Foreclosure Defense: Appraisal Deceit Borne Out by Actual Facts

One of the key elements of the attack on the “lender” is fraud in the inducement and fraud in the execution of the loan documents. A central point to the attack is that the borrower was correctly, reasonably and legally (TILA) relying on the mortgage broker (state law and regulation), the lender (TILA, state law and regulation) and the appraiser (state law and regulation) to deal fairly with him/her.

The law recognizes that real estate documentation is too complex for the average lay person to understand or absorb, especially when they are given one day or even 10 minutes to review a 2 inch stack.

It is the borrower who had the least amount of information and true facts and the least access to those facts which were intentionally withheld from him and even where they were in the the documents, he/she was distracted from looking at it by these players. That is why TILA and other laws require summary disclosures in clear plain English and severe penalties to lenders if they fail to comply.

The fact remains that these declining prices underscores the comments in Bill Moyers’ piece (see top of blog) that the conspiracy of Wall Street and Main Street banks produced the environment for this crash to happen. They artificially inflated appraisals on a systemic basis.

The borrower relied upon these appraisals despite the fact that, unknown to the borrower, the mortgage broker had entered into side agreements for forging financial information and obtaining extra fees or bonuses in exchange for putting the borrower into a worse loan than he/she qualified, the appraiser was rewarded for coming in with higher appraisals than published appraisal standards permitted, and the lender disregarded standard underwriting principles breaching its fiduciary duties to the borrower.

The excess of “free money” pouring into the marketplace under false pretenses on both ends of the Continuum (Investor and Borrower) created an upward spiral of prices that was not based upon demand or any other fundamental factors. It was based upon high pressure sales tactics, concealed parties and concealed fees that were excessive by any measure. In the end it was a Ponzi scheme where the investor’s money (and money from new investors) was used to pay himself.

On the borrower’s end, there is only one conclusion: the people who had the expertise to know, MUST have known that the loan would fail and could not have reasonable thought otherwise. In cases where the payments would rise to a multiple of the gross income of the borrower, it doesn’t take a rocket scientist to figure that out. In cases where the borrower’s income was misstated, the lenders had easy access to internet sites that would allow confirmation but either disregarded it or used it to justify what they were doing.

See garfields-checklist-for-foreclosure-offense-and-defense1

See Garfield\’s Glossary and Tactics


S&P: Home Prices Drop by Record 15.8% in May

July 29th, 2008

Via: AP:

A closely watched housing index shows home prices fell by the steepest rate ever in May, as the housing slump continued to deepen nationwide.

The Standard & Poor’s/Case-Shiller 20-city index, released Tuesday, is off 15.8 percent for May compared with a year ago, a record decline since its inception in 2000. The narrower 10-city index has fallen 16.9 percent, its biggest decline in its 21-year history.

No city in the Case-Shiller 20-city index saw price gains in May, the second straight month that’s happened. The monthly indices have not recorded an overall home price increase in any month since August 2006.

The steepest decline in the index is in Las Vegas, where prices fell 28.4 percent in the month. Miami is a close second, with prices down 28.3 percent.

2 Responses

  1. Found this interesting document in our Settlement pkg. It has the correct Loan # – Borrower names – Property and Loan amount… it is written using all capital letters and is titled…

    Correction and Revision Agreement

    The undersigned borrowers have been advised at the loan closing that the loan documents which they are executing this date in regard to a mortgage loan being made to them do not have prior approval of or acceptance by the investor who will be purchasing this loan. As a condition of C&F Mortgage Corporation (Hereafter known as “Lender”) Proceeding with the closing of said loan prior to receiving investor approval and acceptance we agree that immediately upon request of lender we will execute whatever additional documents may be required, or will correct documents already signed, in conformity with the loan commitment.

    Any request by lender for additional documents, corrective documents, or for corrections to existing documents shall be prima facie evidence of the necessity for same. A written statement from lender or the investor addressed to borrower at their address as shown on the loan documents shall be conclusive evidence of the necessity for said additional documents or corrections.

    Failure or refusal of borrowers to execute the aforementioned required additional documents or to correct those already executed shall constitute a default under the terms of the loan documents and shall give lender the option of declaring all sums secured by the loan documents immediately due and payable.

    Dated – our settlement date – Dec 29, 2006

    At the bottom there are two signature lines – both for borrow – none for lender. I thought that was odd.

    I’m no lawyer, but that sure seems like a contradiction to the meaning of disclosure. It almost sounds like a guilty conscience by the lender… Anyone seen something like this..?

  2. Looking for suggestions…

    Construction expired 1-2 times. Our particular loan pkg no longer available. The lender makes special deal with builder – they will honor loan pkg if builder agrees to complete the house within 30-days “after” settlement. Builder agrees – appraiser comes out – appraises the house “as completed” – builder never completes the house. Lender sells note and offers no help to pressure builder to finish their house. Homeowners move into house 7-8 months later – still not completed. The lender was aware that the builder did not get legally required inspections and aware the house was never completed. The note was sold by the first or second mortgage payment. The ordeal cost the owners several hundred thousand dollars extra – it has bankrupted their business, which means they cannot afford the mortgage, but they cannot even sell the house – unless they accept huge losses, because it will not even pass state or county code.

    Can anyone tell us what we can or should do..? We want to keep our house. Can we rescind this note? I believe the current mortgage holder should be suing the previous mortgage holder for fraud.

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