Posted on 07/17/2006 8:26:48 AM PDT by ex-Texan
*Ping* !
Are not banks, which lend the money and will be on the hook for a foreclosure, be vigilant in the appraisers they hire and trust? Or is it just about getting more and more loans...
"Or is it just about getting more and more loans . . ."
*BINGO!* . . . Greed trumps all ! 'Nuff sad.
EVERYBODY knows this. But while it served everyone's purpose, nobody said a word. Our agent brought in his old college buddy to do the appraisal on our house. And voila...the appraisal was right where we wanted it. Coincidence? Think not.
Ah, you proceed from a false premise: it is the very rare financial institution that holds a loan any more. They are packaged up into "mortgage-based securities" ASAP and foisted on Wall Street. The money-maker for the bank these days is, as you wrote, simply to get the loan written and sold off.
Hence the milder form of appraisal fraud: "The buyer has a contract to buy the house at $X contingent on an appraisal. Mr. Appraiser, if you can't make your appraisal come in at $X, we're gonna find somebody who will."
Excellent post!
First, this guy is NO victim. Appraisal fraud or not. The appraisal had NO BEARING whatsoever on his failure to pay his mortgage.
When you say "Home values are too high in 71 cities", what you should really say is, home values are set to fall in those places. The value, can not be too high, though the asking price may be.
I don't understand. Can you explain that a little more?
I didn't see anywhere in the article how having an inflated appraisal causes the homeowner to quit paying on the mortgage.
Are mortgage companies demanding the difference be paid immediately based on independent audits or something?
If you've ever had your bank turn down a loan application because they thought the property was over-valued, then this is a pretty good indication that you have an excellent bank. The same goes for a property insurance company. Even if the bank extends a loan based on an inflated property appraisal, an insurance company will generally be very careful about what their exposure is on a property.
A few years ago, my wife and I refi'ed to get a lower rate. On banker told us point blake that with reason she could "adjust" the numbers to get us more money. The were pushing for us to take money out. We did not.
From what little I understand about this it seems that lenders in turn sell the mortgages to Government backed companies (ala
Fannie and Freddie), but correct me if I'm wrong. If that is the case then the Gov't and you and me are left holding the bag.
Banks will lend money to illegals who could be deported at any moment.
Does that answer your question as to their motivation?
As a former residential appraiser, this sums up the B & C market perfectly.
Now, many loan applicants in the A market don't experience the practice, because they're coming into a transaction with a decent down payment and certainly acceptable creditworthiness.
Where this goes on is in the bad credit arena, where borrowers have virtually no money to put down, and want to roll all the costs into the loan. (psst, the loans are at rates that would make you and I run the other way).
So, since a borrower needs about 105% more than the purchase price (to cover all the fees), the mortgage company needs an appraisal at 20-25% more than the property is valued at.
I heard this a multitude of times: "If you come in at a lower number, don't bother sending us the appraisal." This after most of the appraisal work had been completed.
Ouch!
How far out are you? (I'm expecting mine to bump from 235 to about 285 or so, and we're in Mableton)
But, what has happened with housing is no different than the stock market, or the Federal Reserve System. They are all ponzi shemes requiring "growth" in value of their shares, while lessening value elsewhere.
Too many people look at their home as an investment, not a place to live. They are willing to pay exhorbitant prices, because "one down the street sold for that much". In Marinsburg, the indiginous population has been priced out of the market, and farms are selling for millions.
I live near DC. Many of the builders are now advertising they are selling "at cost". That should warn a lot of people, but it doesn't. A home is not an investment. Land may be, but you must have a warm place to lay your head at night!
I bought Apple stock for $13 and sold for $83, after a 2-1 split. I made a killing. You can buy Apple stock (and should) for around $50 right now. It is "undervalued". I got some nice pices of paper when i bought the stock. I sold the same pieces of paper. The difference is what some fool figured he could make a buck on. I did it then! I bought last month at $56!!!
I work in an appraisal office, and the problem is that Mortgage Companies and Mortgage officers, send work to appraisers that will get them the sales price value, regardless of real data. Many Mortgage officers, have become like Real Estate agents, they get paid or get paid more if the loan closes. Easy way to end it, is to outlaw any mortgage officer working on commission.
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