No Money Down Real Estate Investing Course
Learn How To Buy Income Properties Without Risk, Good
Credit, Money Or Tenants!

Click here for more information
 
Welcome, Unregistered.
User Name
Password
Forum Links
Site Navigation
Real Estate Resources
Go Back   Real Estate Investing > Real Estate Resources and Tools > Mortgage and Finance
Reply
   
 
Thread Tools Search this Thread Display Modes
  #1  
Old 02-26-2006, 11:52 AM
admin's Avatar
admin admin is offline
RE Guru
 
Join Date: Aug 2005
Posts: 111
Post Lying to Lenders

In recent years, it has become common for mortgage brokers to make risky loans happen by getting appraisals that reflect a value higher than the true market value of the property. Out-of-town lenders accept these appraisals at face value, and make loans at 80% or so of the appraised value to borrowers with marginal credit. As a result, many lenders have been unknowingly making loans on properties with no equity to homeowners who don’t have the credit to support such a mortgage. We’ve all seen the results of this in the huge increase in the number of foreclosures in the last 12 months, not to mention the number of sellers we can’t help because they’re over-leveraged on loans with sky-high interest rates. In these deals, the lender loses and the borrower loses. The only “winners” are the mortgage brokers who were paid to put the deals together and the sellers who sold their properties for top price plus–many of whom, unfortunately, were investors.

Thanks to the problems this has caused, a new laws are being passed to “control” the parties involved. Throughout the country, newspapers are writing (and picking up–the recent Enquirer story has already appeared in Canton, Ohio) “exposé” stories on poor homeowners who’ve lost their homes thanks to unscrupulous brokers and investors. Lenders have tightened their standards, and honest appraisers are so afraid of being accused of fraud that they’re hesitant to appraise a property for more than its most recent purchase price. The result? Those of us who are doing legitimate repair and resell deals are having a difficult time getting loans for our buyers. Investors who have engaged in or cooperated with this scam have cost lenders hundreds of millions of dollars, cost thousands of buyers the American dream and cost the industry it’s reputation. So when the few investors who do this tell me that they aren’t doing anything “wrong” by helping make these deals happen, I just have to wonder.

Buyer Beware. One of the most heinous–and common–things I’ve witnessed is the "wholesaling" of properties based on false figures. Apparently, some wholesalers have forgotten what wholesaling is. Wholesalers are supposed to leave a lot of profit in a deal for the buyer, NOT sell properties at a price where the buyer can’t make any money! I know too many wholesalers who prey on inexperienced investors by "proving" (through fake appraisals or by using those high-end comps created by those deals I outlined above) that the property is worth more than it actually is. In fact, some wholesalers I know won’t work with experienced investors anymore, because they've discovered that they can charge newbies thousands of dollars more for the same properties! When you can convince someone who's new in the business that you're a good guy and an expert, it’s not hard to convince them to overpay. But when you prey on the trust of people who don’t know any better to sell them deals that can’t be profitable, you're scum who doesn't deserve the name wholesaler. The buyer should not HAVE to beware of you.

Reprinted from the Real Deal, a monthly newsletter for Real Life Real Estate Investors with permission of Vena Jones-Cox. Get a free 3-month trial subscription by logging onto regoddess.com
__________________
No Money Down Real Estate Investing Resource Site:

WWW.BuyIncomeProperties.COM

Income Property Listing:

WWW.BuyIncomeProperty.COM

Real Estate Investing Blog

www.Reiblorg.org
Reply With Quote
  #2  
Old 09-19-2006, 06:39 AM
Ole_chilli
Guest
 
Posts: n/a
Default

well seems to me that there are some miss interpretations here . appraisals and market value are not one and the same to begin with .appraisals are estimates not true value . market value is exactly what it is selling for on the open market

and buyer should always research what he is getting into
Reply With Quote
  #3  
Old 09-19-2006, 05:37 PM
r8rpwr
Guest
 
Posts: n/a
Default

That whole situation is pretty appalling, and has made it harder on those who legitimately try to do business. We recently bought a foreclosure home which we did a lot of work to and tried to refinance and cash out in order to buy more properties. Well, of course the bank had issues with the seasoning on the loan and would not accept the appraisal! Caused all kinds of headaches to work that out.
Reply With Quote
  #4  
Old 09-19-2006, 06:55 PM
Ole_chilli
Guest
 
Posts: n/a
Default

Quote:
Originally Posted by r8rpwr
That whole situation is pretty appalling, and has made it harder on those who legitimately try to do business. We recently bought a foreclosure home which we did a lot of work to and tried to refinance and cash out in order to buy more properties. Well, of course the bank had issues with the seasoning on the loan and would not accept the appraisal! Caused all kinds of headaches to work that out.


there are almost no banks left that will do less than 12 months seasoning on any mortgage. you should talk to a mortgage professional first
Reply With Quote
  #5  
Old 09-20-2006, 02:43 PM
r8rpwr
Guest
 
Posts: n/a
Default

Quote:
you should talk to a mortgage professional first


That's what we did; we have a good relationship with a local mortgage broker who has worked with us on several recent loans.
Reply With Quote
  #6  
Old 09-21-2006, 08:19 AM
Ole_chilli
Guest
 
Posts: n/a
Default

Quote:
Originally Posted by r8rpwr
That's what we did; we have a good relationship with a local mortgage broker who has worked with us on several recent loans.


he didn't make yo uaware that 99.9% of lenders require 6 -12 months seasoning or to sell a house at a profit
Reply With Quote
  #7  
Old 09-21-2006, 04:39 PM
r8rpwr
Guest
 
Posts: n/a
Default

Quote:
Originally Posted by Ole_chilli
he didn't make yo uaware that 99.9% of lenders require 6 -12 months seasoning or to sell a house at a profit


I'm not sure what your point is? I sense a little condescension?
Reply With Quote
  #8  
Old 09-22-2006, 02:04 PM
Ole_chilli
Guest
 
Posts: n/a
Default

Quote:
Originally Posted by r8rpwr
I'm not sure what your point is? I sense a little condescension?


No I am trying to be condescending towards you .. I am just shocked that your mortgage professional didn't point this out before hand. I know several people that have gone to jail for tryn gto find unethical ways to get flips done ...
Reply With Quote
  #9  
Old 09-23-2006, 05:45 PM
r8rpwr
Guest
 
Posts: n/a
Default

Quote:
Originally Posted by Ole_chilli
No I am trying to be condescending towards you .. I am just shocked that your mortgage professional didn't point this out before hand. I know several people that have gone to jail for tryn gto find unethical ways to get flips done ...


My mortgage broker and I are fully aware of the issues surrounding seasoning. That does not mean that a refinance is not possible in less than 12 months. Our original loan was a 6 month balloon note, so we had to refinance in that period of time. I feel fairly confident in the advice of my mortgage broker, who has worked with us for several years, over the opinion of some random person on the internet whose credentials are unknown.

I certainly hope you are not insinuating that we are involved in something unethical. Seems an odd reference to unethical thrown in there, in reference to my post.
Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is On
Forum Jump



All times are GMT -8. The time now is 11:55 PM.


Powered by: vBulletin Version 3.0.8
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
Search Engine Friendly URLs by vBSEO 2.4.0
Copyright © 2001 - 2006, Buy Income Properties, Inc. All Rights Reserved. Privacy Policy in Observance.