BILL NUMBER:  S1941

 TITLE OF BILL :
An act to amend the executive law and the real property tax law, in
relation to requiring licensed and certified real estate appraisers to
report on certain appraisals


 PURPOSE OR GENERAL IDEA OF BILL :
The purpose of this bill is to implement an appraisal reporting
statute in the City of Buffalo for residential real estate in order to
combat flipping (the short term ownership of property) which is
enabled by illegal and unethical real estate transactions and a
significant contributing factor in neighborhood decline.

 SUMMARY OF SPECIFIC PROVISIONS :
The appraisal reporting statute will require all licensed or certified
real estate appraisals to be filed with the Office of Real Property
Services. At the end of every calendar quarter a report listing the
address and appraised value of residential real estate in the City of
Buffalo upon which the appraiser performed an appraisal during the
calendar quarter shall be filed. The statute will be applicable to one
to-four family residential real estate appraised for mortgage
underwriting purposes. Furthermore, the report will be open for
inspection for investigation of fraudulent practices.

              

 JUSTIFICATION :
The introduction of an appraisal reporting statute is meant to combat
real estate flipping. Real estate flipping is an unethical, and at
times illegal, real estate practice that leads to neighborhood
destabilization. Whole communities are devastated by the combined and
concentrated impact of illegal and unethical real estate practices.

Property flipping involves the repeated sale of a property at inflated
value for profit. Typically in a city with shrinking population such
as Buffalo, these homes are vacant, have housing code violations and
may be slated for demolition. Usually, little to no rehabilitation has
been completed on the property before it is resold. These transactions
are often completed with cash but may also involve financing based on
inflated appraisal values that constitute fraud.

Property flipping is a cyclical process that results in an escalating
pattern of neighborhood decline. Flipping is most likely to occur in
distressed neighborhoods where sellers or "investors" are enticed by
the low property values. To begin, these "investors", many who are
located out of state or out of the country, purchase and quickly
resell low priced properties, making significant profits. Next, these
properties are left in poor condition and rented, or left vacant and
abandoned.  Houses which are foreclosed upon or abandoned are left for
the City to sell or demolish. In the end, foreclosure and abandonment
of these properties contributes to increasingly depressed real estate
values in surrounding areas.

In Buffalo the destructive practice that flipping inflicts on city
neighborhoods has been criticized by city residents, community groups,
City officials, and HUD and has led to the formation of the Mayor's
Anti-Flipping Task Force.

This legislation is modeled after the successful legislation in
Baltimore, MD. The City of Baltimore was confronted with the problems
of real estate flipping. Extensive research and analysis of thousands
of real estate transactions was conducted by the Community Law Center
in Baltimore, MD. This research on how property flipping and mortgage
fraud worked led the way to identify falsely inflated appraised values
a major contributor to flipping. An appraisal reporting statute was

enacted in 2003 and led to a significant decrease in flipped property
and corresponding increase in neighborhood stability.

 PRIOR LEGISLATIVE HISTORY :
2006: S.8024/A.11623  No action.
2008: S.2952/A.5434   Referred to Finance.

 FISCAL IMPLICATIONS :
Minimal Cost to state to receive quarterly report.

 EFFECTIVE DATE :
This act shall take effect on the first of January next succeeding,
with provisions.