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Challenge to FHA: Do Not Insure this Loan!

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timd354

Thread Starter
Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I know that people from the FHA monitor this forum and I challenge the FHA to take a very long and hard look at the following loan before they insure it. Here are the facts of the case:

FHA Case# 241-8349982 (Moderators: this case number is from the Deed of Trust filed in the public Land Records of Carroll County Maryland - Deed reference 5619 0511....so please do not delete)

Subject Property listed for sale on 11/9/2007 for a listing price of $199,900. On June 6, 2008, listing price for subject property changed to $195,900. On August 13, 2008, listing price changed to $189,900.

Property subsequently sold and settled on September 30, 2008 for a sales price of $203,000 with a reported seller credit of $18,000 (no doubt this was a transaction with seller funded downpayment assistance)

FHA purchase money deed of trust in the amount of $202,400 used to fund the buyer's purchase.

Subject property is located in Carroll County, Maryland in the 21157 zip code. The median sales price of residential properties in Carroll County which sold in September, 2008 is 15.66% less than Carrol properties which sold in September, 2007. The Average sales price for Carroll County residential properties declined 16.98% in the same period. The median sales price of residential properties in the subject's zip code of 21157 declined 5.24% over the same period, while the average sales price in the 21157 zip code declined by 16.40% from Spetemeber 2007 - September, 2008. The average DOM for sold properties in Sepetember, 2008 in both Carroll County, MD as a whole and the 21157 zip code was 173 days.

To those at FHA who actually care, please answer how it is possible that a property that has been on the market for almost one year with a list price that started at $199,900, then was decreased to $195,900, then $189,900 in a market area that appears to be definitely declining can suddenly appraise for $203,000? We all know what happened here, seller funded downpayment assistance used and at least a part of the seller's costs was just added to the sales price and an appraiser hit the value despite the fact that the property did not sell in almost a full year on the market at lessor listing prices.

This deal obviously does not smell right. Since it only closed on September 20, 2008, it is doubtful that the FHA has insured this loan as of yet.

As a taxpayer, I am very concerned that the FHA may insure a loan that may very well be in excess of the true market value of the property and I challenge the FHA to take a very hard look at this loan.

If anyone from the FHA cares to follow up on this, they can PM me for more information (including MLS listing numbers, property address, etc.) though the case number should be sufficient to track this loan down.

If the FHA fails to follow up on this loan, I am going to be damned sure that all Senators and Congressional Representatives that sit on the committees that oversee HUD/FHA are made aware of this situation.

FHA, the ball is in your court now.....please do the right thing.
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Obviously, it sounds very fishy.

Is it possible that any improvements were done to the property in the last 6 months, or is it possible that the buyer obtained a 203K loan and included the cost of some remodeling in the sale price?
 

Craig Farr

Junior Member
Joined
Sep 26, 2004
Professional Status
Certified Residential Appraiser
State
Arizona
Happens all the time around here. Listed months and months for, say, $229,900 and sells for $250,000, FHA. I find them when looking for comps. When I call the Realtor they usually say, "Oh, there was about 10% in points and seller-assisted.....it appraised okay".

I have no clue how the appraiser performs such magic........well, yes I do, but I have no clue why FHA allows such obvious fraud to continue.

The seller-assisted down payment program is over, and at least that will slow down the opportunity for such fraud. Let us hope that FHA fights the ignorant, feel-good-damn-the-unintended-consequences politicians who want to re-instate the seller-assisted down payment program.
 

Roy Courtney

Senior Member
Joined
Dec 8, 2006
Professional Status
Certified General Appraiser
State
Texas
Yep, those things are possible. It is also possible that those involved in this transaction are trying to BEAT FHA LIKE A DRUM! That is what normally happens!
 

timd354

Thread Starter
Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Obviously, it sounds very fishy.

Is it possible that any improvements were done to the property in the last 6 months, or is it possible that the buyer obtained a 203K loan and included the cost of some remodeling in the sale price?

No, I am personally very familiar with this property and I know for a fact that no improvements were made in the past 6 months and I am also sure that this was not a 203K loan.
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Comp check time!! :icon_mrgreen:

Hypothetically only, of course - If you were doing an appraisal review on this property, and looked at the recent comps and active listings in the area, would you estimate the current value to be closer to $180,000, or closer to $200,000?
 

timd354

Thread Starter
Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Comp check time!! :icon_mrgreen:

Hypothetically only, of course - If you were doing an appraisal review on this property, and looked at the recent comps and active listings in the area, would you estimate the current value to be closer to $180,000, or closer to $200,000?

Its a 108 year old semi detached property in a town where the condition of homes varies greatly, so I would not wat to make a judgment as to the value of the property without driving the comps. I will just say that it is very difficult to see how a property that was on the market for almost a year in an area with declining property values can possibly be worth more than the highest list price, especially since I know for a fact the property was not improved in that time period since I actually helped the seller move some items out of the property a couple of days prior to settlement)
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Yep, they are all over the country, the MB and LO just moved over from the subprime to FHA not a problem, we can still screw along our merry way. Goverment will bail out FHA in time. Skip still has a lot of work yet to do. Goverment bailed out the bank, now the goverment can bail out the goverment in a few years. By that time skip will have enought to retire along with the MB's and LO's.

Just my thinking but who really cares outside of a few appraisers.
 

OSU Beavers

Elite Member
Joined
Jan 10, 2007
Professional Status
Licensed Appraiser
State
Oregon
FHA Case# 241-8349982 from the Deed of Trust filed in the public Land Records of Carroll County Maryland - Deed reference 5619 0511....

Too late, it already recorded.
 
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