In the Sarasota Hotel & Marina - as in other Cay Clubs properties - dishonest lending practices lead to dishonest loan applications and appraisals - which lead to loan officers falsely x’ing off boxes stating this was a “second home” or that the project was completed, when in fact it was not.  Here are some notes I wrote from an appraisal I just reviewed on this today.

It’s important to include mention of this in Judge Letters and Responses to Complaints because the Plaintiff in the complaint is the Lender and the cheating and tricking of the loan officer/appraiser combination done on these was a key part of the difficulty now experienced.

If the appraisal were properly ordered by Lender’s loan officer (who was to some degree in league with the Developer) than this would have been earmarked as strictly investment property and would have been properly appraised as that and the appraisal would have shown that the income on this property didn’t nearly cover the expenses of COA fees plus Property Taxes and Debt Service and that a seriously negative Cash Flow existed and therefore the loan would have been denied, but because the lenders officer tricked their underwriting system you are being saddled with negative credit for 10 years and a deficiency judgment that will haunt you and that the lender isn’t even being given any real benefit by this either, as the property is so low in value due to all the Fraud connected with the sale of the property and the distress the overall complex is in - due to an incomplete project and lost contracts and upset CondHotel unit owners who have had their lives ruined by this massive scam - that the offer you have in with the Lender is far, far better than they can get in the current market by any means and you want to give this a chance to go through their lines.

I’m reviewing the appraisal and see the following points that are either false or questionable.  The appraisal was ordered on lenders instructions and it was the loan officer who would have falsely reported these points to the appraiser or should take it up with the appraiser if they did not.

1. The appraiser classifies the ‘Project Description’ as a Row or Townhouse or Garden property, which it is not.  It is a Condominium Hotel, which is not livable by tenant and must be utilized as Hotel use only based on zoning.  This should have been put in there under “Other”.  See lower 3^rd of Page 1 of 6 of appraisal report.
2. The Appraiser checked off the box ‘Second Home or Recreational’.  Loan officers extensively did this across the nation in order to obtain loans for Ma and Pa - uneducated - ‘investors’ on investment property using Fannie and Freddie and Secondary Market funds.  Many courts across the nation now have sanctioned lenders where loan officers have instructed appraisers to check off this box as ‘Second Home’ as it converted what would have been a commercial loan - subject to a much stricter guideline of dollars and cents review of property as an income property, to a residential loan where comparables were the primary appraisal form.  It’s called ‘cheating or tricking’ the automated underwriting system in the bank - which essentially cheats and tricks Fannie and Freddie on putting in the investment dollars to purchase the loan to begin with.  So now the buyer is getting a residential ‘second home’ loan versus an income property loan, which will look at cash flow as a primary tool in supporting purchase price.
3. On the question ‘Does any single entity own more than 10% of the total units in the project?” the appraiser answered ‘no’.  This is also false, as Sunvest, the developer, owned 34% or more.
4. On the question “Are the units, common elements, and recreation facilities complete?” The appraiser answered: Yes.  This is not true, as the entire facility was to be converted to a five star hotel, in promotional materials.  You will need to pull out evidence of this, as I don’t have it.  This may not be that important of a point, but the actual fact that it wasn’t true is what is causing this hotel to be in the trouble it is in today, with the hotel having lost its key repeat customers (IMG Academy and Red Sox) because of lower standard rooms that needed to be upgraded.
5. On Zoning Compliance the appraiser checked off ‘Legal’, which is false. The zoning is actually legal non-conforming when used as a Hotel and should a hurricane wipe out a major portion of the Hotel it would not be able to be rebuilt, however this was not researched and disclosed in this appraisal.