Invesor ring artificially boosting property values

[Mark Safrin]

How common is for a group of investors to sell properties amongst themselves to inflate the apparent value of the property before approaching a HML to draw out the value?

Came across one such group. If I understand it correctly, they are hoping our appraisers will just use the last sale price as the preferred comp.

I don't think they realise our professional underwriters are not dumb. Nor that people in the industry speak to each other.

I am however wondering how common this is.

[Chris Mason]

Originally posted by @Mike Malloy:

We have seen some of our borrowers refi with small banks at 3X what the property is worth. Not sure how or why, but it can’t be good in the long run. 

 FWIW usually there is cross-collateralization involved. EG, you see a mortgage for $1.5m recorded on 123 Main St because you are looking at 123 Main St's title history. Dig a little deeper into other things owned by the borrower, and you might also find that same $1.5m recorded against those other properties as well.