rehabs in city

[Ray Ohler]

is your first example a "so called flip"? Technically, YES. "Illicit" POSSIBLY. You could cite 300,000 different "examples" and each one COULD be different. In a lot of the "illicit flips" that took place here THE BUYER IS INVOLVED UP TO THEIR A**. So much for "buyer beware" - they knew exactly what they were doing OR were so "duped" by a
con-artist and wanted a house that they DIDN'T know what they were doing. Doesn't matter. End result is the SAME, when there is a dollar loss on a third party it is criminal fraud, before that, it's civil fraud. Some of the banks have attempted to cover up the activity (no idea why but they "probably" don't want the feds poking around too much and some of them didn't have a clue although they SHOULD have - hey, you're buying a loan with an 11% yield - market is 6% - what did you THINK you were buying - GOLD?). End result, depositors now pay $50 for bounced checks instead of $35. Service charge is now $3.50 instead of $1.50. If a bank had only one depositor it wouldn't amount to much but multiply it out and it makes up SOME of the losses. If mergers keep going the way they are going there will probably be - The Bank of The East and The Bank of The West OR if you like, The Bank of The North and The Bank of The South. Your final statement - "He functions at the will of the lender or he doesn't work" - I totally agree with that, more and more each day. While I can't condemn it because if he has a family to feed and kids to send to school what is he supposed to do? Personally I DON'T and WON'T. But then again, I don't have the responsibilities of keeping a roof over someone else's head - except mine, which I guess I'll be under a railroad trestle soon. Oh well, that is just the way it will be then. Oh-oh, there goes the nose again.

 

[bradellis]

leeart,

In your 2/21 post you blame the "weakness" of the Appraisal Organizations for some of the ills befalling appraisers.

My question is this: Do you belong to any of the appraisal organizations?

If you do, GREAT! If not, consider that the combined membership of these organizations is only about 25% of the total licensed appraisal population. Those members pay fees that non-members do not pay.

If all, or even most, of the appraisers would join these organizations, they frankly would have tons of additional funds to do lobbying, public education, etc. Perhaps they would not be so "weak".

Please note that I am not trying to recruit. Every appraiser has his/her own decision to make on whether or not to belong to any organization. I belong to a couple because I believe it helps me- and the profession. Not all will agree. Nor am I trying to start a debate over such membership.

I am merely pointing out that it might be unfair to blame them when so many choose not to join.

I'll offer an example: You may remember those HUD ads that seemed to be saying that the appraisers would be out making sure that the homes being bought would be free from defects.

NAIFA's legal counsel arranged a meeting with the then head of the REAC. I was there with Tom Munizzo, IFA. We presented our concerns along with a video tape that Tom made outlining the differences between an appraisal inspection and a normal home inspection. Result? The ads were pulled after existing committments were honored. I cannot know if it was a direct result of the meeting, but I assure you it did not hurt.

It costs money to have such representation. It did benefit the members, but it also benefitted the appraisal profession- some 22-25,000 of them on the roster.

Brad Ellis, IFA,RAA

 

[Larry Lyke]

My last word on this subject in this post series --

[I locked myself out of the Forum somehow since about Friday; just got back on yesterday afternoon, courtesy of Wayne]

Sometimes in appraising we are left to our own devices. No one used a known or bettter known definition of "flip" to counter my argument for how I've used the word since 1998. And, like I said, I do a lot of appraisals in "flip territory." And, nary a word is heard or even been raised against my appraisal reports of all kinds, including FHA ...

The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute, doesn't describe "flip," either.

Does anybody have the Fourth Edition? Oops...I'd heard that one was on the way, perhaps out by now. THEN I DECIDED TO LOOK IT UP: The AI's 2002 Resources Catalog arrived in the mail yesterday. The Dictionary of Real Estate is annotated as follows: "Note: A fourth edition of the Dictionary is scheduled for publication in Summer 2002."

I still recommend that my posts above be read again. For those who may disagree with me, and that's OK, I allow that, there's working information therein that you can use until a better solution comes along!

HONESTY is never out of fashion unless you use it to abuse somebody, when a white lie would be better.

 

[Leon Stewart]

Brad:

I was a designated member for many years, and i've been out for about 6 or 7 years now. I don't have the numbers (as you do) but I think the decline in membership is related to licensing and the Lender's desire not to go with mostly "Designated" Appraisers for their work. So with Lenders expanding it's pool of Appraisers, few found it necessary to pay $ 300 or $ 400 per year to belong to something where they didn't even have a voice, and as far as I know you didn't have a Vote on anything unless you attended their National Convention. So what that creates is a small group or 1% of the membership who's constantly running everything, and no opportunities for new Ideas and new Leadership.

With the Appraisal Profession deterioting like it has in recent years with the changing to Short Form Appraisal Reports, BPO and AVM, some not requiring Appraisers at all, the Appraisal Organizations have sat idlely by and done nothing. In fact they have joined in the process of encouraging the use of the Non-Appraiser Appraisal Reports, but all the time they are suppose to represent the best interest of the Appraiser.

You mentioned that IFA may have been instrumental in getting the HUD Ad stopped of TV, but if "all" the appraisal organizations had participated, it's possible that HUD could have been incouraged to run a retraction on what the AD had planted into potential borrowers mind of holding the Appraiser responsible for items that need the services of a Home Inspector. The least that HUD could have done was to put a clause in all HUD Sales Agreements releiving the Appraiser of any Home Inspection responsibilities.

Just taking the Ad off TV didn't completely solve the problem, since many borrowers still have this information planted in their minds, and that's enough to have the borrower file suit against the Appraiser. Even if the Appraiser wins his Case, he'll still end up with legal fees and a increase in his EO Insurance which will be greater than the Fee he/she collected for the appraisal.

leart3

 

[jtrotta]

Wow - it appears I missed a few Real Estate classes somewhere- this thing has taken on a life of it's own; Having been in this business (Real Estate Inclusive) over 30 years; I have NEVER EVER heard of the "Term" - "Legal FLip" and to the best of my knowledge, you all are making it up.

If you are in the business of Buying "Fixer Upper" properties and intend on doing more than (I think the # here is a question) 1-3 properties in any given year, You are then designated a "DEALER" under IRS rules.

"A FLIP" is a property that is purchased by one; sold in a short period of time using a "straw man" and perhaps Sold 2-3 more times for the sole purpose of increasing the Value on each transaction, for the sole purpose of an "attempt to defraud" 1 or more Lenders. If one is caught (usually includes several players) each person is accountable to pay the stolen money back; so hypothetically speaking; this group gets together and defrauds the "Lender's" of a total of approximately $60,000 and get caught; Each player can be responsible to pay back $60,000 plus damages; fines; interest; attorney Fees; and do jail time. This could easily amount to well over $100,000 each.
The way I see it is this is the beggining of the amount of stoopidity; they originally made perhaps a total of $20,000 each possibly and the cost to each of them is well over $75,000 + ; does anybody know what kind of Math the original culprits were using :?: :?: The "Lenders" in this instance use typical American Math, by adding all the fines etc. together they can now "Forclose" on several more properties without spending 1 thin dime of there own money. And it's getting real easy for them to collect if it goes to court; lets see a $400,000 return on a $20,000 Forclosure property; certainly not the Math Enron was using eh 8O

What A Country - 8)

 

[Larry Lyke]

As you see, without using the term "flip" and its licit and illicit meanings, whichever applies, as I described them, you can't write about the subject in a meaningful way.

In an appraisal or otherwise. AND, when dealing with this kind of transaction, the Appraiser must be extremely clear and write in declarative sentences using apt terminology.

That was my intent. Not only has nobody over time, and especially the past 5 years, ever criticized me one iota -- they haven't LAUGHED, either.

I would never EVER use the term "FIXER-UPPER" in an appraisal on a quick purchase-tunraround sale. That's a deal-killer ... even when "flipping" is what's going on.

Even if it isn't an arm's length transaction, it can be wholly legal and the UW will treat it as such, using a little more due diligence in scrutiny.

What causes convulsions in underwriting is the seemingly apparent knowledge that a "flip" is being perpetrated imminently as a coincident, yet the Appraiser DOESN'T address it. That helps the fraud potential along and from that point the UW wants the whole transaction made more transparent.

Fraud is usually not available to the parties WITHOUT the complicity of the Appraiser.