Real Estate Fraud? Question

[crin63]

If a new home in a subdivision was appraised as being a different home than what it actually was, and for a greater value than it has ever actually been worth, does that constitute fraud?

The home was purchased (from the builder) in the Houston area in September 2004. It was a zero down purchase if that matters.

The appraised value was for a 2-story home with a patio, rain gutters, ceiling fans, garage door opener and a few other things. The home is actually a single story home with no patio, no rain gutters, 1 ceiling fan, no garage door opener and the other few things.

The comp homes used for value were 1 home from another subdivision somewhere else, and then 3 homes from the same subdivision as the house in question, but those were all sold based on this other home from the other subdivision.

Apparently the appraised value shown was $135,000 but according to county records the home has never even reached a value of $100,000.

How would a person proceed from this point if that actually constitute fraud?

[Gaffer]

This sounds like something that needs to be handled by the state police fraud division.

[Mr. P]

]If a new home in a subdivision was appraised [/B]as being a different home than what it actually was, and for a greater value than it has ever actually been worth, does that constitute fraud?

The home was purchased (from the builder) in the Houston area in September 2004. It was a zero down purchase if that matters.

The appraised value was for a 2-story home with a patio, rain gutters, ceiling fans, garage door opener and a few other things. The home is actually a single story home with no patio, no rain gutters, 1 ceiling fan, no garage door opener and the other few things.

The comp homes used for value were 1 home from another subdivision somewhere else, and then 3 homes from the same subdivision as the house in question, but those were all sold based on this other home from the other subdivision.

Apparently the appraised value shown was $135,000 but according to county records the home has never even reached a value of $100,000.

How would a person proceed from this point if that actually constitute fraud?

PMP is the real estate guy..but this can be illegal and folks do go to jail for it.
The scam (on the bank or new buyer) is to inflate the value then the owner borrows against the instant equity and then runs. Or they resell the home for an inflated price, pocket the excess and run. They have really cracked down on inflated appraisals around here.

[crin63]

I have a bit more information. I reviewed the appraisal and looks like 3 different properties were blended into the appraisal. I'm not talking about the comp homes obviously.

The first 2 pages have the right address, the 3rd page has no address and is full of discrepancies, making it an obviously different house. The comp page has the wrong address of the subject house. The floor plans are for a 2-story even though its a ranch house and so on.

The Texas statute of limitations on fraud is 4 years and this is almost the 5th year.

If there has been a lawsuit filed by another party against the builder, mortgage company and appraiser for the fraud in this tract of 375 homes would a person be able to join that lawsuit even after the statute of limitations was up?

Are there any grounds that would extend the statute of limitations?

[Mr. P]

Is this appraisal causing you financial harm? What are yer loses? What would be the basis of your suit?

[crin63]

Is this appraisal causing you financial harm? What are yer loses? What would be the basis of your suit?

The purchase price of the home was based on the appraisal. The county assessor shows the value of the property as $40,000 less than what the appraisal price is. The purchase price was $30,000 overvalued if the county assessment is correct.

The losses are currently 5 years of payments and in the next couple of months the loss of the home.

The builder, original mortgage company (owned by the builder) and appraiser worked together to overvalue the property. They were sued for a similar practice in another tract they built prior to this tract.

[Mr. P]

The purchase price of the home was based on the appraisal. The county assessor shows the value of the property as $40,000 less than what the appraisal price is. The purchase price was $30,000 overvalued if the county assessment is correct.

The losses are currently 5 years of payments and in the next couple of months the loss of the home.

The builder, original mortgage company (owned by the builder) and appraiser worked together to overvalue the property. They were sued for a similar practice in another tract they built prior to this tract.

County tax assessments are always less than market value.

Was this price ok when purchased? You got what you wanted for a price you were willing to pay? If so, ya ain't gotta case.
Actually you don't have a case at all. Buyer beware.

[Nukeman]

The purchase price of the home was based on the appraisal. The county assessor shows the value of the property as $40,000 less than what the appraisal price is. The purchase price was $30,000 overvalued if the county assessment is correct.

The losses are currently 5 years of payments and in the next couple of months the loss of the home.

The builder, original mortgage company (owned by the builder) and appraiser worked together to overvalue the property. They were sued for a similar practice in another tract they built prior to this tract.I have to agree with P. The assessors are ALWAYS lower than the appraisals. If they were actually in line than your taxes would be through the roof.....

[crin63]

Thanks guys!

My folks are just going to end up walking away from their house in the next couple months unless something drastic happens to spur the economy.

Here in California properties are assessed at the purchase price or the higher market value if you get a deal. I got lucky and was only assessed at the purchase price, they were going to tax me $50,000 higher because that's the current low market value.

[Nukeman]

Here in Indiana my assessed value is about 75,000 less than the appraisal..... Thank God!!!!

We built our home about 12 years ago and have done numerous updates. The market is mildley depressed around here right now but it really hasn't affected the prices of our homes around us....

[emmett]

Wouldn't there be some potential residual damage to the attorney who oversaw the closing? Seems to me the attorney would have to have been knowledgeable. Bear in mind, I know nothing.

[Mr. P]

Wouldn't there be some potential residual damage to the attorney who oversaw the closing? Seems to me the attorney would have to have been knowledgeable. Bear in mind, I know nothing.

Not likely..He/She typically represents the mortgage companies' interests not the buyers'.

[PostmodernProphet]

looks to me like you have a major case of fraud, but if your folks were the ones who took out the loan it may be difficult to raise the issue in a way that doesn't make them look like the ones committing it....they were the ones who took out a loan for more money than the home was worth...it was the bank that was defrauded....likely by the seller, since he's the one who pocketed cash.......I suggest you contact an attorney who can examine the details, to see if a case can be made for predatory lending......

[crin63]

looks to me like you have a major case of fraud, but if your folks were the ones who took out the loan it may be difficult to raise the issue in a way that doesn't make them look like the ones committing it....they were the ones who took out a loan for more money than the home was worth...it was the bank that was defrauded....likely by the seller, since he's the one who pocketed cash.......I suggest you contact an attorney who can examine the details, to see if a case can be made for predatory lending......

Their original loan was through the builders mortgage company. Soon as all the units were sold which was shortly after my parents bought their home, the builders mortgage company sold off the loans to the bank.

When my folks called the bank to try and get their loan modified, the bank said there was no possible way that they could be upside down in their loan.

From the estimates I have heard and read about there have been more than 50 foreclosures in the tract of homes.

[PostmodernProphet]

I had people in my office from time to time trying to set up sales similarly.....appraisals for amounts that made you roll your eyes, second mortgages to the seller for non-existent equities....

I am happy to say that none of the buyers I represented in the 90s have been foreclosed on, as none took out adjustible rate mortgages or five year balloons....it only takes about five minutes to explain to people why that additional third point of interest to get a thirty year fixed rate could save them their largest asset.....and could be offset by paying an additional $20-30 a month in principal for the first five years....

[crin63]

I had people in my office from time to time trying to set up sales similarly.....appraisals for amounts that made you roll your eyes, second mortgages to the seller for non-existent equities....

I am happy to say that none of the buyers I represented in the 90s have been foreclosed on, as none took out adjustible rate mortgages or five year balloons....it only takes about five minutes to explain to people why that additional third point of interest to get a thirty year fixed rate could save them their largest asset.....and could be offset by paying an additional $20-30 a month in principal for the first five years....

My folks have/had a fixed interest rate. The problem is with the house so overvalued they cant sell it now. My dads business came to screeching halt when the economy did and now they need to sell in order to keep their heads above water.

Thanks PMP

[Mr. P]

My folks have/had a fixed interest rate. The problem is with the house so overvalued they cant sell it now. My dads business came to screeching halt when the economy did and now they need to sell in order to keep their heads above water.

Thanks PMP

I guess I'm missing something or not understanding, crin. What do they owe and have they had an appraisal done?

[crin63]

I guess I'm missing something or not understanding, crin. What do they owe and have they had an appraisal done?

They still owe $108k and it was appraised at around $85k. They paid an extra $4k toward the principle over the last couple years.

[Mr. P]

They still owe $108k and it was appraised at around $85k. They paid an extra $4k toward the principle over the last couple years.

appraised when and by who, a real appraiser of a real estate agent?

Prices have tanked Nation wide though. I hear this sort or situation daily.

[PostmodernProphet]

clearly though....if the appraissel says its a two story house and it's a one story house, there's a demonstrable problem.....

[Mr. P]

clearly though....if the appraissel says its a two story house and it's a one story house, there's a demonstrable problem.....

Yes, if they're relying on that appraisal to sell..I can see that..but they need a new one right? Seems any old appraisals (2004?) would be just that, old. void by time and current market conditions. No?

[crin63]

clearly though....if the appraissel says its a two story house and it's a one story house, there's a demonstrable problem.....


Yes, if they're relying on that appraisal to sell..I can see that..but they need a new one right? Seems any old appraisals (2004?) would be just that, old. void by time and current market conditions. No?

The 2004 appraisal is what the original loan was based on. Apparently no one went through the appraisal with them, they were just shown the appraised value. I have to find out if the house was actually appraised at $85k or if that was the market value they were given by a Realtor. That part is unclear to me.

There was a lawsuit filed against the builder, the mortgage company and the appraiser in Nov. 2007. I have a case number but no way to find out any other details. I found the address of the guy who filed the lawsuit and my brother is going over to talk to him this evening to see what he can find out, if anything.