From the Examiner:
Devalued real estate appraisals harmful to subprime borrowers
You face foreclosure.
You quickly move to refinance but qualify only for a double-digit subprime rate.
You take it, pay for an appraisal and learn your house is worth $425,000.
Then the lender reduces your appraisal by $100,000.
That’s the situation Mark Allen, of Gwynn Oak, faced after being downsized at work.
“I took a part-time job to feed my family, keep gas in my car and continue my job search,” said Allen, a single parent of three. “When I finally got a full-time job, I was so far behind I couldn’t catch up. I had to refinance to save my home, but when they dropped my appraisal by $100,000, I was floored.”
Allen accepted that his monthly mortgage payments would go up by $1,000 and that he would only receive 70 percent loan to value, but he questions whether dropping his appraisal was legal.
A loan officer from Quality Home Loans, a lender that downgrades appraisals, said, “Appraisals can be downgraded for a lot of reasons, like market saturation, houses that stay on the market too long, or if when doing a public records search we see that though additions were made to a residence, the proper permits were not obtained. So then we disallow those additions.”
Real estate lawyer Stephen Greenwood said he thought lenders are “being oversensitive” to avoid financial problems such as those that affected New Century Financial, which went bankrupt.
“I don’t know if it is actually legal to decide to reduce somebody’s appraisal,” he said. “Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.”
he questions whether dropping his appraisal was legal.
Funny. Now we start questioning the legality of appraisals. Where were you when inflated appraisals were the norm? Now a high appraisal is your legal right? Maybe if Charlie Schumer gets his way!
From Forbes.com VIDEO OF Prof. G. Schilling !!!
Recession in ‘07
(255 sec.) One of Wall Street’s biggest bears tells us why investors should look out below
http://www.forbes.com/video/?video=fvn/moneymasters/vj_mm122806&partner=yahootix
Is Wallstreet in Denial right now ?
A loan officer from Quality Home Loans, a lender that downgrades appraisals, said….
This is part of the problem. The people in the media are clueless about what goes on whey they write these articles. Lenders don’t have a stance on whether they downgrade appraisals or not. When a POS appraisal goes to an underwriter, usually what happens is that the comparables provided by the appraiser don’t support the value he’s stating. For instance. All comparables are 4 bedroom colonials and the subject is a 3 bedroom cape and he’s stating it’s worth the same. Or, the appraiser selects all comparables far away in a better part of town. The first thing that an underwriter usually does is have the appraiser provide better comparables that support the value better. If the underwriter then still doesn’t agree with the value, they will either decline the appraisal or lower the value to what they think the the property is worth and then make a counter-offer. It’s all done on an individual basis.
In any case, the borrower always has the option of going to another lender and getting another appraisal.
This article is so full of crap. It makes it out like the bank is going to go to the town and tell everyone that the house is now worth $100,000 less and that it will affect the actual worth of the property.
Yes, lenders are being more careful these days with regards to the values estimated by appraisers…as they should always have been
Sorry, I have no tears left for this idiot.
Cue Nelson Muntz: “Ha-haaaaa.”
The bank can’t afford anymore losses.
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