From the Chicago Tribune:
Appraisers to databases: Back off
With home prices stagnant or declining in dozens of markets around the country, a bitter dispute has broken out in the property appraisal industry, a fight that could affect how millions of houses are valued.
On one side are traditional appraisers, who render estimates based on interior and exterior inspections and research market conditions and recent selling prices of “comparable” properties.
On the other are data companies that vacuum up vast quantities of publicly accessible property information and help create “automated valuation models” that many lenders use for home-equity loan transactions and increasingly are consulting to make primary mortgages.
Traditional appraisals cost $300 to $500, and can take days–sometimes a week or more. AVMs, by contrast, are available almost instantaneously online and may cost a lender $25 or less. AVMs power the valuation estimates anyone can obtain online–free–from Web sites promising to tell you what your house is worth.
Appraisers have resented encroachments by AVMs for years, in part because they have lost some of their business and revenue. They also have challenged the accuracy of AVMs, arguing estimates often are off the mark, especially when price patterns are changing rapidly.
…
Turner says he and other appraisers are discussing how to better control the use of their key data. Copyrighting appraisals is one possibility; legal or regulatory relief are others.Meanwhile, he urges consumers to pay closer attention to the appraisals used in their transactions. Computerized valuations “can’t smell, can’t see, can’t hear” and may be based on outdated information in fast-changing markets, he says. .
Turner also advises buyers to demand a copy of the full appraisal to make sure it was done by a licensed, professional appraiser.
Check out zaio.com, they are changing the way appraisals will be done. Much more efficient and accurate. Some select cities are underway, give the rest of the nation a year or so.
fyi from http://housingpanic.blogspot.com/
FLASH: Cash-back mortgage fraud scam sweeping Arizona (and the US): “could erode confidence and values in Arizona’s real estate market”
Sunday, January 21, 2007
ARIZONA HOUSING IMPLOSION CODE RED!!!!
Nice again to see the MSM (and the lazy Catherine Reagor!) FINALLY reporting on the meat of the housing bubble ponzi scheme, although the cat is way out of the bag now.
Greg Swann’s Phoenix Arizona may in the end be the epicenter of not just the housing bubble, but also mortgage fraud. Why? Because there are no real jobs in Phoenix. Just a bunch of high school GED’s gaming the system with mortgage fraud, fake appraisals, and the REIC spinning out of control.
Oh, man, this is going to end so ugly. Someone get the paddywagon, we got a bunch of ’em to put in jail when this is over. And billions, if not trillions, in fraudulent loans. Fannie, Freddie, hedge funds, Countrywide shareholders and China should be a bit nervous right about now.
Valley fighting mortgage fraud wave
A wave of mortgage fraud is rippling through pockets of the Valley, inflating home values through scams called cash-back deals.
Left unchecked, cash-back deals cost homeowners and lenders millions of dollars and could erode confidence and values in Arizona’s real estate market.
The fraud involves obtaining a mortgage for more than a home is worth and pocketing the extra money in cash. Neighbors may then discover home values in the area are exaggerated.
Homeowners stuck with overpriced mortgages may never recover the difference. And lenders end up with bad loans that, in the long run, could hurt the Arizona real estate market, the largest segment of the state economy.
“Arizona was like a housing gold rush for speculators from California, Florida and Texas a few years ago,” said Detroit real estate agent and fraud activist Ralph Roberts, author of the book Flipping Houses for Dummies. “But home prices stopped climbing, and speculators got greedy. Now the cash-back scam is going to make the savings and loan crisis of the 1980s look like a soft landing”
great article to read and pass on !!!
http://www.azcentral.com/news/articles/0120mortgagefraud0121.html
A wave of mortgage fraud is rippling through pockets of the Valley, inflating home values through scams called cash-back deals.
Left unchecked, cash-back deals cost homeowners and lenders millions of dollars and could erode confidence and values in Arizona’s real estate market.
The fraud involves obtaining a mortgage for more than a home is worth and pocketing the extra money in cash. Neighbors may then discover home values in the area are exaggerated. Homeowners stuck with overpriced mortgages may never recover the difference. And lenders end up with bad loans that, in the long run, could hurt the Arizona real estate market, the largest segment of the state economy.
OK, let’s see, the appraisers who have manipulated appraisals for years to achieve target values so mortgage brokers and RE agents could close sales at ever more ridiculous prices are complaining? That’s a good one!
We just got our new appraisal, $633,000 up from $355,000. I don’t know what to make of it yet. We did put money into the house and values should have gone up in the last 10 years but $633,000 seems high. There are a lot of new housing developments and my hunch is that people with over $600,000 to spend want a new house.
I want to see what the actual tax rate will be before I panic. We would like to stay here in retirement and the property taxes are the biggest concern we have.