Complaint / Real Estate Appraiser

Filed against Sean Solomon

Colorado Board of Real Estate Appraisers
1900 Grant St, #600
Denver, CO 80203

Attn: Enforcement

Re: My File Number -- Solomon02
Subject Property: 3112-3116 High St (Duplex), Denver, CO 80205

This is a complaint against Sean K Solomon, License Number AL40014086.

I have not contacted Sean Solomon. This matter is not under litigation.

Factual Details of the Complaint:

Who:

Buyer: Jesus Moreno, Andres Franco Gonzalez
Appraiser: Sean K Solomon
Selling Real Estate Agent: Unknown
Mortgage Broker: Countrywide
Listing Real Estate Agent: NA/Paisno
Seller: Santos Rameriz
Concessionaire: Nehemiah
Mortgage Wholesale: FHA/HUD
Person(s) with actual risk of loss: United States Taxpayer(s)

What:

The above team skillfully lied (intentionally deceived) in order to obtain $222,000. They produced a mortgage loan in the amount of $221,523. On or about May 5th, 2004, the $221,523 was divvied up amongst the team. The loan is secured by a $214,000 (or less) property (collateral) and the borrower’s promise to repay the loan (i.e., FICO score).

This is a high risk loan, i.e., there is a high probability of foreclosure, AND nearly 100% probability of substantial loss to the person(s) with actual risk. To say the same thing another way: The value of the collateral is significantly less than the amount of the debt, and because of that, there is a very high probability of foreclosure.

The appraisal report is an intentional deception produced by Sean K Solomon for the purpose of putting money into his own pocket (i.e., fraud).

Where:

Subject property address: 3112-3116 High St, Denver, CO

When:

Appraisal effective date: 04/16/04
Appraisal signed: 04/21/04
Closing: Approx 05/05/04

Contract Date: The most common date is 3/26/04. The signature is dated 3/26/04.

Why:

Each member of the team had their own motivation, but they are all paid on commission – either directly (Real Estate Agent(s), Mortgage Broker, Concessionaire) or indirectly (Appraiser). HUD is best described as politically motivated.

It is unclear if the buyer walked away from closing with net positive cash from the transaction.

For Sean Solomon, the most likely scenario is he was “marketing” – an effort to ensure a steady supply of $350 orders by keeping the customer satisfied. He knows that if he appraised this property at $214,000, he would adversely affect his reputation as a team player, and therefore, reduce his personal revenue stream.

How:

Each of the team members knew what needed to be done, and they did it.

For Example: Nehemiah exists for the sole purpose of allowing HUD to make loans that exceed 100% LTV. Nehemiah sits at the closing table, takes $10,000 cash from the proceeds of the loan, peels off some for themselves, and gives the rest to the buyer. As ridiculous as this sounds, everyone involved in the transaction knows it, and they make no effort to hide it. Since HUD assumes the risk, everyone else plays along.

Another Example: The contract contains the following statement:

“Notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase.....unless the purchaser has been given ......a written statement setting forth the appraised value of the property of not less than $232,000.”

In 2 words, the appraisal report was prepared competently and unethically. Sean Solomon started the appraisal process with the requested value, and worked backwards to support that figure. This is a 27 page report with photos, boilerplate, a detailed sketch, maps, VC, essay section, and signature. The appraiser did everything necessary to allow the loan to close.

Statement Section:

Sean Solomon has/is:

Violated the USPAP ethics rule.

Violated a standard(s) for the development or communication of a real estate appraisal, specifically standards 1 and 2.

Guilty of breech of trust in a business transaction.

Comments:

In the scope of work statement – the report says “All information was, where possible, condemned.....”. This is a curious choice of words. The scope statement used by Adam Conner contains this exact same language.

The appraisal report is misleading about the identity of the intended users, by name or type -- this is a violation of USPAP Std 2-2(b)(i) and SMT-9. Specifically, HUD should have been mentioned as an intended user. A careful reading of the report makes it clear the report specifically denies that HUD is an intended user. This is misleading.

USPAP Ethics Rule: An appraiser must perform assignments ethically. An appraiser must perform assignments with impartiality, objectivity, and independence, without accommodation of personal interests.

An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.

An appraiser must not communicate assignment results in a misleading or fraudulent manner. [Note: Fraud = Intentional deception to cause a person to give up money. Something said or done to deceive.]

It is unethical for an appraiser to accept compensation for performing an assignment when it is contingent upon:

1) the reporting of a predetermined result (e.g., opinion of value);
2) a direction in assignment results that favor the cause of the client;
3) the amount of a value opinion;
4) the attainment of a stipulated result; or
5) the occurrence of a subsequent event (i.e., loan approval)

It is readily apparent that Sean Solomon violated all of the above cited portions of the USPAP Ethics Rule. Sean Solomon is a competent appraiser. Sean Solomon is also an unethical appraiser. He set out to produce a report that allowed the loan to close, and he did so in a manner that was as competent and as unethical as necessary to accomplish that primary objective.

Pursuant to USPAP Std 1-5(a) and 2-2(b)(ix), the appraiser is required to review and analyze the contract and the listing (market exposure) and to “summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions and conclusions.”

Pursuant to USPAP AO-1, the appraiser must take into account the listing [market exposure], the agreed price, and the pending sale of the subject. The appraiser’s failure to analyze these facts may exclude important information....(See AO-1, lines 32-39).

Pursuant to USPAP Std 1-5(a) and 2-2(b)(ix), if a copy of the contract was unobtainable, a statement on the efforts undertaken by the appraiser to obtain a copy of the contract is required. If the contract is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required. It is unclear if the appraiser (Sean Solomon) reviewed a copy of the contract. If he did not review a copy of the contract, the required statement is not in the report.

If he did review a copy of the contract, the report violates the USPAP requirement to “summarize the information analyzed and appraisal procedures followed”, i.e., clearly state that he did review a copy of the contract.

The appraisal report makes a reasonable disclosure of the seller concession on page #1 of the URAR, however, there is no mention of the market exposure, no mention of the asking price, and no analysis of the sales contract. I am unable to find any mention of a sales contract anywhere in the report.

Was the subject listed on MLS? No mention of this in the report.
Was the subject marketed as a FSBO? No mention of this in the report.
Is this an arms length transaction? No mention of this in the report.

The report states the “sales price” price is $225,000, and the report states there is a seller concession of $10,125. If we accept these figures at face value, it means the appraiser knew the seller agreed to accept $214,875. How could Sean Solomon conclude that the market value was $232,000 when it is clear the buyer agreed to pay and seller agreed to accept $214,875? The report does not answer to this question.

USPAP AO-1 requires the appraiser to consider the pending sale of the subject. There is nothing in the report to suggest compliance with AO-1.

The plain meaning of USPAP 2-2(b)(ix) requires the report to provide sufficient detail for the intended user(s) to understand the reasoning and the rationale for how the market value could be higher than the amount the buyer agreed to pay and the seller agreed to accept (i.e., the “agreed price” as the term is used in AO-1).

In the appraisal report, there is no mention of the appraisal procedures followed with regard to analysis of the sales contract, market exposure, the agreed price, and the pending sale of the subject – this is a violation of USPAP Std 1-5(a) and 2-2(b)(ix), and AO-1.

Per my dictionary: Analysis = An examination of the parts to find out their nature, proportion, interrelationship, etc. A detailed examination. A statement of the results of this process.

What is the interrelationship of the “agreed price” to the market value? The report does not examine this issue.

USPAP dictates the report must include a reconciliation of the difference between the “agreed price” and the appraised value, i.e., a stated and plausible reason. There is no reasoning and there is no rationale – this is a violation of USPAP Std 1-5(a) and 2-2(b)(ix).

Certification:

I certify that the statements and information supplied by me in this complaint including the attachments are true and correct to the best of my knowledge and belief.

Signed,

Philip G Rice
11268 E Linvale Dr
Aurora, CO 80014
720-282-3376

Attachments:

Appraisal Report (8 pages)
Deeds Report – Public Records (1 page)
Real Estate Sales Contract: (8 pages)

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