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August 18, 2008

AO IMPACT: Inflated appraisal nearly cost family its home

By MITCH WEISS





Associated Press Writer



HOPE MILLS, N.C. (AP) — After 25 years as a doorman on Manhattan's Upper East Side, Carl Petrone was ready to retire from the cold winters and his daily commute.

Petrone and his wife, Marie, wanted a home someplace warm, and found it in North Carolina — a red-brick tri-level on a quiet, tree-lined street. It was bigger than their tiny place in New York and came with the right price.

The home was appraised at $114,500. The real estate agents dropped the price by $6,000 to make the sale. "We thought it was a steal," Marie Petrone remembers.

It was a steal — a steal from the Petrones.

As the couple would discover, they were the unwitting victims of an unscrupulous appraiser and — as uncovered by a six-month Associated Press investigation — a poorly designed system unable to keep up with such dishonesty.

Only a month after the Petrones bought their house with a conventional mortgage, Carl Petrone was diagnosed with cancer. He and Marie decided to move back to New York to be with family, and listed the home at $118,500. There were a couple early offers, all for much less.

"We thought: 'This is crazy,'" Marie Petrone said. "The appraiser said the house was worth $114,500, so why would we sell it for $100,000?"

A new appraiser concluded their house was worth only $98,000 and said the Petrones had been duped in 1999: The home hadn't lost value. It was just never worth the price they paid.

An angry Marie Petrone filed a complaint with the North Carolina Appraisal Board, alleging the original appraiser, Ed Britt, conspired with the real estate agents — who also owned the home — to inflate its value.

"I called regularly to ask for updates. But most of the time they never returned my calls. Finally, I just gave up," Marie Petrone said.

Board director Philip Humphries said his agency should have contacted the Petrones. But he defended the board's overall performance in regulating the state's 3,500 appraisers.

"The mere fact that a number of complaints have been filed against a person doesn't mean that all of the complaints reach the level of where there needs to be disciplinary action taken," he said.

The board suspended Britt's license for a year. The formal order said it was for failing to return the couple's phone calls, but board attorney Roberta Ouellette told the AP the discipline was also imposed for writing an inflated appraisal. Britt later faced additional complaints once back in business, both of which were dropped after he died in 2003.

Marie Petrone was able to sell her home — just weeks before the bank was set to foreclose. By then, Carl Petrone was dead. She lost money on the deal and returned to New York, where she lives with her two children and works two jobs to help make ends meet.

"This was something that never should have happened," Marie Petrone said. "We were taken advantage of, and there was no one there to protect us."

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