Bank Fraud? Appraiser involvement?

[neverwilllearn]

My home equity loan stated $115,000 as Fair Market Value on 1999 contract. This is up 35% from 1997 purchase price of $85,000. My 2000 equity loan stated $117,000 as FMV, up only 1% from previous loan. After 9 months of asking bank for actual appraisal documentation on both loans, I went to branch office and within a week got in the mail a letter stating that the valuation enclosed was used for purposes of issuing the loan. Well, to my shock, the 2000 Freddie Mac appraisal stated the estimated Market Value to be $103,052,.... $14,000 less than what was presented to me on my contract. The bank, even with certified letters, has refused to allow me to see the 1999 valuation used.

I wrote the CEO in another state with the information. The Bank's legal counsel responds and says that FMV as stated on the contract is binding and they insist the contract is valid. In seperate cover, an aid to the CEO, sends me what I could never get through normal channels, a "field appraisal" comparing my house to only one other non-comparable house for $117,000. The Bank is giving a blind eye to the $103,052 valuation that was sent to me my other Bank agents.

Had the Bank used the $103,052 amount, they would not have been able to make the loan based on the Texas Constitution law that states that between the first and second loan the Equity loan cannot be more than 80% of the Fair Market Value.

Bank Fraud? Appraiser involvement? or Bank asking Appraiser for 2nd valuation and Bank picking the one that best fits their needs of making a loan at any cost to the consumer, up to and including stripping the equity in its entirety at time of sale of home.

Opinnions or thoughts anyone?

 

[Pamela Crowley (Florida)]

WOW

I'm going to read this a few more times, ponder the possibilities, and answer later.

You might want to consider an attorney.

 

[Mountain Man]

Is the one comp, $117,000 "field appraisal" signed by a true licensed appraiser (with a state license or certification), or a bank "evaluation officer"? (IE: bank employee that does construction draw inspections and claims to have some real estate experience). :roll: Hmmm, I think I smell something, and it ain't roses. Like Pam, this may take some thinking and pondering.

Mell.

 

[Tony in Ohio]

Never,

I don't know enough to have a true opinion, but I do see some very red flags.

As Mell noted in his comment regarding the $117,000 valuation, a valuation based on 1 comparable does not sound like its USPAP compliant (USPAP is our "Rulebook") and may well have been by someone who is sitting at a desk thousands of miles away. Check to see if there is a string of numbers near the appraiser’s signature. A licensed appraiser should have those numbers on all of his reports.

Another red flag I saw is the 2000 Freddie Mac valuation of $103,052. I can not think of a reason where I could possibly value a home to such a precise a number. Buyers and sellers rarely negotiate contracts for less then $100 increments, and the natural range of similar sales are usually so great as to make determination of less than $1,000 meaningless. If you consider this along with the fact that Freddie Mac is trying to remove appraisers from the loan process and has created a computer program called "Desktop Underwriter" to allow them to "Value" the homes they make loans on without an appraiser, I think it is likely that this was not done by an actual appraiser either.

Given the information I have available I would guess that there was never an “Appraisal” done by a licensed appraiser. An appraisal by a licensed appraiser is currently only needed for Federal transactions of over $125,000 (how they figure that out without an appraisal is another question). If there was no appraiser, then there was no appraiser fraud. If there was an appraiser involved, there is a possibility of fraud, and also a possibility of appraiser incompetence since lenders have slashed the fee’s for second mortgage appraisals to the point that competent appraisers can not do any significant Due Diligence and still make a living wage. The third, and least likely, possibility is that the highest appraised value is reasonable.

If you plan to take this to court, please be aware that the banks lawyer will most likely say that you, as a prudent person, should have noted the overvaluation (35% increase in 2 years) and not accepted the loan. They could even try to make a case that by not correcting them you actively defrauded them.

If you plan to fight this in the court of public opinion and go to a newspaper, TV station, or politician, we may be able to give you some information to help raise some eyebrows; after all, over 6,000 of us signed a petition that many lenders are pressuring appraisers to inflate values.

Please keep us updated, and feel free to ask any additional questions you may have.

 

[Ray Ohler]

and, if it is, was the Freddie Mac "appraisal" an appraisal? Or, was it a desktop underwriter "report" done with the assistance of an AVM? If it is an appraisal and if the bank is a bank, next determine whether it is a federally regulated (chartered) institution or a state chartered institution OR a licensed mortgage "lender". If federal, call the US Attorney's Office. If state chartered OR a licensed mortgage broker, call both the State Dept. of Banking AND the State Attorney General's Office. OR, retain an attorney and start a "cram-down". Your choice.

 

[Austin]

Equity loans of 125% of appraised price are common place. I have been told numerous times by a CEO whose bank I do work for: "We don't make loans based on collateral, we make loans based on the clients income and ability to repay. We just take real estate as collateral as an abundance of caution." Read Fierra and you find that is an exemption. I have done a number of appraisals over the last year that were thousands of dollars below the sale price but the loan was made. If the client is informed and has the income to repay, its not fraud.

 

[Pamela Crowley (Florida)]

Another thought along the way of my ponderings.

Check your closing statements. If you were charged for Appraisals, you have a right to a copy of the complete Appraisals. If they didn't actually get any Appraisals and charged you for them.... guess who kept that money that you paid for them. This would be a RESPA violation.

Since banks are big contributors to politicians, you might want to consider taking this to the press. Maybe you could find others, through your county recorded records, that have mortgages through this bank and start a class action suit.

I'm still thinking on your situation.

 

[neverwilllearn]

Loans 125% of property valuation?? Not according to TX Constitution XVI sec 50(a)(6)... 80% max. And Yes, it is on my settlement statement that I paid for the appraisal from Trans Union. Restated, the Bank refuses to give me the 1999 appraisal documentation. And all of a sudden, after 9 months two "appraisal" amounts show up for the 2000 loan.

Mr. Tony. "They could even try to make a case that by not correcting them you actively defrauded them” A full-time teacher single mom of a young tot trying to defraud the bank, hmmm, what motive, although I see your point. This $675 Billion dollar bank I suppose would do anything to cover-up and conceal the truth of this issue. I am, or I was, totally ignorant in real estate matters. I was totally dependent on this great financial institution. They are a Bank, a fiscally responsible Bank who I paid to get an appraisal. I knew I had gotten a good deal on my house when I bought it in 1997 for $85 from the out-of-state owners. Then when the Bank said the FMV was $115k, which was through the firm they hired Trans Union, I simply thought, "Wow, I made a great buy!" Nothing would have led me to suspect anything wrong with that 35% appreciation. Nor would anything have led any other non-savvy consumer suspect anything else. My situation is unique in that I had a Second home equity loan from the same bank. And that was the trigger that led to a Question Mark. And at first, with the worst stock market fall in years and the start of a bad economy, I just thought the new 1% appreciation was because of a slowing house market. I was a very naive and ignorant consumer who simply put all my trust in the Bank. They so nice and would never do anything wrong.... I thought.

The second "field appraisal" is also by Trans Union. I have misplaced it, but am writing the CEO's aid for another copy.

All lawyers I have talked to said basically, "You do not have the money that it takes for us to spend our time to research against a $675 billion bank" or they say "We can do 30 cases in the time that it. So with that, I have to pursue this on my own. I have stopped them via a Chpt 13 bankruptcy protection. While I am paying my 1st mortgage, I am not paying the 2nd. And what is especially good for my case is that this Bank has not come to the court to File a Claim against the property for default. And it has been 6 months since I paid them. But now, not being so stupid, I know the lien survives the Bankruptcy. So I still have to take them to court to remove the lien.

So as soon as I get a copy of the $117k amount again I will give you more info. I believe at this time that one of the Texas statues that apply is Title 7, Penal Code § 32.47 fraudulent concealment of Writing of the Fair Market Value on the 1999 loan and the same statue for fraudulent concealment of writing for impairing the verity on the 2000 loan.

I need help, good people. I have to have my complaint into the Court by March 20th (end of 60 day demand letter time). After that, I need evidence which I have in the $103K document. But I will need more testimony on the descrepency of Two considerably different amounts. So please continue to offer oppinions. I will be calling on you all for more info. as needed. Thank you all.

Deborah

 

[Anonymous]

I think you have gotten some really good advice here. First, they are required to give you a copy of the appraisal(s). When you get them, the first thing you need to look for is the appraiser's name and signature on the form. Find out who did it.

By now, I think if I was you, a single mom, teacher, etc. I would find one of those reporters that does the better business type stories, investigates the rip-offs etc. I would go to that reporter with everything you have. I think if you cant get a lawyer to take the case, take the case to the airwaves.

Good Luck

 

[neverwilllearn]

Thank you all for the advice. My concern, at this particular monemt, of taking this to the media is if it will impact my case in a negative way. Can the Bank come back and attempt to accuse me of Libel or slander or what ever else they can come up with. I do not want to want to put my case in jeopardy of anything. What is your though about my hesitation.

The reason I was writing back is that I want to throw out one more thing I heard last night from my daughter's father's son, who I didn't know used to be a Mortgage broker. I was floored by his commentary. He said that he would see that because of various loan to value ratios that the Bank could not make a partifular loan. He said then the Bank would ask for another appraisal, if you know what I mean, to help Make the loan. When I told him, "well, that doesn/t matter, the bank still has to disclose both appraisals". He told me that "NO, the lower amount appraisal would be shredded."

I did not know this type of thing happened in America. Am I naive or what? So now, I wonder if the $103K document copy I received via the branch agent was really supposed to have been destroyed??? Hmmmm.