Greenleaf Cos. customers angling for appraisals

Hard-to-come-by property appraisals may hold the answers to oft-raised questions about whether Greenleaf Cos. LLC broke any laws with its unique homebuying program.

Two former Greenleaf customers and a Springfield appraiser are among those who would like to see original appraisals done on homes purchased by the Springfield-based company's investors. Greenleaf recruited investors with good credit to take out mortgage loans for new houses primarily in southwest Missouri and northwest Arkansas.

Greenleaf affiliate The Real Estate Co. then marketed those homes to third-party buyers - primarily people with poor credit - who agreed to make monthly payments to Greenleaf and eventually obtain conventional loans to purchase the properties.

Many of those buyers, though, never had an opportunity to refinance because lenders foreclosed on their homes. The rash of foreclosures was set into motion in spring 2008, when Greenleaf stopped paying its investors, who in turn defaulted on their loans.

Former Greenleaf customers who think the company acted improperly are hoping investigators with the Missouri Attorney General's Office will unearth appraisals on homes they contracted to buy.

Authorities served a search warrant at Greenleaf's South Campbell Avenue offices in December, carting off more than 80 boxes containing financial records, real estate documents and credit applications.

Demanding documentation

Responding to allegations that Greenleaf deliberately inflated property values in area subdivisions, CEO Eric Gagnepain told Springfield Business Journal in an e-mail that appraisals performed in conjunction with the company's contract-for-deed program were based on comparable home sales, as is customary. He said the typical markup for third-party buyers was 2 percent.

But former Greenleaf customers who have come to distrust the company aren't taking Gagnepain's comments at face value. They want to know who appraised their homes and why Greenleaf officials repeatedly denied their requests to produce copies of the valuations.

After learning last year that the Nixa home she had contracted to buy from Greenleaf was heading into foreclosure, Cyndi Cody hatched a plan to keep her home.

Cody paid for an independent appraisal by Nixa Appraisal Express that valued the 4,500-square-foot home in 14 Park Place subdivision at $268,000, some $70,000 less than the $349,000 sale price listed in her contract for deed two years ago.

"I wanted to keep my house," she said. "I needed to know what my house was worth."

Based on the appraisal, Cody said Nixa Mortgage pre-approved her for a home loan, but Greenleaf officials rejected her offer in November to buy the six-bedroom, three-bath home for the appraised value. After inquiring several times about the original appraisal, Cody said Greenleaf Finance Director Bill Strong eventually told her that Guaranty Appraisal Co. -- owned by Bill Saxton - had appraised her home, but he declined to provide her with a copy.

Cody's neighbors, Tim and Marcie Thompson, also contracted to buy a home from Greenleaf in 14 Park Place. Marcie Thompson said a U.S. Housing and Urban Development settlement statement indicates that Guaranty Appraisal also appraised their home, which went into foreclosure in spring 2008. The Thompsons said Greenleaf has been unwilling to provide them with a copy of the appraisal despite numerous requests.

The puzzling property values in 14 Park Place also caught the attention of Sean Sutton, co-owner of Cornerstone Appraisal Services LLC in Springfield.

Sutton said he was hired last year to appraise a home in the subdivision when contract-for-deed buyers were seeking a loan to purchase the property from Greenleaf. He said the couple was shocked when his estimate was tens of thousands of dollars less than the sale price. Sutton said he noticed a glaring disparity in property values when researching Multilist Service data for 14 Park Place.

"Properties that were built by different builders within that subdivision were selling for way less than (Greenleaf) properties were, and they were the same house," he said.

CEO: Appraisals were aboveboard

Greenleaf CEO Gagnepain denied any wrongdoing and dismissed allegations that his company colluded with Saxton to inflate property values.

"No appraisals and/or sale prices were ever inflated and therefore could not be used as inflated comparables," he said in an e-mail. "... In any case, it would never have made sense for Greenleaf to inflate property values knowing that we were ultimately burdened with the marketing, sale and, if unsuccessful, the purchase of the properties."

Gagnepain did acknowledge Greenleaf's working relationship with Saxton, who did not return calls for this story.

Saxton, who now owns and operates The Appraisal Co. in Republic, previously worked out of the Guaranty Title Co. office on East Kearney Street. When the title company abruptly closed in June 2007 after evidence of an alleged check-kiting scheme surfaced, Saxton changed the name of his business and moved it to Republic. At the time, he told SBJ that Guaranty Appraisal was not affiliated with Guaranty Title beyond the shared office space and similarities in name.

The Missouri Real Estate Appraisers Commission investigates complaints filed against certified appraisers in the Show-Me State, but the commission won't confirm or deny whether a specific appraiser is under investigation.

While that's common practice throughout the country, the Missouri commission has had difficulty resolving complaints in a timely fashion, said Bill Garber, director of government and external relations for the Chicago-based Appraisal Institute.

Missouri failed to comply with a federal law that requires states to investigate and resolve complaints against appraisers within a year of receiving them, according to a February 2008 audit by the Appraisal Subcommittee - a division of the Federal Financial Institutions Examination Council.

Garber said Missouri was one of about 25 states struggling to resolve complaints in a timely manner. Most states are slow to process complaints about appraisers because of limited resources, he said, noting that some states share investigators who respond to complaints against all licensed professionals.

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