I’ve looked in to things like HELOCs before, and from what I know when you’re looking for something like that or some sort of loan that needs some underlying collateral banks usually use appraisers to determine the value of something you’re taking a loan out against. Do people who commit fraud somehow just say “Yup, my properties are worth $X,XXX,XXX” and the banks just gave him loans based on their words? During any of these processes do appraisers get involved? How can you get loans by just saying “My property is worth this much” Do people alter the financial records of how much income properties are making so banks assume buildings are worth that much? Don’t things like the physical characteristics / condition of a building itself, and the location, and similar comps mostly dictate the price tag of real estate?
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Some other aspects they look at is your income. So you could take your bank statements to show that your paychecks are more than they actually are.
> Don’t things like the physical characteristics / condition of a building itself, and the location, and similar comps mostly dictate the price tag of real estate?
You think the bank themselves are going to your property? If you bring an appraisal report, that could be doctored as well as your bank statements.
Banking for you and me is quite a bit different from banking for the rich and corporations. While you and I are scrutinized under a microscope as per very strict rules, those rules don’t exist when banking at that level. Business is done by reputation and negotiation. It is a completely different financial world that has no equal at our level.
Using stolen information you can use a fraudulent address to say this is your real address and so when the bank attempts to chase you for repayments on the loan they contact the fraudulent address to get their money back.
Is this a reference to the Trump suit? It was determined that he lied about how much his collateral was worth in order to get better rates on his loans and lower insurance premiums. eg he claimed his personal apartment was worth over $300m and much large than it actually is. But there are no apartments in NYC anywhere near that
If you’re talking about loans for commercial properties, worth millions of dollars, there are a few ways you can commit fraud.
First, the bank doesn’t usually send their own appraiser for commercial real estate loans – the borrower will have an appraisal done by a licensed firm, the bank will ensure that firm is on their approved appraisers list, and they’ll get a letter from the appraiser saying, “you can rely on this appraisal for your loan underwriting”.
Having an approved, licensed appraiser list limits the risk of the borrower using a friend to give their property a high valuation, but reports can be altered, which would be one source of fraud.
Second, commercial properties are typically valued based on the level of income they produce. A borrower could create fake leases for all of the units in the building to make it appear less vacant/make rents appear higher. This would be another source of fraud, and a more important one than appraisal fraud.
The biggest factor in valuing a commercial property is “how much money can I make off of this property.” Location plays a factor, but only because rents in New York are higher than in Akron. Building age plays a factor, because people will pay more to lease space in a new building. If someone can show a building fully leased up at a good lease rate, that income is much more important than the building’s actual qualities (assuming it’s not an abandoned haunted hospital or something).
Assuming this is in reference to Trump, in my state, the county assessor in the biggest city (Chicago) can’t possibly assess all the buildings. The county claims about 1.8 million properties, which are assessed every two years, although other sources think it’s closer to 4 million. About 30 property tax assessors (some of whom are managers or accountants who don’t actually assess properties) are responsible for assessing those 1.8 million properties every two years, or 900,000 properties per year. If we accept 1.8 million properties, and 25 of those employees did nothing but assess, they’d have to assess 36,000 properties each/year, or nearly 20 properties/day, top to bottom.
The truth is that those properties are all wrapped up in bulk assessments that hand out bulk tax rates, based on a bunch of assumptions about neighborhood, occupancy, building age, etc.
So you get handed a high standard tax rate (Illinois has relatively high property taxes generally), and you immediately hire a lawyer to appeal. CONVENIENTLY FOR YOU, a bunch of members of the state General Assembly also own lawfirms or are partners in firms that do literally nothing but appeal property tax assessments. They appeal — like everyone who knows how to file the form appeals! Property taxes are too high! — and they get you a cheaper tax bill. You pay them a percentage of the savings on your bill. And nobody says you have to vote for them next year, but you vote for them next year anyway.
Maybe in a few years, you own a really big property, and you hire the same guys to do your property tax appeal, and the difference in taxes is a few million after they get your parcel reassessed. And now they start telling you that only their friends get good, low assessments. And a little money changes handles to make everyone feel comfortable with the assessment. And suddenly you’ve paid a bribe, but it’s saved you $30,000, so it doesn’t feel so bad.
Anyway, the smart way to do property-related fraud in my state is to hire a politically-connected lawfirm and have your property assessed as “very dumb and very worthless” so you are taxed accordingly. Your lawyer can navigate the law and your valuation, and chances are the assessor doesn’t have the manpower.
(Also our last few assessors have been HELLA corrupt themselves, so you could also just direct-bribe them, although that’s a lot more federal prison for you if you do a bad job.)
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