Are builders in on the scam? Of course they were! Here is part 2 of a series on the behind the scenes that most people never get to witness.

Poppy from Arizona:

Hey, how about the appraiser that decided he could not come to value (fancy that), who in his infinite wisdom decided to alter/raise the sales prices for the comparables on the top of the grid and adjust from there……he sure was able to bracket and support the value he derived for that subject property and a few others too.  Now the comparables’ sales prices did not match the recorded/actual sales prices on the MLS or in Public Records, but hey, what’s a few fifty thousand or hundred thousand here or there.  The value of the subject properties were inflated to no where near true market value, but what the heck, who would know or care…..  Well, inquiring minds want to know and so they inquired, a little knowledge is a powerful tool.  My Realtor friends provided the MLS listings on the sold comparable properties and a little internet surfing provided the public records.  You may ask who would do this awful, manipulative, divisive act…a Builder Appraiser.  Wow, bet you are surprised, Mr Builder (National Builder) should be ashamed.  Keeps those sales prices rising on his lackluster sub-divisions in the shadow of declining values everywhere else in the immediate neighborhoods, Mr Builder’s profits suck just about everywhere else, but in this market they appear to be just dandy and still rising…

Is this a past or present act? 

Present, presently going on as we speak in one market with which I intimately familiar.  What does the lender/correspondent do -requires it to go forward.  The word “require” is mild, the owner, Mr Lender, of this mortgage bank/brokerage has an annoying habit of coming across the desk at the underwriter literally spitting profanities (goggles were de rigor on that assignment), threatening the underwriter with their jobs directly and in insinuating terms.   You should see what Mr Lender can do with private money mortgages to hide undisclosed properties for his clients….the man is amazingly criminal while combining the innocence of a new born babe when you reveal his malfeasance to him after reviewing the loan.  Absolutely no conscience, totally entitled, you are the fiend if you discover that malfeasance and professionally and politely point out the issues then carefully and respectfully decline the credit request.   The phrase “all holy hell” does not even begin to describe the ensuing events.

As for Mr Builder -we all are familiar with the name, who to protect the guilty will go unpublished, my guess is that Mr Builder is part and parcel of the whole shebang (this appraiser is Mr Builder’s preferred appraiser) and has given specific instructions to the value that must be met regardless of market reality.  When confronted by these naughty appraisal antics I would venture to assume that Mr Builder will protest his innocence as vigorously as the above Mr Lender and with many of the same offensive tactics. 

So, you the buyer of Mr Builder’s new home, you just got taken by a really sophisticated shell game.  Congratulations, that new home you just purchased is most likely worth 30,000.00 to 40,000.00 less than you paid.  You walked into that one, you are most likely in an 80/95% LTV/CLTV Product in todays market, but you are still upside down.  Mr Investor, you have invested in another loss leader should you buy this turkey 80/15 Combo Product, you too are underwater, yet again, yet another one.  With all of the declining values going around in today’s markets about a year from now this collateral will be at least 50,000.00 to 60,000.00 below its original sales price, never mind original value, it was never valid.

Now for a relevant revelation – did you know that the collective Mr Builders (multiple National Builders) are requiring buyers to sign non disclosure agreements at the time of Sales Contract as regards that buyer’s sales price.  Began sometime last year around October, you can not discuss with your neighbors and fellow homeowners what you paid for your New Home.   Damn, up or down Mr Builder is protected.  You paid less than the neighbor on the right, he will never know how much he has lost in value over the last year or so.  You paid more than the neighbor on the left, you will never know how badly you were snookered.

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