Last Winter we did a boundary survey for a young fellow building a new house on a small part of a large tract inside a city. He owns something like five full blocks and the vacated streets and alleys between and through them. That area never developed, although platted as if it would be developed, because a creek runs through it and much of the area is in Zone AE flood status. The purpose of the survey was to cut out a bit less than a block and a half of area where the house was to be constructed. He would only mortgage the area we surveyed but still own the remainder free and clear. We even drew in the line for where the Zone AE fell relative to the area to be mortgaged. He had us do this at the recommendation of his banker who didn't want to have any flood issues.
Fast forward to a few days ago. The banker calls on behalf of the young fellow to explain that the national flood determination service had decided the newly finished house was in the flood plain. I assured him it most definitely was not by something like 200 feet horizontally and probably ten feet or more vertically. None of the land to be mortgaged was in the flood plain. Then he dropped the bomb. The bank decided they wanted all of his land, not just the portion they had recommended we sever last Winter. So, now he wants a modified plat showing where the house is actually located so he can show that to his flood risk people to prove there is no absolute need for flood insurance. I called the young fellow to confirm that he understood what was going on and that he would pay for our services AGAIN. The two grand he spent last Winter was almost a total waste. It did help us easily determine the actual house location, but that was all.
This is a clear case of the bank bullying this young fellow because they know they can get away with it. If it were my house, there would be a new lender. I enjoy making money, but not when it is the result of some greedy individuals abusing someone.
Holy Cow, post: 393537, member: 50 wrote: .. I enjoy making money, but not when it is the result of some greedy individuals abusing someone.
There in is the part that smells bad. I guess generating profitable revenue is no longer considered "good business" unless you can 'put them on their knees and make them hurt.'
I felt the same twinge as I watched the CEO of Wells Fargo the other day arrogantly justifying his ill-obtained wealth. Screwing people over is now main stream. "If you don't like it talk to my attorney......"
paden cash, post: 393538, member: 20 wrote:
I felt the same twinge as I watched the CEO of Wells Fargo the other day arrogantly justifying his ill-obtained wealth. Screwing people over is now main stream. "If you don't like it talk to my attorney......"
I read some articles from various news and business sources about the Wells Fargo matter. To me it was a matter of disintegration of business standards and ethical practices of the bank. Running the bank like it new or even used car salesmen. Pressuring employees to sell by quota to generate a meaningless sales statistic to enhance account activity. Of course, some employees felt it was the easiest to target elderly customers to meet their quota demand by management.
But not to make this poltical, one can't preach about the lifting the burden of government regulations and expect that everyone plays fairly. In Louusiana, some of the right conservative senatorial candidates have echoed the attacks that the progressive liberal senator launched against the WF ceo at the senate hearings. Krazy stuff.
Holy Cow, post: 393537, member: 50 wrote: Last Winter we did a boundary survey for a young fellow building a new house on a small part of a large tract inside a city. He owns something like five full blocks and the vacated streets and alleys between and through them. That area never developed, although platted as if it would be developed, because a creek runs through it and much of the area is in Zone AE flood status. The purpose of the survey was to cut out a bit less than a block and a half of area where the house was to be constructed. He would only mortgage the area we surveyed but still own the remainder free and clear. We even drew in the line for where the Zone AE fell relative to the area to be mortgaged. He had us do this at the recommendation of his banker who didn't want to have any flood issues.
Fast forward to a few days ago. The banker calls on behalf of the young fellow to explain that the national flood determination service had decided the newly finished house was in the flood plain. I assured him it most definitely was not by something like 200 feet horizontally and probably ten feet or more vertically. None of the land to be mortgaged was in the flood plain. Then he dropped the bomb. The bank decided they wanted all of his land, not just the portion they had recommended we sever last Winter. So, now he wants a modified plat showing where the house is actually located so he can show that to his flood risk people to prove there is no absolute need for flood insurance. I called the young fellow to confirm that he understood what was going on and that he would pay for our services AGAIN. The two grand he spent last Winter was almost a total waste. It did help us easily determine the actual house location, but that was all.
This is a clear case of the bank bullying this young fellow because they know they can get away with it. If it were my house, there would be a new lender. I enjoy making money, but not when it is the result of some greedy individuals abusing someone.
To bring this back to a survey topic, Why couldn't you overlay your survey on an orthophoto and/or dFirm.
Good idea.
A certain percentage of loans are made knowing they will default.
Normal business to these guys.
Every year I get someone throwing the same stuff at me that was thrown 30yrs ago when percentage rates were climbing.
They ask for more than what is required and do not care when it makes for more work, they will find a way around paying more to get less.
I've been squeezed out of the works on some projects and get a message "we have found another way to do this and will not need any of your time".
They also mean they do not wish to pay, since I have not set foot on the property yet.
I have had to add a statement about when a job order has been placed that $$$ are due if they cancel after a certain amount of time because I do a minimum amount of research before I give a quote.
I really do not like to talk to anyone except the client and that is usually the seller or buyer.
Everyone else in the mix only wants to give input that has nothing to do with assisting the completion of the survey, they want billable hours and points in their favor and take away from what goes in my pocket.
I've done a number of these reverse mortgage loans in the last few years.
They want the whole pie.
Knowing this wouldn't be the role of the surveyor:
Did the young man act in good faith based on formal discussion with the bank(er)?
A letter describing such, with a good overlaid dfirm, may be a strong first step.
Our job in January was performed because the bank recommended it to the young fellow.
My guess is that "someone accidentally" placed the entire property description on the mortgage papers rather than the description we had prepared for him in January. Descriptions are sort of a case of Greek mumbo jumbo to most laypeople once it gets more complicated than Lot 1, Block 2, City of Smallburg. In the process of signing off about six times on 20 pieces of legal-sized paper, most have no idea what those documents actually say or mean. They are being told to sign here and here and here and here and initial this and initial that. They are so grateful that someone else is putting up the front money to make their dream come true they WANT to trust those experienced, smiling faces in business suits who MUST know what they are doing.
Okay Cow, of course I don't get it, Does the bank mortgage your client's entire property ("like five full blocks") here so as to show the flood zone determination line on the survey, which requires the borrower to obtain flood insurance ?
just being nosy
Greed. No part of the tract intended to be listed on the mortgage is in the flood plain. Most of the remaining land is in the flood plain.
Where the bank most frequently encounters this is where a large tract, say 60 acres, is owned by someone wanting to build a house somewhere on the tract. In one corner of the tract is an acre of flood plain. The other 59 acres are more or less hilltop land, far above the flood plain. Their handy dandy flood determination service searches the local GIS for what tract is associated with the address provided. Technically, that is the entire tract, so they declare the building site to be in need of flood insurance. What the bank normally does is provide them with a drawing showing where the house is located relative to the flood plain. That clears things out, apparently, and everyone goes away happy.
The difference in the case I'm involved with is the bank initially intended to only take the tract we surveyed as collateral for the loan. Instead, the ended up with everything as collateral. Forget about the flood plain issue. They took far more collateral than what was necessary for the loan.
Okay, I think I got it. I was following the Wells Fargo news and all the extra services they signed customers up for, often times without the customers knowing, and wondered to myself if banks got a fee for referring customers to the flood insurers. I understand now, thanks.
Have a new project similar to this one. Ma and Pa are going to deed a tract of three acres or a bit more to son to build a new house. This will be a simple cut out of a full quarter section. The problem is that the son's goal is to position the new house at a scenic spot immediately adjacent to Zone A. I'm sure he will want part of his little tract to actually be in Zone A. This is an upland flow problem not a river problem. Still, no matter what the FEMA calculations suggest, a bigger toad-strangler than what has been reported could easily raise the actual flood level above the expected flood. I'm thinking this young fellow is about to learn all the various ways to spend money on everything required before ever buying one concrete block or stick of lumber.
[MEDIA=youtube]GmU3xoFrPJM[/MEDIA]
That was great! I think I'll pass that along to few banker buddies of mine.
Was the portion you surveyed that the bank was going to mortgage a stand-alone lot in the eyes of the regulatory authorities such that it could be conveyed in fee separate from the balance of the property? Around here (Vermont) no one would mortgage a portion of a residential property that they couldn't take possession of...all or nothing. Then again we have a State Supreme Court decision that held that defects in permitting constitute defects in title.
Absolutely. We live in a free country around here. With the exception of certain larger cities and minimum lot sizes in rural areas for septic reasons, a land owner can pretty much do whatever they are big enough to do. The small town where this is located doesn't get worried about lot splits. He could deed any lots in any blocks any way he desires so long as there is something in writing addressing access to public streets and utility easements. The city could dictate building setback lines, but that's about all. This isn't even considered a true split. It's only being done for mortgage purposes. He owns the remainder of the parent tract. It only becomes an issue if he defaults on the loan someday. Even then, the bank would find a way to grab the rest of his land if push came to shove.
Holy Cow, post: 393747, member: 50 wrote: Absolutely. We live in a free country around here. With the exception of certain larger cities and minimum lot sizes in rural areas for septic reasons, a land owner can pretty much do whatever they are big enough to do...
My fair municipality is pretty much the "land use Nazis" around here. There is a 10 acre minimum on lot sizes that fall within our water supply reservoir's watershed and the City is so adamant about this crap the County won't record a transaction without City approval (yes, you read that right).
Trouble is the FmHA doesn't like to underwrite mortgages with more than 5 acres. I think we finally got it straight, but I have written several "descriptions" for mortgage purposes only to have the County throw a fit because it is smaller than the City's minimum. After about a half dozen folks wanting to refinance and getting stonewalled at the Registrar of Deeds I was able to get them to understand it was only collateral and not a conveyance. In the room there was one overly zealous City zoning official that was upset about the fact that if the property were repossessed by default, there would exist "an illegal lot". Which actually means nothing except the city would not issue any building permit upon the tract....but a house would exist on it!
I told him at that time if it happened to go have the owners arrested for possession of an 'illegal lot'...everybody in the room got a good laugh out of it. The city dude still won't talk to me. 😉
Three years ago I had banks making me cut off accessory buildings and 'excess land' in areas like you describe because the bank did NOT want them. Sheesh. Steve
paden cash, post: 393754, member: 20 wrote: In the room there was one overly zealous City zoning official that was upset about the fact that if the property were repossessed by default, there would exist "an illegal lot". Which actually means nothing except the city would not issue any building permit upon the tract....but a house would exist on it!
Interesting. Interesting because here the "illegal lot" means the owner - the bank upon repossession - has no marketable title. Hence no collateral. And from time to time we do create subdivisions because a bank won't write a note against some aspect of a given parcel, typically when a significant portion of the value of the property as a whole is just the land. But the subdivided parcels must comply with applicable regulations, and go through the process so that the bank has that surety.
So if an "illegal lot" has no title issue, why would anyone bother to comply with the regs?
Good question. Why should anyone adhere to stupid regs written only to benefit a specific minority? Make them pay the land owner for effectively "taking" his rights. I read so much on here about the public apparently being willing to behave like livestock going down the alley to be slaughtered. This country would have never grown or become a powerful world leader if all the foolishness that exists today had been enforced by some means over the past two and a half centuries.