Things never change- potential Occupancy Fraud?

[DTB]

check county records for 1) mailing address of owner, if not same as subject, then it must be a rental, check all properteries owned by "owner".

Gee, all of my properties have the same address and the address doesn't match any of the properties. So, therefore they must all be rentals.

Just read Riick's post and move on, it's a non issue.

 

[Non Sequitur]

Just read Riick's post and move on, it's a non issue.

I'm not so sure it's a non issue but I do agree with DTB, CANative and Riick. Thing is you have good reason to believe the borrower is lying, but it really isn't your call nor your place to call him a liar. Keep your e-mails and move on.

 

[Delta85]

I agree with those that say we are not the rental police. You've informed the client of what you saw and they said proceed with the report as owner occupied. I'd include comments on what you saw in the report and that you reported it to the client and include their response but other than that complete the report as directed and move on.

 

[Carnivore]

The question applies to two areas of USPAP.

1. The Ethics Rule - self explanatory

2. Intended Use of the appraisal. - The question the UW has to be able to answer is:

a, Does he deserve a owner occupied 95% LTV Low rate loan or

b. Does he actually only deserve an non-owner occupied 80% LTV and higher rate loan.


Its not your right to choose. Throw this puppy in the UW face and let her(seems like most of them are she') make that call. Thats her Job.

To strengthen my point; What other parts of the report did you ask for them to tell you what to say?

I got ten bucks that says the AMC never checked with the bank.

 

[Mr Rex]

I usually take a little roll of scotch tape and surreptitiously lift a DNA sample from the underside of the toilet seat. This ain't my first rodeo.

 

[Ca Ar Independent]

I got ten bucks that says the AMC never checked with the bank.

Exactly. I've had several issues lately where there was a "questionable" property condition (lease hold, zoning violation, well water) and after doing the preliminary research (and prior to inspection) informed the AMC about the issues. Each time the response was to "proceed with the assignment" only to have a slew of impossible "correction" requests and ultimately cancellation of the loan. I would also bet that the AMC didn't tell the client up front. When will the lenders realize that the AMC is absolutely NOT working in their best interest or the interest of their borrowers?

 

[Kevin Mc]

I do not consider myself to be the occupancy police. I would put the data you have in the report and make notes that the actual occupancy could not be determined. Not sure if you want to die on this hill.

Ah, a voice of reason. It is up to the HO to document if it is their primary residence or not, not you. Report what you saw and let the UW live with the decision.

 

[Mile High Trout]

Questions, if you will please: Perhaps I have a misconception about the weight of this issue, but also perhaps not.

Report what you saw and let the UW live with the decision.

Please elaborate on UW chain of command and consequences now and also in the future. The notion that the underwriter will be made to 'live with it', may not be that weighty, unless the appraiser clearly and conspicuously reports on that issue so nobody can miss it. Down the road, the UW may be thinking the same thing about the appraiser may have to live with it, and it could turn into a he said she said sort of thing.

I got ten bucks that says the AMC never checked with the bank.

Related to below

When will the lenders realize that the AMC is absolutely NOT working in their best interest or the interest of their borrowers?

As a rule of thumb, many here argue that to be a true statement, and indemnity legal arguments are currently ongoing.

Question for appraisers who argue see no evil, speak no evil, hear no evil.
At what point do you inform the lender about inconsistencies with occupancy issues?

Either you're the eyes and ears of the lender on the ground or you're not. Drawing conclusions which require several highly specific assumptions regarding the scenario seems like seeking predetermined results, rather than an unbiased transparent approach.

Please elaborate taking into account the glass is not always half full, and people do defraud lenders about this issue quite often. Is there liability issues, and to whom? Is occupancy description and ensuing loan categorization really that nominal of an issue that appraisers can ethically just sweep it under the rug like that? What if? How weighty is the what if here?

______________________________________________________________________

Personal anecdote: I just finished a damaged cost to cure homeowner repair loan refi. Grandson lived in unit and pulled wool over families eyes before they found out and outed him finally. Home super trashed and needed $40k repairs. Insurance did not cover because home not properly insured for rental use. That's real world consequense to starting a loan as an owner occupied, and finishing it as a rental without informing the lender or insurance. Now I'm dealing with an elderly on that one, but the question is still valid. Will homeowners have the option to alter insurance while maintaining the owner occcupied loan? There are many questions there, and I assume you know what they are. Please elaborate on the various complexities with these scenarios.

Sure sometimes it's as simple as a divorce. And you can ask a direct question about that. Then you can include a statement in the report that you asked the homeowner directly a question about owner occupancy and report their answer. That's clear and conspicuous to me. But what if they're lying? Why sidestep the issue when you can confront it directly? Pass all the blame back to the blameable party - the homeowner. As an appraiser I am the eyes and ears, and I ask direct questions then report that within the report. Knowing the right questions to ask is important and I guess I've never ran into someone lying about occupancy before and am not sure how I would handle it.

 

[Delta85]

Questions, if you will please: Perhaps I have a misconception about the weight of this issue, but also perhaps not.

Please elaborate on UW chain of command and consequences now and also in the future. The notion that the underwriter will be made to 'live with it', may not be that weighty, unless the appraiser clearly and conspicuously reports on that issue so nobody can miss it. Down the road, the UW may be thinking the same thing about the appraiser may have to live with it, and it could turn into a he said she said sort of thing.


Related to below

As a rule of thumb, many here argue that to be a true statement, and indemnity legal arguments are currently ongoing.

Question for appraisers who argue see no evil, speak no evil, hear no evil.
At what point do you inform the lender about inconsistencies with occupancy issues?

Either you're the eyes and ears of the lender on the ground or you're not. Drawing conclusions which require several highly specific assumptions regarding the scenario seems like seeking predetermined results, rather than an unbiased transparent approach.

Please elaborate taking into account the glass is not always half full, and people do defraud lenders about this issue quite often. Is there liability issues, and to whom? Is occupancy description and ensuing loan categorization really that nominal of an issue that appraisers can ethically just sweep it under the rug like that? What if? How weighty is the what if here?

I'd say as long as you inform your client of what you saw that is the first step. If they direct you to continue on with your assignment as owner occupied then do just that. That's the second step.

The third step is to document all this, including the fact that you informed your client of what you saw and their response, in the body of the report. Then it can not be a he said/she said scenario since the comments are in the report and the report was delivered to the client and used in the transaction. Once they accept and use the report you are no longer on the hook IMO.

I don't believe it is the appraisers job to verify occupancy. And if the owner/borrower and the client are both determined to see this property appraised as owner occupied there is little we can/should do other than turning the job down altogether.

 

[Dale Smalley]

I just observe and report. Leave the lying up to the professionals. CYA