Foreclosure / Appraisal Issue

[MD425]

What is the name of your state? Florida

I bought my house with 80/20 loans. I thought the asking price was a little high based on other homes in the area, but this home was nicer with some decent upgrades. Therefore, I decided to pay for the appraisal and let the appraiser validate the asking price. If the appraisal came in at a lower value, it would give me a negotiating tool. Prior to closing I asked several times for a copy of the appraisal and was told by the lending agent not to worry -it came in at the asking price (amazing). I received a copy of the appraisal after the closing, and of course was too busy moving in to look at it. Over the course of the next 7 months I started divorce proceedings and lost my job. I realized I might have to relocate to find a suitable job and pulled out the appraisal to get an idea about selling the house. The appraiser estimated the value of the home at 260,000 (the asking price) based on 2480 living square feet. The builders plans show 2031, the county estimated 2061, and I confirmed with 2026. In a phone conversation, the appraiser admitted to not measuring the square footage with multiple bogus excuses. Her diagram and calculations show that she included the lanai (porch) as Other sq ft AND as living sq ft. I tried to reach an agreement with her on the gross error. She stopped taking my calls. I moved away for a new job and tried to negotiate a settlement with the bank. I was told there was nothing they could do after talking to several departments of the bank, unless I found a buyer and paid the difference. Realistic value of the home was 210,000 - 215000 based on actual sq footage and comps. I could not afford to pay the 50,000 and I felt it was a steep price to pay for someone else's mistake. I stopped making payments and just found out I have a summary judgement hearing in 3 weeks. The divorce property agreement has been filed with the court and it is days away from being complete. She agreed to be equally responsible for the house in foreclosure. I'm waiting on the outcome of the foreclosure before pursuing the appraiser.
I've spoken to two attorneys but not since the foreclosure proceedings started. The attorneys were not very helpful. I need to find a solid attorney?

o Should I attend the summary judgement hearing?

o Is the bank responsible for the appraiser's error?

o I don't want the house, but is there anything I can do to protect myself from the affects of a foreclosure and a possible deficiency judgement? If the house was worth what I paid for it I would have stuck it out until I found a buyer, but with my situation I felt all I could do was let the house go.

o Is my personal propety/assets in jeopardy if I receive a deficiency judgement?

o Can they garnish wages or retirement accounts?

o How likely is it that a bank will issue a 1099 form claiming the difference in the sale price and amount owed as income? I could easily owe taxes on 100,000 that I didn't earn if they do that.

o The ex wife has minimal income. Will our divorce agreement to be equally responsible for the home hold up in a deficiency judgement?

o Do I file suit against the appraiser or the bank? The appraiser is an independent appraiser hired by the bank. Do I stand a chance in a suit? Is there a time limit to file suit? Its been about twenty months since the appraisal.

I know I have a lot of question, but hey isn't that what this site is for? I appreciate any helpful advice.

 

[FlyingRon]

Excuse me, but you have two unrelated issues that you are somehow joining together. The appraised value of the house has no bearing on the fact that you are not in foreclosure. Foreclosure happens because you didn't make loan payments that you promised to make. I'm not sure why you felt you could just stop making payments.

Why would the bank be responsible for an appraiser YOU hired and relied on? The bank may have required their own appraisal to determine their potential risks in making you the loan, but that has no bearing your responsibility to them.

There is nothing that will stop the foreclosure other than paying the mortgage off. If you can sell the house (possibly kicking in cash for the difference) you can most likely stop the foreclosure. Otherwise, it will be sold at foreclosure and the bank can pursue the deficiency with you.

Yes, you are personally responsible for the deficiency. Subject to the state laws you may be subject to attachment of other property and garnishment. I'm not up on Florida law. If you're wife is on the mortgage, she also will be subject to the procedings. Divorce doesn't change this. Of course, they'll collect money where they can (nothing says they need to be equitable about it).

You have no cause of action against the bank. The only thing they did wrong was to loan money to someone who obviously either won't or can't live up to the terms of the note. They're paying for this now.

You can try suing the appraiser for the damages in the error, but the appraisals are probably weasel worded enough that you are unlikely to get the full $50,000 you are claiming even if you were to prevail.

 

[lcannister]

Should I attend the summary judgement hearing?

You or your Atty one or the other should attend.

Prior to closing I asked several times for a copy of the appraisal and was told by the lending agent not to worry -it came in at the asking price (amazing

There is nothing amazing about that, it happens all the time that the appraisal comes in at the asking price or even what the lender "needs" it to come in at.

Very doubtful you could recover even 1/2 of the 50K in a lawsuit. It is also highly unlikely you could get 3 othe appraisals from 3 other people and get the same sq footage of the home. Too many little variables that can be taken into account or not.

Just me but if the lender would not provide my Atty with a copy of the appraisal which I paid for, before closing I would get a new lender. Though a seasoned purchaser of property I never do it without an Atty who does have the time to do what I do not even care to do and that is to READ the contracts before I sign or he signs as my POA. In the end it is always money well spent. And if one does not have the 500 to 1000 to spend on protecting one of the more expensive things they do in life they, in my own opinion only, do not have the funds necessary to purchase a home yet.

For others who come to the forum and not necessarily aimed at you but if people would treat a home purchase the way they do a necessary appendectomy, seek a professional to handle it, we would not see the kinds of horror stories we do here.

Sorry you went though this but I think if you get out the appraisal papers you will find mouse print that will pretty much get you the cost of your appraisal back and maybe not much else.

 

[tranquility]

Flying Ron wrote:

There is nothing that will stop the foreclosure other than paying the mortgage off. If you can sell the house (possibly kicking in cash for the difference) you can most likely stop the foreclosure. Otherwise, it will be sold at foreclosure and the bank can pursue the deficiency with you.

Yes, you are personally responsible for the deficiency. Subject to the state laws you may be subject to attachment of other property and garnishment. I'm not up on Florida law. If you're wife is on the mortgage, she also will be subject to the procedings. Divorce doesn't change this. Of course, they'll collect money where they can (nothing says they need to be equitable about it).

I thought loans for the purchase of your personal residence were non-recourse. What am I missing?

 

[MD425]

Thanks for the input.

Maybe this will clarify. You are right in that these are two separate issues. I linked the two issues because the bank, not me, hired the appraiser which is why I think they are liable. Now, I cannot sell the house without paying the difference which was created by the appraiser's errors who was hired by the bank. If I had asked my buddy to appraise the house then there would clearly be no relation between the two issues.

I stopped making payments because I moved away when I found a job in another town, I could not sell the house, and I realized I was in a hole I'd never get out of for less than $40,000 and the STBX was not willing to contribute anything. I didn't have that kind of money. A deed in lieu of foreclosure would have cost me at least $40,000 and a short sale more.

Florida law requires appraisers to have insurance, but you're right about the legal wording on the appraisal. It reads like a foreign language.

 

[FlyingRon]

Thanks for the input.

Maybe this will clarify. You are right in that these are two separate issues. I linked the two issues because the bank, not me, hired the appraiser which is why I think they are liable.

You said you hired them, get your facts straight.
If the bank hired them, it is for the banks benefit only and you have even less of a claim. The appraisal's responsibility was purely to make the bank feel confident in making the loan.

Now, I cannot sell the house without paying the difference which was created by the appraiser's errors who was hired by the bank.

No, the appraiser did not cause the difference. You made a purchase offer that was accepted. That's what set the purchase price on the house. You got a 0% loan. That's what set the terms of the loan. You can't sell the house for what you owe. That's market conditions.
None of these are the fault of the bank or the appraiser.

I stopped making payments because I moved away when I found a job in another town, I could not sell the house, and I realized I was in a hole I'd never get out of for less than $40,000 and the STBX was not willing to contribute anything.

None of these are valid excuses to NOT continuing to pay. I've taken losses on rentals and even commuted farther than I cared to because I couldn't economically afford to get out of ownership on properties. I did eventually take a bath on the property anyhow.

 

[MD425]

Flying Ron -

When a bank calls an appraiser to get an accurate value on a house and passes the cost on to me, the bank hired them and I paid for it. I did say that I paid for it. I did not say I hired them.

I do not think it unreasonable to expect a professional appraiser to be able to provide an approximate value of a home. When the appraiser uses a calculation of sf x market price per sf = appraised home value, I believe it is reasonable to expect the appraiser to have a margin of error of less than 25% on the sf. In no way do I expect an appraiser to be exact, but is it too much to expect that they will be within 100 feet? In my case that would have been a 5% margin of error. She was not even close. If you can read a tape measure and do simple math it is not hard. However, in my case the appraiser admitted to not measuring the house. How can one determine the square footage without using a tape measurer? She stated that the plans showed 2480 sf. I have the plans and they do not. I know you cannot build a 2030 sf house with 2480 sf plans. The appraiser clearly calculated the estimated value based on approx 450 sf of house that did not exist. I'm sorry, but that is not market conditions. The market did not take away 450 square feet of my house. That is a missing 21'x21' room. Houses were selling at the same price per sq ft when I moved out as when I purchased the home. So market conditions were not in play here. It is clear that she divided the asking price by the market price per sf to calculate a square footage in order to "appraise" the house at the asking price.

I really did not make this post looking for approval of what I've done, but for advice from people that have experience dealing with similar situations or that can provide useful advice that might help me out.

For all others - thanks for your advice. My first house went smooth, but after this I will definitely hire an attorney on my next go.
Will my contract specify if this is a non-recourse loan or is that a law I can research?

 

[lcannister]

I've spoken to two attorneys but not since the foreclosure proceedings started. The attorneys were not very helpful. I need to find a solid attorney?

And what did they tell you? Sometimes when Attornies are "not very helpful" it is because they are telling the client what they do NOT want to hear.

Appraisals are even done by drive by and by someone never having viewed the home but by computer. I am not sure how often but it is done or how acceptable it is by the industry.

 

[MD425]

The real estate attorney said he'd take the case and start by sending the appraiser a letter and then file suit depending upon the response. He thought I had a decent chance against the appraiser. However, after way too many phone calls and promises to find information and call me back, I found out they never sent the letter and no one could tell me why. I live in a different part of the state now, so dropping by the office is difficult. The attorney was never available and didn't return my calls. After 4-5 months of this I gave up. The other attorney was my divorce attorney and he thinks my chances are bleak.

It's unbelievable an appraiser would do a drive by appraiser. I've heard of that. I'm going to find an attorney monday.

 

[LindaP777]

It's unbelievable an appraiser would do a drive by appraiser.

I got one better . . . we've got a drive by building inspector! I was standing on the front porch of a rehab with my contractor. A car goes by and honks his horn and my contractor waived at him. He said, "That was the building inspector. We were approved!" They know each other. Small town. What can I say?

 

[FlyingRon]

Flying Ron -

When a bank calls an appraiser to get an accurate value on a house and passes the cost on to me, the bank hired them and I paid for it. I did say that I paid for it. I did not say I hired them.

Just because the bank made you pay an appraisal feer, doesn't mean he has any responsibility to you. It's the same way with title insurance. I gotta pay it for the bank's interest but it is of no benefit or reliance to me.

 

[MD425]

I can't find an attorney willing take this case due to short notice for summary final judgement hearing in just over a week now.

Should I go to the hearing? Will I have an opportunity to present my case or is that what the lis pendens was for? Would it be beneficial to request a delay and find an attorney?

thanks

 

[MD425]

I paid for a full Freddie Mac appraisal, so a drive by would have been a negligent act on the appraiser. She did take pictures all around the house, so I know she got out of her car. All I can find is that the information she gathers must be from a reliable source, such as the MLS or builder for sf. Her figure on the sf came from neither as the builder did not offer a house of that size at the time of the appraisal.

 

[lcannister]

This question has been answered for you before

Should I go to the hearing?

YES!! Take anything you like with you just in case but blaming someone for a sq footage error is not going to stop your foreclosure that is due to failure to pay the payments.

I started to reade back through the thread but when I saw that you added dditional info to the original message I didn't.

It is better to add any additional info as a separate entry instead of changing a prior post with info that others have not even read becasue they do not go back to the original expecting to see it changed.

Good luck.

 

[MD425]

This question has been answered for you before



YES!! Take anything you like with you just in case but blaming someone for a sq footage error is not going to stop your foreclosure that is due to failure to pay the payments.

I started to reade back through the thread but when I saw that you added dditional info to the original message I didn't.

It is better to add any additional info as a separate entry instead of changing a prior post with info that others have not even read becasue they do not go back to the original expecting to see it changed.

Good luck.

I edited the post before anyone read this thread. That's why the site will post the date and time of the edit. That's your right to not read it again, but its the same info as the first time you read it. Thanks for the advice...do you have any legal advice?


I just read that a summary final judgment hearing is not intended for counter claims, so even with an attorney I think at best they could delay the foreclosure. I don't care to do that. I'm not fighting to keep the house bc of the 50K negative equity situation. I really don't see any benefit to attending. I stopped making payments and do not contest that. By attending I do not think I have a chance to improve the outcome. I could be forced to answer questions that would not be in my best interest. Anyone have a different opinion?

Anyone know what to expect in this type of hearing?

thanks