Investor Giving Me Tons Of Work

[Farm Gal]

Kate:

There is absolutely NOTHING wrong with an investor who legitimately purchases foreclosed or soon to be foreclosed properties with an eye to nominal rehab and resale, or even holding for resale doing not a darnthing to the property if he got them at distress sales.

The concern is when the sales are inflated, and/or sold to inapropriate buyers in such a manner guarunteed to create another round of forclosure and bank loss.

Check the BACK trail on properties this person has sold... how many of them have gone into default LATER... and are any of the buyers the same <_<

I would like also to call your attention to this letter: 10-27-2004 what I call the "Big Five" letter


INDEPENDENT APPRAISAL AND EVALUATION FUNCTIONS
Signors:
1. Office of the Comptroller of the Currency
2. Board of Governors of the Federal Reserve System
3. Federal Deposit Insurance Corporation
4. Office of Thrift Supervision
5. National Credit Union Administration

Read the whole thing but this section in particular:

Institutions may not use an appraisal prepared by an individual who was selected or engaged by a borrower. An institution's use of a borrower-ordered appraisal violates the agencies' appraisal regulations. Likewise, institutions may not use "readdressed appraisals" -- appraisal reports that are altered by the appraiser to replace any references to the original client with the institution's name. Altering an appraisal report in a manner that conceals the original client or intended users of the appraisal is misleading and violates the agencies' appraisal regulations and the Uniform Standards of Professional Appraisal Practice (USPAP).

Now if these cleints are absolutely NOT Federally Related Transactions and NONE of the entities/agencies listed are involved then you can rest easy... but I'd take a real narrow look at where those reports wind up to be certain fo that 'fact'...

As I understand it, your options are to clearly disclose the cleint ( remember it is who ordered the appraisal that is your cleint, nevermind who pays you ....)

It would probably be best for this "preordering' to cease and you to get your orders through the more appriate 'straight from the cleint'

~~~~~~~~~~

I wouldn't cut off my nose to spite my face, but I'd take a REAL careful look at how and why that borrower wants to drive that part of the train.

Experience has taught many of us to check the teeth on that gift horse. Darn thing might have rabies.

 

[Kimberly Osborn]

If you want to read up on how REI's are doing it, what they are doing and their logic behind it go to www.creonline.com. When I decided on real estate years ago that was one of the first boards I landed upon. Quite an :shocked: eye opening experience.

 

[hal380]

Hi Kate;

I cannot improve on what others have said, but feel compelled to try to summarize or clarify.

1 read the USPAP references cited.
2 we all know what is right and wrong, stay on the right side no matter the cost.
3 avoid all appearance of evil
4 buy this good client lunch and explain the awkward position he is putting you in. If he is unconcerned or cavalier, then you have a clue about how far you should be from him.
5 after you have explained your need to follow USPAP set some rules which will guide your business dealings with him.
6 do what's right and let the Lord take care of the consequences

I know my suggestions are very simplistic and I am certainly not talking down to you. I respect you and your posts.

Regards


Hal

 

[Pamela Crowley (Florida)]

As already said, there are some legitimate investors. My 'scam radar' went off when he asked you not to disclose the listing. He KNOWS what he's doing and his LO probably does too. Don't expect either one of them to back you up or help you if anything goes wrong. When dealing with an investor and what appears to be his buddy LO, you must be very, very careful to do everything as an appraiser strictly by the book. Double and triple check all prior sales and find out everything you can about them. If this investor and/or his LO start backing off from you as you adhere to appraisal laws/rules, you'll know you have been being groomed to be their 'pasty'. Double check everything you have done for that investor - AND THAT LENDER. The 'real money lenders' that those loans are sold to will be doing that.

Looking through your public records for everything he has sold over the past few years to find out how many of the properties he sold turned into foreclosures will tell you plenty. It's a pretty fair bet now that any investor that does more than a couple/few deals a year will eventually be investigated by law enforcement - and the investigations WILL include ALL involved.

Maybe set an appointment to sit down face to face with both the LO and the investor to have a chat with them about how the appraisals need to be ordered and that you must adhere to USPAP, Fannie Mae or any other applicable guidelines as appropriate, and your state laws/rules. If the orders stop after that, consider yourself lucky.

 

[Chris Colston]

I agree with everything Pam said and would add that your supervisor needs to be made aware of these concerns, too. I know you said you would be presenting this thread to your supervisor. That suggested lunch or cup of coffee or whatever needs to include your supervisor, too. After all, their "tail" is also on the line. Your supervisor does sign these reports, right?

I have one investor I work with a lot. However, the difference is the orders come from the lender and it is not always the same lender. This investor does his homework and goes after the best rate he can get at the time. The orders also come with instructions for Operating income statements and rent comp schedules. He is a legitimate investor who buys distressed homes, fixes them up with new flooring, new appliances and paint and then rents them to tenants. He doesn't flip them or even resell them. I will get a heads up from him when he is about to make a deal, but the order always comes from the lender and only after the home inspection has been completed and I get a copy with the contract. The only reason the investor calls me first is so he can verify how much the check to me should be for. I don't start any work until the order from the lender comes across the fax.

 

[Kate]

What would i do with out you all. Looks like I have a lot of work to do.

How do I find out if a previous sale went into forclosure? town hall data just has book and page, sale amounts and date. I just I could look up every deed to every sale. Is there an easier way?

 

[Dee Dee]

I would suggest that every appraiser on this forum take the time to polish up on understanding some of the crap that's happening in the real estate market right now.

People who consider themselves 'investors' are being investigated, hauled before the courts and thrown in jail all over this country every single day.

Rev up your search engines and type in keywords like "real estate scams", "Predatory lending" and "Equity Stripping", then read until you are cross-eyed because most of these practices require an appraiser's help to be accomplished.

Don't be the appraiser who doesn't know the difference between a legitimate investor and sharks. When you are repeatedly approached by the same clients with all sorts of creative financing endeavors, be educated enough to know if you could be getting involved in something that could leave you wide open to accusations of being a party to fraudulent activity.

 

[Chris Colston]

Originally posted by Kate@Jul 7 2004, 08:36 AM
What would i do with out you all. Looks like I have a lot of work to do.

How do I find out if a previous sale went into forclosure? town hall data just has book and page, sale amounts and date. I just I could look up every deed to every sale. Is there an easier way?

If the seller is a bank, HUD, VA or a mortgage lender you can pretty well guess it was a foreclosure sale.

Public records here on line, and there is a SALE CODE that describes a good sale, a foreclosure sale and an non-arm's length transaction.

 

[Kate]

When I desided to become an appraiser I had NO IDEA of all the landmines to watch out for.

 

[Scott Kibler]

Originally posted by Kate@Jul 7 2004, 07:36 AM
How do I find out if a previous sale went into forclosure?

My wild *** guess is that many or most of the properties this guy is buying never actually went into foreclosure. What I'm reading between the lines is that this guy finds properties owned by folks in financial trouble facing foreclosure. He approaches them and offers to buy the properties and rent them back to them. This way the previous owners can stay in the house. Often there is a clause in the lease that credits a portion of the rent as a downpayment for future buyback of the house. Problem (for the prior owner)is that now they are a renter; if they default on the rent they can be evicted...no foreclosure action necessary. Of course what equity they had on the property before the investor came into the picture is forever lost. While this scheme can be profitable both for the investor and the homeowner facing foreclosure, the potential for abuse is obvious.

Also: I think you mentioned that you typically appraise for the refinance of the property, not the original purchase. Who does the purchase appraisals? I wonder if those appraisals are considerably lower than market value. It would help to "prove" to the seller that the property is only worth x. Then he can refi with a market appraisal and take cash out for the next one. Joe Paycheck now renting would never have a clue.

Just speculating <_<