Short Sale Flipping Fraud? - 07.16.10 | Vincent K. Mohr : First Priority Financial, Inc. : Fairfield, CA

AriesCO: (July 19, 2010 2:02pm)

W.R.Buchanan: THANK YOU!! Everyone, pay serious attention to his message!! We are forming a CO Coalition of appriasers; hiring a lobbiest and working with the CO State legislators to get legislation passed. The CO chapter of AI is very active within this group along with several other smaller appraiser orgs that have formed over the years. We MUST unite and support these efforts in every state. Thanks again for your comments.

W.R.Buchanan: (July 17, 2010 10:23am)

There is only one relavant point to all of this discussion, and in fact any discussion concerning appraisers and the appraisal business. WHEN ARE YOU GOING TO JOIN ACTIVIST GROUP AND PARTICIPATE IN FIXING THE INDUSTRY. Yes you will have to spend $100 We are actively persuing every appraiser in this country and quite frankly I peronally will use shame and contempt if asking nicely fails. You people need to come out of your holes, and act like human beings that are actually concerned with your future. The only way to do this is to UNITE!! Just saying you're on board dosen't get it! you must contribute, either money or time or preferrably both. www.CaCAP.com There are links on this website to all other known groups. W.R.Buchanan

W.R.Buchanan: (July 17, 2010 10:03am)

Here's the deal guys and girls. You need to join a state based coalition, and you need to contribute to the efforts of those who are spending their time building these organizations instead of finding ways to appease AMC's, and lenders who are piling on new requirements daily in a concerted effort to drive appraisers from the business. Notice the Fees aren't going up just the BS. Do you really think these new requirements are in the interest of "better quality"? they are being invoked to irritate you out of the business. Wake up guys! The only way to combat this push is to get legislation passed at the state level that overrides these mandates. The only way to get legislation passed at the state level is to have enough people in your group that legislators will listen. That means all licensed appraisers need to JOIN and contribute money to an active statewide group. CCAP,OCAP,ICAP, and ultimately the NationalCAP. If you don't you are the problem not Barney Franks. W.R.Buchanan

W.R.Buchanan: (July 17, 2010 9:53am)

I am a board member of the California Coalition of Appraisal Professionals. CCAP. The only way to take back our industry is to organize into state and nationally recognized groups that have sufficient numbers and money to actually influence legislators. The actual number of participants we need is exactly "EVERYONE"!!! I am quite sick of the "Whine and Hide" mentality of the vast majority of appraisers. When We at the CCAP are trying to build membership at $100 per head, and we get the wait and see answer from prospects, or I can't afford that now BS, It makes me wonder, "Exactly what will it take to get you peons on board." I see alot of feel good stuff being sent around to appraisers telling about all the good stuff in the new bill, and I guess you all just think everything is going to be allright. Well all that feel good stuff was BS, and if you swallowed then it's time to wise up!

W.R.Buchanan: (July 17, 2010 9:42am)

Hello: I am joining this discussion a little late but after reading many of the posts I think I can add some relavant points. First: the one point I want to make is that if you haven't figured that the appraisal industry in not being controlled by appraisers, you are either naive or completely stupid. The appraisal industry is being controlled by Lending Institutions, and ultimately Wall Street. Period! The reasons for this are very simple; They are organized, They have more money to influence politicians, and they have powerful Lobbyists who can and do influence key staff members. And believe me they are watching every bit of legislation closely and doing so by having those key staff members planted in key legislators offices. The Recent "financial reform bill" just passed last week is a perfect example. In the end the sum total of "appraiser beneficial" language, amounted to aboslutely nothing of significance. Continued;

AriesCO: (July 17, 2010 6:18am)

Thanks Bono Vox(7:50am note)! Appraisers do need "to upgrade...standards, the way CPAs did...Thin the herd." Professionalism and being/staying educated are upmost! 5pence: I comprehend just fine. The point you clearly missed was not to blame AI for the changing winds/rules of government. BTW, sure, every organization has its "cult like" followers, but I assure you that there is much heated debate within AI over many topics that affect appraisers. In one comment you acknowledge AI's great education (it is) and that most members are fine people, then you state, "AI has become a cult. And their members are those that defend every little thing they do, right or wrong, with the same arrogant condescending tone," clearly implying a "cult like-blind allegiance" by the members, or at least a majority, such that the AI culture is as you state. Which is it? Can't be both! Lastly, I was asking about (granted sarcastically) your governmental efforts since you are so passionate. What are they?

5pence: (July 16, 2010 7:56pm)

"These Republican gluttons of privilege are cold men. They are cunning men. And it is their constant aim to put the Government of the United States under the control of men like themselves. They want a return of the Wall Street economic dictatorship." -- Harry S Truman, Dexter, Iowa, Sept. 18, 1948. Sound familar? I ran across this and said "wow"

5pence: (July 16, 2010 7:47pm)

Since the typical AI cult response is "if you want to be defended against something so wrong - you should join the AI. If you're not a member don't complain that they're not doing anything for you!" I'm talking right and wrong. The HVCC was not only hurting appraisers but, even more importantly, consumers. Standing up for what's right and standing against what's wrong has no blind allegiance. They totally ignored the harm it was doing to the consumer and the nation because some of their main members owned AMC's and liked the HVCC. How's that kool-aid they're serving at the AI these days?

5pence: (July 16, 2010 7:26pm)

You read but do not comprehend AriesCO. State regulation is out the window. There will be no state regulation of TBTF bank owned AMC's. I'm not complaining about the AI education program - it's the best there is, highly recommended. Neither am I dissing the members - for the most part they are fine people. I'm dissing the cult-like followers of AI that ignore the many, many bad choices the AI has made. They really should change their name. They do not represent any appraisers except their own. As far as challenging my veracity in getting things done FOR the appraiser in government, you are way off base. AI has become a cult. And their members are those that defend every little thing they do, right or wrong, with the same arrogant condescending tone. I don't care to hear it. AI has a history of selling out the appraiser that I will not argue with you. What did they do about the HVCC? Do tell. It's illegal - but did they care? No. They can't even defend us against something so wrong.

AriesCO: (July 16, 2010 7:00pm)

5pence: Sorry you feel the way you do - sounds very biased, but you do not have your facts/claims straight. Case in point, all the many efforts to regulate AMCs at the federal level have failed so far, hence the need to go to the States where several have succeeded and several more have legislation in the works. Looks like our federal gov't is trying to have it both ways. Don't blame that on AI. Also, many appraisers volunteer their time for the good of ALL of us and several are AI members, including some that did indeed write portions of the appraiser provisions in HR-4173. When was the last time you were on Capitol Hill and met with any of the key players? Bad mouthing ANY organization that has thousands of really good members/people and that truly works very hard to promote its industry's professionalism is quite unprofessional on your part. You are certainly entitled to your opinion, but sharing it in the way you are reflects poorly on all of us.

5pence: (July 16, 2010 6:29pm)

@AriesCO: They're working hard to get legislation passed at the state level to regulate AMC's??!! LOL!!!!, have you not read the bill? If what's in there about regulating AMC's comes from them, then with friends like those who needs enemies. Tell them that the new bill states that the TBTF amc's are not to be state regulated as they are part of Federally regulated banks. As far as your other claims, not one person said the AI was there protecting appraisers interests. The important parts of the bill for appraisers were written by appraisers that volunteered their time. As far as I know, they are not AI affiliated. So, get your facts straight. AI does nothing for anyone but their own. If their own, own AMC's, then the AI is all for it. If their own see the advantages of the HVCC despite it's illegality as it has no consumer protections AT ALL, then they're all for it. Remember AIReady? Remember the raising of the de minimus to $250k? How many homes in the US are worth more than that?

cgappraisals: (July 16, 2010 5:14pm)

I lobbied and I'm independent. Wrote more letters sent more emails to my Congress and Senate Reps. I think thousands of us Appraiser's lobbied the same way. When it hits the pocket book you must fight back. Thanks to everyone who spoke up, I believe it made a difference.

cgappraisals: (July 16, 2010 5:09pm)

It was the AI that almost got me to leave the industry. Now I figured out, I don't need FHA to survive. AI lobbied congress to kick very capable licensed appraisers off there list. I was FHA approved for 11 years. Took FHA classes and passed FHA test to get on. Not the one FHA gave the appraisers the answer to fill in 6 questions and your on. So after 11 years of service and no bad appraisal reviews in which they did periodically. I used to get the evaluation of the review in the mail. FHA didn't want to let us go. Its AI's fault and Congress. If they don't my expertice then I don't need them. Experience should matter, not the license. If AI had its choice, it would just help its members, same as any other organization. Luckily theres more none members than there are members. Pressure comes from even joining organizations, take their classes, its all about $ not the appraisal industry. In my opinion AI is cutting its own legs out from under them.

Roger Ewing: (July 16, 2010 4:47pm)

Gentlemen, I am a real estate broker in So Cal and I can tell you there is a tremendous amount of short sale fraud. These frauds are perpetrated by sellers, buyers, real estate brokers and the lenders themselves. I have seen it all. From lenders asking for $ to approve a sale to sellers requiring cash to close short sales the industry is full of this sort of fraud on a lot of levels.

AriesCO: (July 16, 2010 3:48pm)

5pence and III Appriaser: Just to clarify - AI was VERY involved promoting the appraisal provisions in HR-4173. Along with the AI National officers and the government AI representatives, over 100 AI appraisers from around the country (including myself) also helped AI lobby Congress on these issues - both the House and the Senate. They are NOT trying to take credit for something they did not have a hand in!! Glad you like their BPO work. They are working very hard there too - as well as trying to get legislation (which unfortunately needs to be at the States' level) passed to regulate AMC's. Get your facts straight before you make A**s of yourselves.

Nuke 'em Until They Glow and Shoot them In the Dark: (July 16, 2010 3:34pm)

I'll bet you those builders will ONLY offer those incentives if consumer use THEIR Lender. They are not giving anything up. Only experiencing a little delayed gratification while screwing the consumer.

5pence: (July 16, 2010 12:48pm)

I'm sure a lot of appraisers have first hand knowledge of bad BPO's - we're the only ones that spot and report them lol. @cpappraisal: What article? About jeffs story? He said he saw it on Bloomberg - my conclusion was based on what he said in his post. I've got some things to do - 5pence out. Have a great weekend all !!

Ill Appraiser: (July 16, 2010 12:34pm)

In the recent past I was reviewing BPOs and what a crock. Did one on a four unit apartment building where I, merely looking at a photo of the building, could see that the square footage was closer to 4,000 but the assessor had 2,500 so that is what the entire BPO was based on. The comps looked similar to the subject but the assessor had the square footages correct on these at 4,000 to 5,000 sf so the writer of the BPO just changed the numbers on the comps to make it work. Because their value was not off by more than 10% they were given a "good" rating even though the whole thing was wrong and/or fabricated. Another was a rebuild on a house where the assessor's records showed a 1500+/- sf house about 50 years old but the photo clearly showed a new/newer 2 story in excess of 3,000 sf. The BPO used all comps less than 2,000 sf so obviously a big value difference. This too was fine because "they were using the info from public records." Can't blame the messenger.

cpappraisal: (July 16, 2010 12:32pm)

5pence-Do you have the website for that article?

Mark VA: (July 16, 2010 12:27pm)

Of lake you guys have been using Corelogic as a resourse for some of your informatopn. I find that troubling as Corelogic is just a renamed Eappraiseit/First American Mortgage. Where do we know that name form???? Washington Mutual, Cuomo to name a few. The reason for HVCC..... You may say they have changed I say NO THEY have NOT. The campain they used to persude appraiser to become perfered was they used to try a recruit me. When I asked if they had changed thier ways I was told they had no idea what I was talking about. The person on the other end of the phone had never heard of eappriaseIT.MMMMMMMMMMM. Like I told AI why should we use some organization for ads or information when they can not be trusted???? Just thought you should know if you don't and if you do EXPLAIN why you choose to use such a company as a rliable source??????????

joecolorado: (July 16, 2010 12:21pm)

you are probably correct, but dont want to test that theory,gotta go for nowm, have an appraisal I need to get to,have a good weekend.

5pence: (July 16, 2010 12:11pm)

joe : agreed on AI. As far as replacing appraisers - not until they have the technology to replace the physical science/aspects of appraising. The can only mimic it with AVM's and even that accuracy varies depending on the input, and, even who's inputing it ie.. their biases. No data base contains 100% of the information the appraisers provides. Whole industries have grown around ripping off appraisers data - know why? They're too cheap and crooked to pay for the MLS and get it legitimately. Anyway, nothing can replace the physical aspect of appraising - eyes and feet on the ground. The banks would love to replace us but the only way that will happen is if the "investors" are stupid enough to believe that mathematical models have all the answers. When "real" investors get into a "real" market for MBS's (instead of the unwilling taxpayer being the investor) they will require quality underwriting. As it is, the GSE's will allow whatever crap they can write as it's only "taxpayers" money.

5pence: (July 16, 2010 11:59am)

Uhh ohh- it's quiet. Guess I'll have to go find something to do, sheesh. Have a nice weekend

joecolorado: (July 16, 2010 11:53am)

I got the same letter from The American Society of Appraisers....billowing about how good they are.I wrote back a scathing reply telling them what they can do with their Society anatomically as I have had enough,now they have the gonads to increase their fees by 7%+/-....what a crock.I dont expect a reply for my email as I never had any replies from any of my letters or voicemails,BUT the overall goal of these institutions is to get rid of non"society" appraisers and ensure the banks use "qualified"&"certified"appraisers from one or other of their orgs.They're not doing ANYTHING for the typical appraiser,but are most definitely aiding in the demise of the profession by promoting ONLY their orgs..a myopic view I think as the banks will eventually realize they can do without residential appraisers altogether,and the commercial side will be next on their agenda.watch out what you ask for,you may get it......

5pence: (July 16, 2010 11:43am)

Of the 2 short sale or REO's that I've been involved in lately, I just described one. Here's another. Did a house that came in at $275k with 3 exact model matches. The home needed paint and some patching, total, $5k - so $280k real market value. BPO came in at $200k and totally ignored the same home selling on the same street and 1 street over and the 3rd 2 streets over. Can someone tell me what was going on there? I told the client I was available for court if they wanted to take action. For some reason saving money by using a BPO makes more sense to a lender than paying an appraiser and saving thousands. @jeff. Actually, wouldn't the fraud be the low listing price that the investor played off of?

5pence: (July 16, 2010 11:36am)

Ill Appraiser : I read that too. The AI has been in the forefront alright, defending the AMC model as they have vested interests in seeing the scam continue. Did they ever rile against the HVCC? No. I know 2 appraisers that were there that helped Mr Kanjorski write the language in the appraiser sections and no one, anywhere, ever mentioned the AI there and doing anything. Even his assistant never mentioned the AI's help in crafting anything. They're glory whores - trying to take credit for something they didn't have a hand in. Like I said, they defend the AMC model and the HVCC. I do admit though, they have been pretty loud against BPO use. Although, I'd hardly credit provisions against BPO's entirely to them. 2 people, appraisers, were there that actually wrote some of the language in the bill to protect appraisers. Them I'm proud of. AI can kiss my A**

Anonymous: (July 16, 2010 11:36am)

Ill Appraiser: (July 16, 2010 11:05am)

It's official. HR-4173 approved in Congress 60-39 and I recieved an email where Leslie Sellers the President of the Appraisal Institute said “The Appraisal Institute has been in the forefront of promoting these provisions, and we’re pleased to see the bill passed,” Sellers said. “We look forward to celebrating when President Obama signs it into law.” I didn't know they were in the fray. Anyone hear they were working for appaisers?

joecolorado: (July 16, 2010 11:00am)

if the U/W wants additional information on those properties,consider giving the raw data to him/her,without gridding it,let them make a decision to consider recommending a reduction of your figure if they think it necessary,like I say,If you dont like my figure,get one of your own,I can prove and defend mine,but wont be changing my figure if you dont agree.Get and defend your own figure,I dont care what figure you recommend as an U/W but leave mine alone.

joecolorado: (July 16, 2010 10:51am)

I typically will note some sales/re-sales of foreclosed homes in an area,with an address and date of sale,but do not elaborate on sales data etc.noting that the sale is atypical as it is a foreclosure or bank owned property,thereby not a re-sale with criteria qualifying it as an open market transfer.

joecolorado: (July 16, 2010 10:44am)

there is no harm in documenting the re-sale at $290K in your future report(s) as long as you also state that it is not typical for the market as an open market sale/re-sale & thereby justifying not using it for your grid,but documenting it in your report explains that you have seen it,recognize it as a sale but discount it as not"market",that way the U/W and any readers' cannot dispute your thoroughness in considering ALL of the sales and re-sales.If the pseudo appraiser does not do so then s/he is at fault not the appraiser that knows the market,consequently they can be reported to the State for not doing their job properly & for perhaps working outside their geographic competence area.Remember you have to be able to defend YOUR report,not ratify someone else's rubbish.

Ancient Appraiser (Retired): (July 16, 2010 10:22am)

5Pence - The real sad part of your scenario is that the next pseudo appraiser that comes into that neighborhood will use the $290 sale as one of the best available.

iam 2520: (July 16, 2010 10:00am)

I think the market for HOME WARRANTY is about $300 for a year... most Realtors, Sellers (for Coldwell Banker) pay for these or offer them as sales aids to market the home.

iam 2520: (July 16, 2010 9:51am)

only 1 in 200 being re-sold, hardly a problem. I would think the #s are ALOT higher with little to no FRAUD involved. Poor sellers are being lied to however thinking they are getting FULL release of liability, yes on the deed, probably no on the note. Banks are selling these interests to scratch and dent for cents on the dollar, or they are issuing 1099-c msking them liable to IRS... real nice. These deficency amounts are collectable for 6 years and if you thought you were getting away clean 3-4 years later they are back. This would seem to be a bigger case of fraud and deception by the parties that KNOW... the bank, the escrow,the Short Sale Negotiator, the Realtor (no show at closing). Sellers, are you receiving FULL Reconveyance ? In Writing ? Foreclosure may be a better option.

YvonneEngelbrecht: (July 16, 2010 9:41am)

There seems to be a common misconception here as folks are posting that the lenders/banks are losing thousands or tens of thousands on short-sales. Never forget that the lenders/banks are not playing with "real money" like you and I are - so the translation for them is different. They play the fractional lending game. Their reserves need only be one tenth of what they lend. So their "loss" is fractional as well. Now, couple the real 1/10th investment with the interest charged on the front end of the 9/10ths fantom investment, you will realize that they are not taking a loss of "real cash" at all. In all shorts I have analyzed to date, they are still realizing a profit.

joecolorado: (July 16, 2010 9:33am)

banks dont lose money on anything as that is their bailiwick.They get their money back on a loss by spreading that loss over the other gains made and getting relief from the loss from the IRS,against profits,so they dont lose anything,thery may not make as much but believe me,when you sign that loan document,you have a millstone round your neck until they remove it.

joecolorado: (July 16, 2010 9:28am)

'cos there is no direct link between cost,price and value.The bank or seller can sell the property for any price as its their property,but the loan on that property doesnt go away,someone,somewhere is still liable for it until something else removes them from that liability.The banks dont just eat the loss,its you and me that pays for the deficit in the long run,with higher loan rates of interest,reduction of quality of service,stricter lending criteria,upfront fees etc,etc,etc..The banks are in a great position as they can't lose for winning.

jeff: (July 16, 2010 9:20am)

Okay, I think you're right about many of the quick resales....but let me give you a quick example of the opposite...short sale accepted by the bank for an investor, who's contract allowed him to list his unowned home in MLS. He sells it for $30,000 more than his agreed purchase price from bank to new buyer...New buyer closes exactly 4 days after investor buys the property, and is required to completely redo the purchase contract with new dates once investor actually owns the property. The "fraud" part of it is the investor's depiction of value to the bank. Technically probably not illegal, feds are looking into it according to Bloomberg.

cgappraisals: (July 16, 2010 9:13am)

Before I go, I just want to say. Its funny when I do a REO appraisal, the agents tell me what the BPO came in at and its always been the lowest price to sell quickly. Notice, I said price, not real market value. Then when you do the sale appraisal, they're always wanting the a higher value to make the deal. Why can't it just be the real market value all the time?

5pence: (July 16, 2010 9:05am)

iam2520 - it sold as-is without warranties and was listed as a short-sale. How many buyers are going to walk into a home and pay full price knowing there's no warranty? If it had a warranty it could have and should have sold at or near my appraised value. All the comps sold in less than 90 days and so should the subject. And, we've all heard stories of realtors listing a home but not showing it so the sellers will lower their price. Face it, the realtors are only there for a quick flip and a 20% reduction in the sales price does not take nearly that much from their commission. Where's their incentive? They're pricing it for their needs, not for the banks or the seller in trouble.

cgappraisals: (July 16, 2010 8:59am)

Me to 5pence, I got my lawyers working on it as we speak:) Now I have to go do one of those stand in the way appraisals. Its going to be a hot one today, I can feel it.

iam 2520: (July 16, 2010 8:57am)

(5pence) The obvious question is then why didn't this $360K home not sell while listed thousands under your professional opinion ? Who were you working for ? Seems like $290 is just a hair over the 80% LTV... used to play that game.

iam 2520: (July 16, 2010 8:56am)

(5pence) The obvious question is then why didn't this $360K home not sell while listed thousands under your professional opinion ? Who were you working for ? Seems like $290 is just a hair over the 80% LTV... used to play that game.

5pence: (July 16, 2010 8:55am)

Yeah but Godlike, who made those laws? The people or the banks? Nice going cgappraisals- I'm hoping it plays out the way it's been laid out.

5pence: (July 16, 2010 8:54am)

Yeah but Godlike, who made those laws? The people or the banks? Nice going cgappraisals- I'm hoping it plays out the way it's been laid out.

cgappraisals: (July 16, 2010 8:52am)

Godlike, you better clean your ball. Maybe you were looking at your future and it didn't include Appraiser's anymore.

mparic: (July 16, 2010 8:40am)

The link to the book has been fixed; if anyone is having trouble logging in to post comments, please send an email to [email protected] as the Discussion list is not actively monitored by TBWS Support. Thanks!

GODLIKE: (July 16, 2010 8:39am)

All the talk about what a bank should do relies upon logic, but one piece of the logic you need to add to the mix is the laws. The laws may not allow the logical stuff. For instance a bank can't accept partial payments when someone is behind on their loan or it starts the foreclosure process clock ticking again. If they accept partial payments for months and then the borrowers finally quit paying the bank doesn't get to count the time spent accepting partial payments as part of the foreclosure process time.

cgappraisals: (July 16, 2010 8:38am)

Since were the only ones in the way of deals going through, thats why under the new Financial Regs, we are being protected. AVM's and BPO's can't be used for primary valuation. They can only be used to check to see if us the Appraiser who is standing in the way. HVCC is gone because they knew it was illegal. Our fees will go back to normal. Lenders will have to pay the AMC for the little they do and will eventually go back to ordering inhouse with better appraiser's. JustFrank101 doesn't look like you've read HR4173. Better days are ahead. No more drivebys, full inspections must be done on subprime. No more BPO's. I think that is a step in the right direction and its the LAW.

5pence: (July 16, 2010 8:35am)

Just appraised a home at $360k that was SS listed at $325 for 30 days then dropped it down to $310k and it's closing at $290k. $70k?? There's nothing wrong with the house - it's only 2 years old and never lived in! Maybe if the banks would buy home warranty insurance for a year or 2 they could market it in an arms length transaction in less than 90 days instead of a non-arms length offering to sell yesterday. An impartial subjective opinion or actual fraud about the listed value could be argued about the players intent, the point is that it leaves a lot of room for playing dumb, "I really thought that's what it should have sold at!" The banks are valuing these things using BPO's and CMA's and that is the height of idiocy-trying to save a few bucks by not getting an accurate valuation done and then losing thousands on the deal. It's the seller that suffers. You guys would know, does the bank not care about losing 10's of thousands because the FDIC is going to make them whole anyway?

5pence: (July 16, 2010 8:31am)

Just appraised a home at $360k that the realtor had listed at $325 for 30 days then dropped it down to $310k and it's closing at $290k. $70k?? There's nothing wrong with the house - it's only 2 yrs old and never lived in! Maybe if the banks would buy home warranty insurance for a year or 2 they could market it in an arms length transaction in less than 90 days instead of a non-arms length offering to sell yesterday. An impartial opinion or actual fraud about the listed value could be argued about the realtors intent, the point is that it leaves a lot of room for playing dumb, "I really thought that's what it should have sold at!" The banks are valuing these things using BPO's and CMA's and that is the height of idiocy-trying to save a few bucks by not getting an accurate valuation & then losing thousands on the deal. It's the seller that suffers. You guys would know, does the bank not care about losing 10's of thousands because the FDIC is going to make them whole anyway?

Joebob: (July 16, 2010 8:31am)

Wow Guys--need to redo my password every time I comment. Also, the "Little Book..." link doesn't work. Love the show...but the ancilliaries appear to neet tweaking!

Chris- NY: (July 16, 2010 8:24am)

has anyone had a chance to disect the 2319 page financial reform bill being signed in shortly? I would love to have that brokern down into english (Financial Reform for Dummies) I saw the real short version on yahoo: http://finance.yahoo.com/banking-budgeting/article/110085/what-financial-reform-means and is this spelling the end of Mortgage Broker YSP? For the past few months when ever anyone said YSP was ending... my understanding was they were wrong and it appeared that regulators were trying to eliminate Service Release Premium which would only affect the "double dipping" from retail loan originators at the lender for charging up front and making onthe back. But this now looks like mortgage broker YSP will be hit?? anyone?

Alabama Country Boy: (July 16, 2010 8:17am)

Fellows, that amounts to .5% of all applications. The folks looking for this are auditors. They have to find something wrong or they will not have a job. Sure, my 22 year old donkey is worth $750,000 and is a sure bebt to win the Triple Crown next year. Anything that eats at my house is a liability, not an asset. I agree with your analysis that an unintentional misstatement would be labeled fraud. You also have to understand that most of these "auditor/examiner" people have never had to drag the information out of an applicant to get a loan application completed. This also applies to many of the political heroes waving their "protect the consumer" flags. None of us who meet the public and live to put a deal together would ever relegate ourselves to a back room with 200 files to find one incidence of fraud unless we got really hungry.

charlottehousehunter: (July 16, 2010 8:12am)

Sad but true that in our market, we have the same or more Short Sales than REO's however REO's account for 25-30% of all sales while short sales are only 4.5% It's unbelievable that agents would continue to steer their clients away from short sales to REO's especially when many now have guaranteed commissions and quick turn around times.

Ill Appraiser: (July 16, 2010 8:01am)

Blame it on the BPOs. BPOs are done as drive-bys and generally properties are valued at the low end of possible value in a neighborhood. No matter the condition. Perfectly good houses. If the banks are willing to settle for 25 cents on the dollar there's going to be funny business going on. I get asked all the time. Why don't the banks just renegotiate when a homeowner is in trouble? Lower the principle, add another year on the end. Whatever. Instead of renegotiating a principle say 25% less the banks throw out the homeowners and sell the house for 75% less. Makes no sense to me.

Gilbert: (July 16, 2010 7:52am)

I clicked the eBook link and got an error message...is there a problem with the hyperlink?

Bono Vox: (July 16, 2010 7:50am)

I may have misunderstood. Is CoreLogic saying that only 1 in 200 files contains fraud? That would seem low. I'm off to sell the complicated, but high profit option of a 203(k) loan to owners and buyers - wish my luck. APPRAISERS - get your mouths off of the tailpipe! The market will swing and you'll be in high cotton once again. AVMs can't take the place of an appraiser. You need to upgrade your standards, the way CPAs did when they started admitting only members with Masters Degrees. Thin the herd.

GODLIKE: (July 16, 2010 7:31am)

Speaking of appraisers, I whipped out my crystal ball and I see a world without appraisers in the near future, maybe in as little as 2 years. I see the lenders using AVMs and then sending a cheap, non licensed "inspector" out to the house to document if the house is better/worse than the norm and arriving at a modified AVM value figure that way.

GODLIKE: (July 16, 2010 7:26am)

There were several cases of fraud in foreclosures documented right here in the blog a little while back. The Realtor was marketing the house at a higher price than the bank had it listed at and pocketed the difference.

JUSTFRANK101: (July 16, 2010 7:17am)

There may come a day when the Real Estate Appraisal Profession is a total loss. If you are an Appraiser and have half a brain, you may already see your profession is targeted for removal. The Appraiser is the only profession that stands in the way of Real Estate Market chaos. The Initial and on-going expense to be a Licensed Real Estate Appraiser is huge and yet we are forced into giving up half or more of a fee just to get a job. The biggest insult is being forced to wait 30, 60 sometimes 90 days to receive the below modest earned fee. NO ONE ELSE MAY PROVIDE A Real Estate APPRAISAL a lender will acknowledge but the Appraiser is BASHED, WHIPPED AND PISSED ON. The only way to retain your Independence as an Appraiser is to have representation supported by others like you - - - - - - - Step up Appraisers and Join – Email Now Help Save your profession. [email protected] - 805-241-7770

JDrobeck: (July 16, 2010 6:48am)

donloyd:I read your post. I am guessing that you are not telling the bank what you are going to resell it for, thats not full disclosure. I'm also guessing that you dont do any work to the home. It may not be illegal, but it is certainly unethical and hopefully soon will be illegal. You are costing the bank thousands of dollars all of which gets passed on to the consumer. Why not just be upfront about it an charge a nominal fee say 1500 bucks for negotiating the short sale. Or better yet, be happy with the real estate commission you earn on the transaction rather than being greedy and taking additional profits. Again all of which is passed on to the consumer.

JDrobeck: (July 16, 2010 6:44am)

I've seen a lot of what you are talking about. Here what these short sale companies do. . . Realtor brings in a listing. Short sale company has an investor that submits a low ball offer this gets submitted to the bank for short sale approval. In the mean time the property remains listed and the Realtor brings in a buyer at a higher price. The buyer signs a PA with the investor that submitted the offer to the bank. Typically at that point the short sale company will have the real seller add the investor to the deed. At closing the investor buys the home from the seller for say 150k, they turn around 1 minute later and sell the property to the real buyer for 180k. The investor pockets the 30k and gives the short sale company a cut on that. Is this fraud? As far as I know there are no laws regulating this type of activity. . . Does anyone know of any? The investor simply flips the home, has zero risk, does no work, and their money is only tied up for a matter of minutes.

LUXRealtorFL: (July 16, 2010 5:57am)

OK Guys...I HAVE to disagree on the Short Sale Fraud! At the VERY LEAST here in FL, but we all know it is going on in AZ, CA, NV to name a few....haven't you heard of Nathan Jurewicz & his buddy ATTY Chris McLaughlin? shorTheir company shortsalesriches.com is basically a training seminar for Short Sale Fraud and HOW TO navigate the NEW rules put in place by banks and HUD to STOP the fraud they are teaching! These guys aren't repairing ANYTHING, these just a->b->c transactions, but hey the ATTY said it is legal, so jump on board and be RICH,,,just like them....and have fun in PRISON...JUST LIKE THEM!! Hey maybe the ATTY will provide free representation......I have PROOF people

msmammypie: (July 16, 2010 5:55am)

I'm a real estate regulator, and you are correct, the vast majority of our licensees are honest and hard working. Unfortunately, short sale fraud is rampant, and while I can't quantify numbers for you, I think the statistics provided to you are too low. We have seen a whole bunch of creative "business models" that are also fraudulent. They all sound good, too, so it's really easy for good folks to get sucked into participating. We are hoping that we have seen the peak and that the new federal short sale requirements will help eliminate most of what we've been seeing, like equity skimming, "phantom offers", unlicensed folks negotiating short sales with lenders, and the list goes on and on. Focusing on the negative is not good for the industry, but we have to try to get the word out to our licensees about what we're seeing so they can stay out of harm's way themselves. Keep up the good work, fellas! Frank, if you're going to San Francisco, be sure to wear a flower in your hair...

donloyd: (July 16, 2010 5:53am)

I’m a Realtor, Investor and private money lender and in the early 80s a bank loan officer. When I place an all cash offer on a short sale I add a statement in the offer that says, “Buyer is making this offer with the intent to re-sell for a profit,” or words to that affect - and generally re-sell within 24 hours of closing. As far as I can tell, if there is full disclosure there is no fraud. The point mentioned earlier is on target. Many of the homes I see in short sale lists are those who need more than TLC. Many need major renovations, appliances, etc. Let’s get these short sales off the books sooner than later so we can get back to a more “normal” way of doing business (which is, of course, constant change – but that’s a subject for another time).

Racheli: (July 16, 2010 5:51am)

Brian and Frank, GREAT SHOW TODAY thanks Well Said! Not everything that has a profit constitutes Fraud An investor taking a dilapidated property (out of the banks hand) fixing it up so that it can be sold to an end user who needs a loan to buy it doesn't mean it is done fraudulently. he deserves to make a profit. Yes I know there are some scruples characters out there that makes it look bad for everyone. Racheli Refael Smilovits Senior Mortgage Advisor www.YourMortgageCafe.com

GaryP: (July 16, 2010 5:48am)

I can't help but wonder how the Coldwell program (and others) gets around the seller concession caps? I suppose that $10K works on high cost homes, but what about "affordable" homes. This is going to be an even bigger issue if HUD has its way and they reduce the allowable seller concession on FHA loans to 3%. I think this is simply another cae of them trying to fix a problem that no longer exists in the industry (like Congress outlawing sub-prime or stated loans). I know that reducing seller concessions is definitely going to hurt me and my market. Not only is it going to cut down on entry level deals, it will eventually trickle down to hurt the move up buyer market as well. HUD is currently accepting comments on the 3% change. You can leave your remarks here : http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480b1a605 Just remember, even if this won't impact your market, it will definitely impact the overall market and you indirectly.

philromanow: (July 16, 2010 5:38am)

The link to J Gitomer e-book did not work

jack: (July 16, 2010 5:27am)

Coldwell Banker's promotion is a farce. Talk about a misrepresentation. It is basically a seller credit of $10,000. Does anyone think that this really is effective marketing? The seller concession is disclosed to the appraiser who then makes an adjustment and the deal blows up. A better approach might be to list the home at a price that it will actually sell for.

PAREOSales: (July 16, 2010 5:17am)

Well put BuyLowSellHigh! Is this akin to the contractors who flocked to New Orleans after Katrina because that was were the WORK was? It’s natural investors are focusing on Short Sales and looking (although one may argue speculating) to turn a profit.

BuyLowSellHigh: (July 16, 2010 4:55am)

There is no fraud in a short sale if a buyer buys the house and sells it the same day or 30,60,90 days later for more...be that 20%+/- or whatever number. Fraud is intentional misrepresentation... Somehow there is some assumption that a short sale lender is owed a fiduaciary responsibility from the buyer to (who waits through the frustrations of the lender for 60 to 180 days to get his deal approved) GIVE that lender the buyer he or she has found to buy the property at a higher price. Where, when, how has this fiduciary responsibility occured? Short sales, by the very fact a buyer has to wait 2 to 6 months for an answer are worth SUBSTANTIALLY less than the exact same house where the owner or reo department can respond to an offer in a matter of days. Why would anyone wait 2 to 6 months for an answer on a purchase if they were not going to get the property for a "real deal"?

nnicholas: (July 16, 2010 4:51am)

Coldwell Banker is actually asking it's sellers to put up the "stimulus" money. They're not spending a dime of their dough.

mmeyers1212: (July 16, 2010 4:25am)

Of course foreclosures are down. This administration has introduced "mediation" as a stall tactic for foreclosures. This mediation rarely works, and, if it does work, will only help the "strategic foreclosure" folks who have had the money but ducked their bills. Hence, mediation is artificially lowering our foreclosure numbers.

Fl Mortg Lady : (July 16, 2010 3:49am)

In Fl., rehab investors are buying homes and curing them of defects that banks WILL NOT take care of. The investor then resells these homes for a higher market price increasing property values, versus selling a home in need of repair for a lower price AS THE BANKS DO, which decreases area values. Rehab/investors have the burden of justifying a greater price and the labor of making homes livable, where the banks get away with doing nothing while decreasing our values. Why is it that we are remedying everything possible in our industry... except for making banks do exactly what these rehab investors are doing, by making these homes decent for new home buyers and then selling for a decent price in the market? The banks insist we sell them a perfect home with qualified homeowners. They need to practice what they require of us. These investors are simply doing the hard work the banks won't.