Bank Fraud? Appraiser involvement?

[Pamela Crowley (Florida)]

If I were in your area of Texas, I would do forensic appraisals for you pro bono or minimal fee. I'm not there. (Hint to those in Texas)

With your situation, the press might be the only chance you have. Get lots of input on this idea but, do not discard it.

 

[bradellis]

Tony,

Obliged to point out a few things:

1. USPAP does not specify the number of comps that must be used.

2. The appraiser's license number may not appear in all states. This is a state law and I am not sure if her state requires this.

3. The $103,052 is most likely a number produced by an AVM (Automated Valuation Model) or by using a tax assessor record. I fully agree that an appraiser would not likely conclude such an estimated value.

4. Federally Related Transactions carry with them a "transaction" amount of $250,000, not $125,000. This is based upon the transaction- a defined number and not upon the estimated value of the property.

To our homeowner:

What you are experiencing is one of the worst types of abuses carried out by banks. There is an old saying that " A banker is a person who lends you an umbrella, and the minute it starts to rain, asks for it back" (paraphrased- author unknown).

You should note that, if you want to pursue legal remedies, you may well have been injured in yet another way. IRS rules allow for home interest deductions on loans ONLY up to the market value of the property. Consult your accountant. I would, frankly, alos seek out a licensed appraiser to estimate value. It could well bolster your case.

Good luck,

Brad Ellis

 

[Austin]

I think this will be the banks defense: Fierra says that if banks make loans based on the clients credit worthiness and or ability to repay, and they use the real estate for collateral out of an abundance of caution, then they can send the janitor out to do the appraisal if their written appraisal policy so states. If a federally regulated bank has a written policy to the above effect, they can sent anybody they want out to do the appraisal. If you don't believe it, call the local Federal Reserve Bank and ax them. Some local banks are making equity loans based on the tax assessment. Yesterday I finished an estate appraisal with about 15 dwellings that were not habitable but assessed at over $50,000 total and under local zoning laws could be about a $30,000 liability due to demolition costs. If your residence is under $275,000, I don't think you have a case. But I will put your name on the prayer list.

 

[Tony in Ohio]

Dear never,

I am sorry if I gave you the wrong impression with my warning regarding potential bank defenses in a court case. I was not implying that you have done anything wrong. I have not seen the details of your case, and I am not a judge, so I do not really have an opinion. I was merely trying to warn you that big banks, like other people, tend to hire pit bulls as lawyers, not lap dogs, and it could get rough for you.

Your situation is not new or unique, but few people fight it like you are. It sounds like you are prepared and knowledgeable for your case. I applaud your tenacity and strength. I hope things work out well for you and your family.

Dear Brad,

Good points, but the post was not meant to be technical, just to help point a non appraiser in the right direction.

1. You are correct, but "one comp is not a market" and the description is a red flag that to me indicated a possibility that it was not done by a licensed appraiser.

2. Also a good point, but I was just trying to show her were to look for the info that may or may not help her.

3. I agree.

4. Thanks for the correction. I should have checked before posting, but it was 1 AM and I was only up because I had too much coffee. My point was that the bank did not need to use a licensed appraiser.

My overall point was that it is an awful situation, but with the info I have, almost all of it leads me to believe that there was never an "appraiser" involved.

 

[neverwilllearn]

Settlement Statement states:
Appraisal Fee to Transunion Real Estate Service $65.00 (U get what U pay4)

The Freddie Mac (not signed and appears to be computer generated… but does that make it bad) was sent to me with a Bank One letter and I quote:

“We’re enclosing the valuation report you requested in regard to your application for credit on the property specified above. Bank One uses several valuation methods, depending on the type and amount of the requested loan. The enclosed property valuation report (which includes either an appraisal or evaluation) was prepared solely for Bank One’s internal use in connection with you recent loan application..”

Yet Bank One Executives were able to secure a $117K field Asset Verification (that I can’t find at this time) and definitively imply that it is Unique and the only one that exists. This FAV with its one comparison of a non-comparable home does seem that it would be better or worse than the Freddie Mac.

The Harris County appraisal district lists the appraisal amounts and Market value amounts of my home and two other Exact same models as mine as follows.
$101,000/$104,500*
$103,500/$103,500
$103,600/$103,600
average sales in my subdivision in 2000: $102,900

So with that info.. any other opinions of success or doom…

I believe these act my fall under:
Texas Statues U.C.C. Business and Commerce Code § 27.01© Fraud in Real Estate for false representation of material fact. The $103,054 is a material fact and I would not have made the loan had I seen it at closing.

Texas Statute, Title 7, Penal Code sec. § 32.47. Fraudulent Removal or Concealment of documentation to support Fair Market Value. Bank One refuses after 5 request to give me documentation used on 1999 loan.

I will pursue this issue to the end. I have gotten many helpful ideas. And the biggest was to get an appraisal myself…I never even thought of that. 2 questions here. How do I find a good one. And in 2000 I had nasty carpet and tile that I pulled out in 2001 and put down Pergo flooring on every inch of the 1st floor. I want an estimate that would reflect the 2000 condition…. How can I get that accomplished???

Thank U so much for your imput

 

[Ray Ohler]

Freddie Mac sounds like an AVM. A "Field Asset Verification" (NO idea what that is) sounds like someone said, the janitor at the bank did a "drive-by". BankOne is a member of the federal reserve system. US Attorney's Office would handle it. However, not knowing ALL the particulars you might have an uphill battle. The appraisal MAY help, especially if they went way above and beyond in the loan amount. As far as the flooring issue, the appraiser could do it as either a hypothetical condition OR an extraordinary assumption. I THINK extraordinary assumption would apply. Hypothetical condition is more suited for zoning issues, highest and best use issues, lot sizes, etc. Good luck.

 

[Anonymous]

i hate sounding negative. but, i will. it appears the bank employs several different methods of valuation for equity lines. the first model used supported a value of 103k and a subsequent model came in at 117. i dont recall seeing how much u borrowed for the first mortgage or for the equity line. typically, banks view equity lines as having less risk and exposure. as a result, your credit rating and the model using the higher valuation secured the loan. your house was not appraised and the equity line was extended first and foremost because of your credit worthiness, your ability to pay, and not the fmv as provided by any model. in my honest opinion, the bank provided a service, u got the $$, and now u owe the bank the $$.

 

[neverwilllearn]

Mr. Brown, with all due respect, the issue isn't the money, the issue is whether the bank is making loans to the public that they shouldn't in the first place. The bank definitely had a document for $103,054 the I paid for and had a right to see before closing.
My 1st mortgage balance was appx. $82,400. The texas constitution states that a Home Equity loan can only be made if the sum of the 1st and the 2nd do not exceed 80% of the market value. With the $103,054 amount the Bank could only lend $43.20 (82,443.20 - 1st mortgage of 82,400). So it appears to me that they sought out another "valuation" to Make[/u] the loan.

Understand that 80% of the higher $117,000 they secured is $93,600. $93,600 - the 1st mortgage of $82,400 is $11,200. $11,200 is the now the amount they "could" lend out. Guess what my loan was for? $11,200. My contention is that Bank one seeing they could not make the loan for customer secured an amount higher so it would appear to all that view that contract, that it appeared to be in line with the Texas constitution.

But double jeopardy comes unbeknownst to the consumer who does not have any type of appraisal documention at all when the sale of the house occurs. If the $103,054 is a realistic amount, which I believe it is, the problem is 100% of equity loss at time of sale. If I sold the house tomarrow for $103,500, lets say. If I owe $82,400 on the 1st and $11,200 on the 2nd my equity (not counting closing costs) would be $9,900. That equity amount is far less than the 20% amount of $20,620.80 that the the Texas Constitution wanted to preserve for it's citizens. Equity stripping is what's happening here.. that's what it's called. Like in predatory equity scams... equity stripping. It is a national sham and shame what banks are doing. They simply cannot continue in this deceiptive manner. And once again, I reinterate... the REFUSE to allow me to see the 1999 "valuation documentation". Why?

If the bank was on the up and up, they would have disclosed the fact that there were materially differences in the "valuation" documentation to the borrower. I Paid for that information and I should have had it to allow for what is given to me in the law.... my right to riscind on the contract.

And am I reading comment as those heard in the Emperors New Clothes? The $103,054 amount Exists!!!! And I got it in the mail! I am trying to figure out why some are trying to get me just to see the $117,000 amount. I see that but I also see the $103,054 amount! It is the "Naked" truth!

 

[neverwilllearn]

correction: the equity would not be stripped in it's entirety but almost.

Mr. Ray, thank you for your suggestion on the new floor problem. Also, thank you for the Attorney General tip. I will follow through. I do recall and that "Field asset verification" (and yes, that is what it is titled at the top) did have "drive by" checked on it.

So maybe it was janitor!? What does this all mean? Does it mean that one of these two appraisals are better than the other or are they equally considered junk paper in the appraisal industry??

One thing I will certainly do now is get my own appraisal as suggested. I will also get many written estimates from realtors in the area. Armed with that, I believe I will succeed in showing that all is not roses for consumers in home equity land. I Thank all of you very much, even those with different views. I really needed to hear what the other side would be thinking too. Thanks again.

 

[Dee Dee]

Neverwilllearn,
I can see your point clearly as to wether or not the bank should have ever loaned you the money based on what appears to be a bogus appraisal.
But I can't help but wonder....truthfully, didn't you have some inkling at the time that you took out your equity loan that your home was being over-valued, but you took the money anyway? Is it possible that the reason that you are so upset is not just because it was over-valued, but that now you can't borrow against your home any longer? Or sell it and have some money left in your pocket? If you hadn't taken your equity out several years ago, would you have lost it or had to sell it sooner than now? Please be honest, not necessarily to us, but to yourself.
The situation that you are finding yourself in is becoming more and more common. Yes, thanks to lenders who have questionable appraisal methods and appraisers who will 'stretch' the numbers to make the deal work, there are many people who are finding themselves in your position.
The other side of the coin is that if yet another appraiser came along and could re-value their home high enough to allow them to borrow even more money, those same homeowners would most likely turn their head and take it.
Every honest appraiser is faced with having to draw the line on an almost daily basis, and often it means the homeowner can't get the loan that was going to bail them out of the hole. For every one person in your position who is questioning the banks deception of the homeowner, there are ten homeowners howling in fury, or crying their eyes out, that the lenders and appraisers are to blame for their finally falling through the cracks because they wouldn't value their home high enough to get that one last loan.
Trust me, no appraiser wants to be the one who finally puts the brakes on the gravy train, because inevitably they will be the one who is blamed for every mistake the homeowner ever made.
I hope you do pursue your battle...because if enough people join in your cause there will be a refreshing purging process among lenders and appraisers who practice such deception. But also know that people such as yourself will get cut off much sooner than what they've become accustomed to in what has been, for the most part, a market of increasing values.