Loan Survivor

NAR Keeps Whining About Appraisals

Good info Tom. There are problems with HVCC, but it's not going away. Biggest problem I see is the "race to the bottom" on AMC's pushing for the cheapest price & fastest turn times. Leads to very shoddy work.

On NAR - they have a code of ethics they've published for their members. Maybe it's time they create a code of ethics for the organization so they stop being so selfish.

Obama's Foreclosure Plan Du Jour: Own-to-Rent

Crazy idea. What next - can't afford my car payment so the government subsidizes that?

This is a sign that the government is a lot more worried about the housing market than they're letting on. Maybe all that shadow inventory is piling up and getting to be a problem.

Also, how much would it cost taxpayers when the government has to hire oodles of accountants, admins and executives to execute the program?

Foreclosures Getting Out of Control

There is no easy solution. It will get uglier before it gets better.

I also believe the government is trying to force banks into hiding the true extent of the problem. How many of us see vacant houses around us that aren't for sale? Why is that? What will happen to the number of homes in this category when banks increase their actual foreclosures?

Some type of incredible intervention will be needed to break the negative feedback loop on the housing crisis.

BTW - America may be broke, but so is most of the civilized world.

More Reckless Home Lending, Courtesy of Fannie and Freddie

Edward, please explain how the 125% LTV program on only exisiting FNMA/FHLMC debt will be bad for banks?

The only facts you present are that HBOS in the UK had problems because they offered 125% PURCHASE loans.

We're talking 125% LTV REFINANCE loans here that FNMA/FHLMC are already on the hook for, meaning taxpayers are on the hook.

If lowering interest rates to lower payments, means taxpayers have to bailout fewer foreclosures, why are you against that?

Before responding, please read my post that discusses this in detail and addresses many of the misplaced concerns about the porgram - seekingalpha.com/insta...

The Assault on Ethical Home Appraisals

Tom, owe you an apology for being a bit heated in my earlier response here.

Not sure if you had time to read my blog before you posted this?

Shoot me an email if you get a chance.

NAR on Existing Home Sales and Low Ball Appraisals

Tom, I wish I would have read this earlier before my OTHER responses yesterday. I probably owe you an apology on the other posts. Time to go eat some crow!


On Jun 24 11:56 PM Tom Lindmark wrote:

> Drew,
>
> Thanks for taking the time to write your well reasoned comments.
>
>
> Although it's not mentioned in this article my other posts on this
> subject have been critical of the loophole that allows the banks
> to own appraisal management companies. It's simply a testament to
> the power they still wield in Washington.
>
> I am going to defer to you on the issue of whether they are in fact
> stacking the deck in favor of low ball appraisals. I have my doubts
> since this runs counter to their best interests but you're closer
> to the market on this one than I am.
>
> That having been said, I don't want to see the industry revert to
> the old standard. I was in the business then and the abuses were
> appalling. This might not be perfect but to my mind it is a step
> forward -- I'll take conservative appraisals over inflated appraisals
> any day.
>
> I don't have time now but tomorrow I will visit your blog and leave
> some further comments if I have anything substantive to add.
>
> Once again thank you for adding a lot to this conversation.
>
> Tom

The Assault on Ethical Home Appraisals, Part Deux

There is a problem with the HVCC appraisal PROCESS.

The system is now being run by AMC's that are trying to make money, not do accurate appraisals.

Who owns the AMC's? Banks, which is a conflict of interest period. WAMU, a bank, got caught emailing their AMC to push appraised values. So, now you all expect banks to follow the straight and narrow path?

Who's being naive about the reality of this situation?

BTW - I do agree with all of you that NAR has no credibility on what they report as they are masters of spin. Crying foul about lowball appraisals while standing silent about inflated values is a joke.

The Assault on Ethical Home Appraisals

Tom, you need to get off your high horse and look at reality.

Yes, appraisals were way too aggressive in the past.

Now, the pendulum has swung the other way and they're way too conservative.

In a perfect world that you seem to imagine exists Tom, we wouldn't need appraisals at all as the free market would determine the value of a home to be what a buyer is willing to pay.

The reality is that not only are there crooks looking to manipulate the system, there are also over exhuberent buyers, sellers, Realtors, loan originators, banks and Wall Street firms that would skew the system.

You want facts Tom? I personally know of an appraisal done in Livonia, Michigan by an appraiser from Grand Rapids, Michigan. I'm sure you'll think it's no big deal that the distance between these two cities is 169 miles and the appraiser never went in the house (a violation by the way). Not surprising, the appraisal came in far under the consensus value. A new appraisal was ordered (yeah, that's save the public money) and it was done by a local appraiser and was more in align with expectations.

Now, how is that possible in your world of a perfect appraisal system?

I'm sure you don't care that the AMC's are paying appraisers peanuts, while pocketing a pretty penny, which is commoditizing the appraisal system and leading to crappy work.

Can you produce statisitics that show examples of the commoditizing of services leading to anyhting but poorer qualifty?

Is poorer quality appraisals what the real estate really industry needs now?

How will poor & lowball appraisals help a housing market on its knees?

Tom, you should just walk away for this appraisal topic as you're too far out of touch with reality.

Unless of course, you're deliberately trying to stir up the hornets nest to increase your SEO!

NAR on Existing Home Sales and Low Ball Appraisals

With all due respect to the writer and ALL those posting comments, none of you has bothered to get all the facts about what the Home Valuation Code of Conduct (HVCC) is really about and the issues the real estate community is dealing with concerning appraisals.

As an aside, I agree that NAR always pushes their kool-aide too much to have any real credibility.

FACT - appraisals were over inflated during the hyper-appreciation years and buyers, homeowners doing cashout refi's, Realtors, loan originators, banks, FNMA/FHLMC and the government ALL didn't care until the bubble burst.

HVCC was created when the NY Attorney General got his hands on emails from WAMU directing an Appraisal Management Company (AMC) to bring in appraisals at inflated values or else.

HVCC was originally designed to separate those ordering appraisals from the appraisers. No direct contact was to be made. Appraisals would be ordered through neutral AMC's and randomly assigned to appraisers via computer. Banks and mortgage brokers were to all play by the same rules, none could own any part of an AMC.

Well, something funny happened on the way to the forum. The final version of HVCC issued by FNMA that went into effect May 1st, allowed BANKS to circumvent this system and use their own appraisers. Not only that, banks were allowed to own AMC's!

Hmmm, a bank called WAMU got busted inflating appraisals, but banks get to stick to biz as usual. Something's rotten in Denmark!

Not surprisingly, banks are now calling the shots even more so on appraisals. They are telling, supposedly independent appraisers, what comparables to use, how recent the sales have to be, what adjustments to make, etc. Each bank also has their own special rules about these requirements so there's no consistency in appraised values.

If an appraiser does an honest appraisal and challenges a banks requirements, they're black-balled and put out of business.

Banks have now gone from controlling the inflation of appraisals to controlling the deflation of appraisals. It's WRONG EITHER WAY as neither allow an independent valuation of a property.

But, he who has the gold, and uses it to bribe/lobby the government, get's to make the rules. No surprise there.

What has surprised me is that you all appear to have shot from the hip without any research on the topic.

Tom, I started following you because you always seemed to be right on in your perception of housing. I'm hoping this article is just an aberration on your part due to your disdain of NAR.

I highly recommend everyone Google HVCC and read for yourselves the issues honest real estate professionals are dealing with concerning appraisals.

For even more details on the problems with HVCC, read my blog:
drewsmortgagenews.blog...

Housing Is Bottoming, Along with the Economy

The data from last week about housing starts being up 17.2% & permits up 4%.

A closer look at the Census Bureau data showed that the 17.2% increase was May over April of 2009. Housing starts were actually down 45.2% and permits down 47% from last May. Hmm, how's that qualify as a bottom, much less a recovery?

No one's really addressed the issues of the FNMA/FHLMC foreclosure moratorium holding back supply, or the shadow inventory of homes that are either not being foreclosed on (I personally know someone that hasn't made a payment in 18 months and still no Sheriff Sale) or just sitting vacant, but not on the market.

The Obama administration appears to be doing its best to hide the true extent of the housing crisis so the public keeps buying houses. The news on the Bank of America forced marriage with Merrill Lynch is probably just the tip of the iceberg on what the government's forcing banks to do. Banks have no choice but to play along unless they want to be declared insolvent. The recent Stress Tests could be just a way to keep the pressure on the banks.

It's actually a pretty smart strategy because if the public panicked and stopped buying houses, it'd be extremely hard to kickstart a housing recovery anytime soon.

We live in interesting times.