on. I did a review of an appraisal for one of the properties and the appraiser came in a lot higher than what the property was listing for.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Someone mentioned that same ploy on this forum a couple of years ago. As I recall, it was one of the Texas appraisers. It surprised and disgusted me too, but when you crunch out the numbers at least the owner ends up in a house that can probably be resold within a reasonable timeframe if need be, or that has affordable payments, versus losing it all and having nothing.
 

wickedness1

Senior Member
Joined
Jul 12, 2007
Professional Status
Certified Residential Appraiser
State
Ohio
After working in the US Bankruptcy Court in Ohio for many years, NOTHING suprises me.

This is the tip of the iceberg as far as these "types" of situations go.

His situation might be challenged in an Adversay proceeding especially if someone can prove he acted fraudulently however there would have to be ALOT of proof.

Truth is: people all over the country are walking away, filing Bankrupcty & seeking a fresh start from this whole mess. And yes it is our "American right" to file Chapter 7 every 6-7 years and file Chapter 13's in between.

There may be "underlying" financial reasons for him walking away as well that the developer would have no idea. Of course the developer is going to be angry right now, so they might be embellishing the situation as well.

In my experience, most debtors use bankruptcy as a very last resort and most feel so embarassed by their situations. But yes there are some "real jerks" who attempt (key word) to play the system. Believe me when I say that the Bankruptcy Judges & Trustees can smell fraud & a system players from a mile away & they will pursue the case accordingly.
 

Tom Woolford

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Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Ok, I'm the first to admit that I tend to be a little naive :blush:, and a lot to trusting in the basic goodness of my fellow man,
I don't know about y'all, but I was shocked that someone would even think of this! :huh:

Talk about slimy....

"trusting in the basic goodness of my fellow man" - First Mistake

"shocked that someone would even think of this! " - Second mistake

In a world where Fathers rape Daughters, Caregivers rip off terminaly ill patients, Teachers have relations with 14 year old students, and Church Leaders steal funds from their congregations, nothing surprises me anymore.

I'm moving to Alpha Centuri...................
 

Otis Key

Elite Member
Joined
May 15, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
Ok, I'm the first to admit that I tend to be a little naive :blush:, and a lot to trusting in the basic goodness of my fellow man, but today I learned a new *twist* on this down market... and I frankly would never in a million years have even considered this....

Doing an REO in a still developing subdivision - you know the drill - those that bought in phase I are upside down and some are in foreclosure while the last of the build out is still being sold and *everything* is included and the price is STILL $100,000 less than the Phase I models...
Anyway - the sales office agent tells me that one of the original purchasers called her and after finding out that his model was going for $100,000 less than he paid - fully loaded - he tells her that he is going to buy a new home in a different subdivision at the new great deal, and walk away from the home he's in and the 2 OTHER HOMES he bought as investments!
Basically, while his credit is still good, he's going to buy something to live in for the 7 or so years it takes his bankruptcy to clear and he's walking away from 3 mortgages!!!

I don't know about y'all, but I was shocked that someone would even think of this! :huh:

Talk about slimy....
Uh huh - money talks and Chit walks - I'd believe it when it happened - the lending has been tightened up so much (like it should have when the develompent opend up) that I doubt he'll be able to buy it.

Report the facts and move on -- you're appraising the real esate and not the HO's expectations - of which I know you know.
 

Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
Business or Morals

<<<<< snipped >>>>>
Basically, while his credit is still good, he's going to buy something to live in for the 7 or so years it takes his bankruptcy to clear and he's walking away from 3 mortgages!!!

I don't know about y'all, but I was shocked that someone would even think of this! :huh:

Talk about slimy....

He made some moves that worked out badly... because he couldn't find "a greater fool".
Many people in the Texas Oil Patch dropped their keys off at the Bank back in the 80's,
and moved to the Northeast- where there were jobs.
They got mortgages on their new homes.
Tip of the iceberg... nope, just the beginning if the next wave.
We'll probably be hearing a lot about this sort of tactic.


????? Would you be just as upset if it were someone from a minority group that walked away
from his overpriced home with an exploding mortgage, and bought something for 1/2 that value?

This is not a matter of morality, it's just business.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
, but I was shocked that someone would even think of this!
In the era of SIV's, Hedges, etc. there are not many new wrinkles and this one is an old one, its like kiting a check. However, Bankruptcy law has some protections and if it can be proved that the action was deliberately done to facilitate a duplicity to the Bankruptcy court, they do have options to allow liens on that property by secured investors. Also, if they get behind there (and the trustee will have to approved their house payment) the limit to 'save' your house from foreclosure is pretty low. Also, they might want to check their mortgage - language in it might make the new lender think twice and if they violate terms of the mortgage they could be foreclosed anyway. And, finally, when you go into bankrupcty how are you going to pay the new mortgage if the trustee is holding the purse strings? You do lose control as sorry a system as bankrupcy is. I know a fellow who put a CD in the name of the owner of the property to make the payment during the first year. He kept his farm that way under Ch 12.
 
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