Monday, November 21, 2005

Jury Verdict for SouthStar in Civil Lawsuit Against Appraiser

SouthStar Funding, LLC obtained a $150,000 jury verdict against Oyedele S. Oyewole, a Georgia appraiser on November 16, 2005.  According to the underlying complaint filed in the action, SouthStar relied on appraisals of Oyewole in funding two loans in July 2003: One for borrower Olanrewaj Tejuoso for property located at 27 Joseph E. Lowery Boulevard, SW, Atlanta, Georgia and the other for Gertrude Longwan for property located at 568 Muse Street, Atlanta, Georgia.

Both loans were sold in the secondary market to FNMA and both defaulted for nonpayment. At foreclosure, according to the complaint, FNMA obtained review appraisals which revealed that the appraisal overstated the value of one property by more than $140,000 and overstated the value of the other by more than $100,000.  SouthStar was required to indemnify FNMA for losses and thereby suffered damages in the principal amount of at least $100,000. 

According to the complaint, among the misstatements, misrepresentations and reckless errors in the Tejuoso appraisal, Oyewole failed to use true comparable sale data, ignored and failed to disclosed relevant sales in the neighborhood at much lower prices, relied upon two other questionable sales as comparables without disclosing that both were purchased by the same person within a two week time period, failed to make proper adjustments to comparables, failed to mention area foreclosures, listed the effective age of the property as 10 years despite the fact that it was 82 years old at the time of the appraisal, and falsely indicated that the property exterior was brick and frame when it was, in reality, wood siding.

On the Longwan appraisal, the complaint alleges, Oyewole reported that there had been no sales history of the property in the past three years despite the following sales: $115,000 in April 2000, $214,000 in May 2001, $107,500 in May 2003 and $250,000 in July 2003.  The property was also listed as having an effective age of 10 years when it was actually 73 years old at the time it was appraised.

The complaint, filed September 9, 2004, included causes of action for fraud and negligence and also sought punitive damages and attorney fees.

mortgage fraud

1. I am not trying to support what this appraiser did, however, it is important to understand the difference between actual age and effective age.  For example if I purchase a home that is 50 years old, and extensively renovate it with new mechanical systems, new kitchen, and new baths.  The actual age of course is still 50 years, but because of the renovation the house is effective more similar to a much newer home thus the effective age would be something less than the actual age.

   Posted by  on  12/01  at  12:29 PM