WFAA-TV
Inflated appraisals threaten North Texas housing market.
MCKINNEY â Owning a home is the American dream, right? And for most people, it is also their biggest investment. But some out-of-state investors are doing something that is threatening North Texas neighborhoods and putting houses on the fast track to foreclosure.
Documents obtained by News 8 show that in February of 2002, one McKinney home listed for $315,000. In January of 2006, it sold for $625,000, and in the closing documents, someone walked out of the deal with $256,000 listed as a âdisbursement.â Records show that money did not go to the seller.
Josh Melton did the appraisal. He declined to talk to News 8. And while appraisals are confidential, News 8 obtained records that show Melton appraised three properties in that same McKinney neighborhood at extraordinarily high values.
Mortgage lenders will determine a loan amount based on an appraisal. Appraisers generally formulate their values by comparing a home to others similar to it, in the surrounding area. But the McKinney home News 8 investigated had an appraisal nearly double the value of homes around it.
Appraisers whose reports are favorable may get repeat business. But appraisers who inflate amounts also stand to lose business.
âAnytime we see an appraisal has potentially inflated values,â Rodney Anderson of CTX Mortgage Company, âwe will move them off our list where we will not let them be an appraiser. And we will not accept an appraisal thatâs done by them on any mortgage transaction.â
So whatâs the problem with allowing out-of-state investors to pay too much for properties? Who does it hurt? All of us, Anderson believes.
âWhen it finally comes out, it kills the market.â
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