The lenders say they are just playing defense. "We believe the property in question was appropriately valued," said James Olecki, a spokesman for GMAC Mortgage, the Stiner's initial lender. GMAC uses an in-house staff of appraisers to review the independent appraisals they receive.

THIS is a BIG PART OF THE PROBLEM......"GMAC uses an in-house staff of appraisers to review the independent appraisals they receive."

These GMAC in-staff reviewers probably KNOW NOTHING about the area the home is in, yet they sit in their leather back Executive seats in another State making calls for another appraisal because they don't personally like the independent appraisal ? What a friggin joke !!!

Wow, the old "hand shake" agreement certainly has gone out the dad gum window.

The Banks are being stuck with so many properties that they have to undersell on the mortgage and they are looking for ways to avoid more. You just can't blame the Banks for this blame all the people who bought homes they couldn't afford whose house is out there now as a problem loan.

It was greed all around. And people living beyond their means.

Neighborhood property values are being driven down by the lenders with foreclosures in the area to a point that they will soon have to give many away just to get them off the books. I know first hand what is happening out there, I see and work with it everyday. The lenders are telling agents to price foreclosed homes lower than the last sale or listing so that they can start a bidding war, sometimes it woks sometimes not. It's the banks that made this upswing in the market happen and they are responsible now for the declines because of the pricing they set in order to dump them in the marketplace. As for appraisers, we have taken a beating in all arenas. They have stolen our clients, our money, our business and our independence. Now these fluffing amc's tell us just when, how, where and for how much we will work or ya, and buy the way, wait 60 days to get paid. I hope there is an IRS agent here to read this because what the amc's are doing is illegal and I'm sure the IRS would like their cut of what is being shaved by the amc's. Basically reclassification, but that;s another story.

Amen to that. It is illegal what has been done by the AMC's. Here they are currently taking 40-50% of the appraisers fee and then saying it has to be done in 3 days and it has to be done this way and that way, oh and if it doesnt meet what we want your not gonna see any more work from us and we will pay you eventually....My full time job is simply trying to track down these people and try to get paid for the work that was performed before they go out of business or have insufficient funds for that.

"Wells Fargo must ensure that the value of the collateral supports the loan amount."

I would be laughing if it wasn't such a sad state of affairs. Their position now completely contradicts how they did business just a few years ago, instead of returning to "normal" lending practices of two decades ago.

I think ultimately this is a failure of government. Fannie and Freddy HORRIBLY distorted the market following the mandate of congress to facilitate and promote sub-prime lending. Which then in quantity facilitated the creation of the mortgage backed securities . Then the criminally incompetent rating agencies blessed them with triple A standing, the SEC was politically leveraged to stay out of it, and everyone patted themselves on the back for being so clever.

Most participants unwittingly fanned the flames through their ignorance and greed of the kind that most the rest of us possess. But there were some who probably knew exactly where all this was going while perpetrating their schemes, and I like to think they will receive "special attention" after they die.

Wow who would have guess that letting the bureaucrats in would have slowed down the system. More paper work, less progress, and a lot of wasted money. I wonder what the medical system will look like when they get their hands on that. Probably like the VA system that everyone hates and it's impossible to get what you actually want or need. Thanks Obama you were right more government was definitely the answer.

these banks are the problem. they get their money from the feds for next to nothing but they don't want to loan any to the people who bailed them out. next time let the bastards crash and burn.

The banks now have full control of the housing market and can manipulate it in any manner they like. To them the consumer (you) is of no value.

I feel for all of you going through the home loan process of hell. My husband and I went through somethhing similar with U.S. Bank. U.S. Bank sent us a refinance loan offer in the mail offering us 80% of the appraisal value of our home along with $3,000 closing costs which were to be added into the loan amount. We were asked to pay a $300.00 "non-refundable" application fee plus $465.00 for the appraisal. After doing all of this, and our loan signing appointment scheduled, US Bank called us and changed the rules. They called us the DAY BEFORE we were to close and told us they were raising the closing costs to $6,000, and wanted that money in cash the next day at our closing, To add insult to injury, they also informed us that the underwriters did not accept the appraisal amount and therefore were giving us less money, not the 80% of the appraisal value we had agreed upon. I never could understand why the closing costs were doubled for a much smaller loan amount. I felt the bank should refund the $465.00 appraisal fee since they rejected the appraisal and would never tell me what they thought the house was worth. After doing some of my own research, I found out that my local US bank did not charge an application fee and the local loan officer told me to NEVER respond to offers that come in the mail. We bank locally with US bank so when the offer came in the mail from US bank we assumed we were dealing with our bank. Loan officers should be required to inform the customer of the possibility of the appraisal being rejected by the underwriters which allows them to decide whether they want to take the risk of losing the application fee and appraisal fee. For us that was $781.75. After weeks of negotiating with US bank, I am happy to say they refunded all of the money to us. Yes, I was surprised but more investigating on my part has led me to believe that what they did to us was illegal and called a "Bait and Switch". It was probably cheaper for them to refund my fees than become involved in a legal case. What I want everyone to know is, NEVER RESPOND TO LETTERS SENT IN THE MAIL EVEN FROM YOUR OWN BANK!!! Deal locally and save yourself the application fee and frustrations. The crazy thing is, we could afford to pay for the loan and have good credit.

This action is called bait and switch. If you are still interested, this should be brought to the attention of the state attorney general where you live. Did they make out a new truth in lending statement for you when this happened?

Frankly - it's about time. We do not need another mortgage meltdown.

Housing prices have decreased because of the market but that's the way it is.

In the past, some appraisers would pad so that there was justification to give a person a higher mortgage.

Those kinds of practices have to go.

bklynj..it seems that you feel the banks had no faukt in the mess this economy is in. I have to feel that you think these home owners that have lost their homes created the loans the banks had them use. I for one do not see any bank allowing a borrower to make up his or her own loans. It was the banks and mortgage companies that created the no doc loans,,not the individuals. It was the banks and others that created the interest only loans that required no information concerning income. The sad thing of course is that many of these people did not understand what they were getting into since mortgage brokers were telling them just how safe it all was. There is plenty of blame to go around...including a congress that accepted funds from lobbyist representing the financial industry that brought about the de-regulation of same that allowed this mess to be made up for the banks profits to soar.

They did and it is called the AMC. It was Attorney Andrew Cuomo who started this @!$%# that took effect 5/09. Regulations? Dodd and Frank took care of the rest. Please don't talk about regs. unless you can understand the human cost involved. I for one, do know.

"There's been a pendulum swing in appraisals comparable to the one we've seen in mortgage credit, from foolishly lax to overly restrictive," said Walt Molony of the National Association of Realtors. He reported that as recently as October, one in 10 member agents said they'd had a contract canceled as a result of a low appraisal, 13 percent said they'd had a contract delayed, and 16 percent said they'd had a contract negotiated to a lower sales price as a result of a low appraisal.

So, a small percentage had "a" contract cancelled, delayed or negotiated to a lower price? Maybe a poorly worded sentence, because most likely there have been many examples of contracts cancelled or delayed. But this is a predictable correction from the days of the housing boom, when many appraisers were nearly rubber-stamping deals to be sure the deal would go thru

No one mentioned that Andrew Cuomo is affiliated with and AMC? He is chairman of AMCO's advisory committee on governmental and regulatory affairs, and is a member of the company's board of directors.

Yep, just another politician lining his own pockets at the expense of the public.

Sorry, but it's not the banks being paranoid. Reading these posts, it is clear that people continue to be ignorant of the politics that brought about our current financial situation. Fannie and Freddie were set up and given directions from the government (at the time, dems) to make housing affordable. Remember Clinton and Carter both thought it was unfair that only those who could afford a home actually owned one. The liberal lending policies that led to the current crisis was as a direct result of the government getting involved and encouraging (and forcing) lenders to lend to other than "credit worthy" buyers. Remember all the discussions about redlining and discrimination, etc.?

The whole sub-prime crisis was led by Fannie and Freddie. And now it is clear, assuming there is any truth in the article, that they are leading the way again by dictating appraising standards. Just as when the government would punish banks that didn't have the correct "diversity" portfolios (ie: lend to noncredit worthy minorities), they are now on a rampage to go in the other direction. The end result is that we lose, just like we lost before.

There is a logical explanation for this. If you view things like apologizing to the world for America's exceptionalism, from each according to their needs, from each according to their ability, prosperity is arrogance, wealth is evil, etc. as the ideal, (in other words: the destruction of America as we know it), then you see that this is exactly what Obama and this administration wants. This is by design. This has nothing to do with Potterville or anything evil by the banks. Let's face it, the fact is that they make money by making loans! So, commonsense tells you that this is not in a bank's best interest to be overly cautious (they lose money if they are). What this is is the creation of another crisis by socialists who have calculated that they will be getting more people to rely on government by creating more depression. And, unfortunately, it is working. Only when people know history and are willing to stand up will this destruction stop!

I've brought these very facts up several times before but it tends to fall on deaf ears if the person voted Democrat.

To them, it all lands in Bush's lap every time even though the rules were made during and by a Democrat administration in 1998 to set up the mess. I'm amazed Bush is not being blamed for the garbage going on in this article.

Remember Clinton and Carter both thought it was unfair that only those who could afford a home actually owned one. The liberal lending policies that led to the current crisis was as a direct result of the government getting involved and encouraging (and forcing) lenders to lend to other than "credit worthy" buyers. Remember all the discussions about redlining and discrimination, etc.?

My certified financial planner sister who is President of a major investment institution completely agrees with you about this. She blames my favorite President for this fiasco and it bums me out that she's right because I love Bill.

...They did and it is called the AMC. It was Attorney Andrew Cuomo who started this @!$%# that took effect 5/09. Regulations? Dodd and Frank took care of the rest. Please don't talk about regs. unless you can understand the human cost involved. I for one, do know. ~ Posted by Ms. Stanford

You are wrong. Please do not talk about regulations unless YOU understand the Independent element.

Keep whining.., it appears to be your only solution after Independent Appraiser rules took away abilities to directly influence and enslave.

Cuomo's fault? He didn't initiate the HVCC. The Independent Appraiser did. The ones who blame Cuomo on a certain date are ignorant and ticked off that that their cash cow went by the wayside, along wth their slave masters, whom by law, for DAMN GOOD reasons -- not to have any advserse influence in the reporting of market value.

Well here is the thing about appraisers. They are hired by the banks alot of the time and if they dont come with a number the banks like then they dont get rehired. The other thing about appraisers are that they are real estate agents who could not hack thi8s market so decided to do appraising. Getting an appraisal that is not in the same neighborhood is NOT an appraisal. Its a bank snowjob. So appraisers having balls is not the issue. Its the banks and appraisers like to eat and feed their children like everyone else. One last thing, I sold a a house for $116,284. Guess what the appraisal came back as....you guessed it $116,284. No way do they come back with the exact dollar.

Appraisers are hired by the buyer and seller it's one of the costs of buying or selling a house. I know in my state they are licensed and go through an apprentiship.

Jerry-1101592.....I wholeheartedly agree.

The appraisers are called out by the mortgage institution. If the appraisal comes in low, you better believe that the lending institution, and more than likely the sellers, would get hot because the "deal" would probably fall through because the "buyers" would want the "seller" to reduce the price to the lower appraised value. That is why more appraisals are called out if the first appraisal comes in low.

Why does the appraiser "ask" the "seller's agent" for a copy of the Purchase and Sale agreement ? So they can find out what the price of the home was agreed to. Based upon that information, the appraiser will more than likely come in with an appraisal value equal to or near the selling price stated on the Purchase and Sale agreement.

They are all crooks.

none of these comments are true. appraisers are hired by third party "appraisals management companies" appraisers are not hired by buyers or sellers. banks MUST contract third party companies to hire appraisers. appraisers are paid by the mangement company. the Mgmt company collects the fee and the appraiser gets a percentage of that or a flat fee. appraisers have no contact with loan officers, processors or any other bankl representative.

I see all these comments about appraisers and appraisals and I just laugh. Unless you are an appraiser you know nothing about appraising. Someone questions why appraisers ask for a copy of the purchase agreement. That is because they are REQUIRED to analyze it. Not just to look at the price. Another person states that the appraiser is hired by the buyer and seller. Well banks are not permitted to accept an appraisal performed for a buyer or seller because it comprimises the independance. Appraisers must be engaged by a financial institution. If an appraisal comes back at the exact sale price it is not because they are trying to "make" the number. Comparables indicate a range of value, if the sale prices falls within the range then it is deemed reasonable. If someone is appraising properties to the dollar, that is amazing because it is not an exact science. People just need to realize that their house is not the best one in the neighborhood or the nicest. Everyone thinks their house is the best and think it is worth the most. And when they are the buyer they think the house is worth nothing so they can try to steal it. People need to wake up. As far as mortgage brokers go, they are the biggest problem. They will say and do ANYTHING to close a loan. They are the criminals. There is no recourse for selling a bad loan.

How long have we heard "It's the Appraisers fault". Every Time the flipping markets go off the deep end, it's the appraisers fault. Not the loan repo or the underwriter or the check writer or the escrow company or the ceo or the underwriting guidelines, the buyer or seller or maybe the home inspector. "It's the flipping appraisers fault. The only person in the chain that makes the least amount of money on the entire deal. Give me a break.

PAMELA L STANFORD

How long have we heard "It's the Appraisers fault". Every Time the flipping markets go off the deep end, it's the appraisers fault. Not the loan repo or the underwriter or the check writer or the escrow company or the ceo or the underwriting guidelines, the buyer or seller or maybe the home inspector. "It's the flipping appraisers fault. The only person in the chain that makes the least amount of money on the entire deal. Give me a break.

WILL YOU MARRY ME?

People, people. There is an appropriate price for every house. Unfortunately appraisers, bankers, HUD, the Federal Govt and most lendrs do not have a clue what that number is. Get buyers and sellers together, use common sense about what someone can afford and you have a deal. Trying to make a buck off of someone making a stupid decision has led us down this rathole. Let's get out of it!

Appraisal Hell?? They have it all wrong. I have been an appraiser for 19 years. Trust me, if the bank orders 3 appraisals on the same property, don't blame the appraiser for that. Overcautious and underinformed underwriters are to blame. When the new guidelines started in 2009, 18 years of experience became meaningless. Appraisal Management Companies have all the power. All that matters now is who will appraise the property cheapest and fastest. Leaving the most profit for the AMCs. Quality appraisers are unable to make a living because unqualified hacks are willing to drive 80 miles away, where they know nothing of the market for a $160 fee. If you pay peanuts your hiring monkeys. The only appraisal hell I see is the one that the true appraisers now have to live in. Soon all that will be left are the monkeys... What kind of loans will be made then?

That makes no sense........

This is the way it is supposed to be but with the amount of foreclosures outweighing non foreclosures and short selling what ends up happening is the new loan is higher than the competitions asking price or the recently sold foreclosure and the lender is automatically upside down and so is the new buyer. Competition created by the very lenders that now want to make loans in any given neighborhood sold foreclosures at 25% to 50% or more lower than market and now the new market for the same product is 25% to 50% or more lower and who did it? The flipping lenders. And by the way, I sent Dave Stevens (at HUD) an email about all this garbage, needless to say he did not respond. I forwarded a copy of that letter to congress, the banking finance committee and the senator in my state. Guess what, bingo, no response. Maybe I should post it on newsvine, lol. Personally, I think they don't give a rats a$$ about all of this unless they can make a buck.

Its called lease option and is not a good option for the seller unless it is in the contract that the leasors will buy after a set period and not the option to buy.

95% of rent to buy or lease options ever go to closing and it is a bad idea for the seller.

and sometimes for the buyer/renter since the rent is based on future value of the property. If market rents are say $1000, the seller wants say $1200 and the $200 difference is supposed to go towards the downpayment. So after say 1 year and $2400 paid to the seller, things do not go as planned, the renter/buyer is out $2400 and the owner/seller ill not return it in many cases. be careful of these situations, know all the ins and outs before signing on the dotted line.

the criteria for an appraisal varies due to conditions of the sale or refi however the forms are standardized and have been for a long time. anyone that wants to know these rules can get a copy of the current USPAP guidelines

Been out of the residential appraisal industry for over a decade, but even back in the early 90's we had to follow "typical underwriter requirements" which were put forth by FNMA or write a explanation as to why we felt the necessity to deviate. Today, if we were to see a formal standardization of comparable sales criteria it would most likely come from the Appraisal Foundation and be made part of the Uniform Standards of Professional Appraisal Practices (USPAP).

The guidelines that we had at the time I was doing valuations were as follows; Comps to be within a 1 mile radius of the subject property; Sales had to have closedwithin 6 months of valuation date; Square footage of comp should be +/- 15% of sq. ftg of subject; Single item adjustments <10%; Gross adjustments <25%; Net adjustments <15%; And the comp sales prices needed to "Bracket" the subject (at least one of the comps needed to sell for more than the subject).

The challenge was finding comps that fit. Usually the appraiser has to use their professional judgement as to which comps are the least non-conforming.

Standardization has already been done. It's the flipping banks that are now calling the shots. Go to the fannie or freddie website or the hub site and look under appraiser topics. It's free.

All of these are the same, but now they want more than 3 and also listing or pending sales. It is unreal how the lender/underwriter knows your local market better than the appraiser does. Lenders are not required to use an AMC unless their upstream lender requires it. Nowhere in the HVCC does it require the use of an AMC. It is a big pain in the rear now though, just dealing with all the crap.

once again, there is no more HVCC

Banks get to choose the appraisers? That can open some back doors which might otherwise need to stay shut.

That doesn't happen anymore unless it is a local conventional loan.

Perry, you are right as of 11/14, there is no more HVCC, but the lenders are still using the basis of the HVCC for their own guidelines of practice. It may as well still exist.

There are two appraisal catigories. The problem is what is happening in my area. In the last 24 months, in the area of So Cal where I live, 98% of the sales are bank owned. We are talking about a large region. There are no other comparables to use other than Bank Owned properties. This is when you compare feature to feature, condition to condition and size to size and hope for the best.

there are not two appraisal categories, period. comparable sales are selected based on the condition of the property, distance from the property, time of sale and many other factors. appraisals are done to determine the fair market value of the property and that is all

Perry you're wrong. There are two categories. There are markets where you have both an active regular sales market and an active REO market and you compare REO to REO and standard to standard. It is not only about distance or time of sale.

sorry to disagree with you. reo is not another appraisal category, it is another appraisal type. an reo appraisal is just like any other appraisal except it requires an REO addendum noting anydefects in the property and the estimated amount to repair or replace any property defects. the property is then valued and FINAL opinion of value is the value minus the cost of repair. it would be fair to say you would use a different category of comparable sales IF the property warrants it based on condition. a house isn't worth less just because a bank owns it

Sorry to disagree with you Perry, but there can be, and in some markets are, two distinct markets that need to be analyize differently. I would not compare standard sales to REO properties if I can find other standard sales that satisfy the requirements of the assignment.

that is a different types of appraisal, not a different category of appraisal. it is still a residential appraisal. i guess technically there can be 2 categories of appraisal, residentail and commercial. you can adjust for the condition of the sale if needs be (short sale, foreclosure, reo) IF the adjustment is warranted. REO properties aren't necessarily in a detriorated condition and are not automatically worth less. that is why there is a section in the appraisal addressing the condition of the propery and it is the lenders discretion. it is either an as-is appraisal or an as-repaired appraisal. it is still a residential property valuation and not a different category

An accurate appraisal should determine what the market supports for that house at that time. It's absurd to think there are two catagories. When an agent shows a home, the buyer doesn't care who owns it. They care about physical characteristics and appeal.

How can you consider a REO or a foreclosure an "arms length transaction"?

It is because you have a willing seller. It is owned by the lende and there is typically no adversities connected with the sale, for instance if a married couple have a house and one dies and the other can not make the payments, the survivor may choose to sell at a very low price to get it sold within3 days. When the bank lowers the price on a property they already own it is at their discression not because they can't hold it but because they don't want to hold onto it. The difference, in a nut shell is a big IF. This is called undue stimilus, forced to sell vs want.

It's a property in duress. I would go out of the area for like properties before I would use a property under duress.

There are markets where REOs are the market still. You don't have a choice but to analyze them. They are offered on the open market, yes, they are desired to be sold at almost any costs, but they still lower the values of houses around them. Don't ever forget the most important 3 words in Real Estate. LOCATION, LOCATION, LOCATION. This still establishes your home's market.

Well, the best way is to find a repossessed house in decent condition, then pay cash. That's what my daughter did a couple of months ago.

The public need Independent Appraisals to protect their investment. The banks and the others do not need protection. Quite frankly, banks and sales people do nto deserve it, because they don't want protection.

Phil,

You are right. A contract is a contract, not a "I'll pay if it is convenient and not too much trouble" agreement. The guilt in this market is shared by everyone, including and especially by homeowners who thought that paying an incredibly low monthly payment would buy them a MacMansion. Banks, appraisers, realtors, and buyers all share the blame. So, let's get onto something more productive.

The rich walk away from bad investments all the time, including via their companies. That's partly how they got rich. You hurt the country, by helping to widen the gap between rich & poor, when you don't walk away when you can.

Yea, don't blame the banks for telling appraiser's "either hit the value or your fired". Don't blame the banks for appraisers being black listed when they did stand up too the banks. Don't blame the banks now for ordering second and third appraisals because they feel the "value" isn't right. Lets blame the borrower for being told by brokers that they could re-finance out of the bad loan in three years. Lets blame the Government for wanting everyone to be able to own a home, not just the elites in the country. I agree, I owe more than my home is worth, I bought it and I am continuing to make the payments and live up to my contractual agreement. I am in a position to do so. Some people are not due to increased interest or loss of jobs. It's a bad market and you can blame everyone involved, but don't tell me that the banks were only responsible for accepting bad appraisals. I have been on both sides and that is not a correct statement.

Phil C. wrote "You bought it and signed a contract promising to pay for it, then do that."

The same contract also included a stipulation that the bank would seize the house in the case of non-payment. If banks make it too easy to walk away from an asset that lost a significant portion of its value because the bank under-collateralized the loan by accepting an inadequate downpayment, there should be no surprise that house debtors will do this.

Walk away !

Very well said, I couldn't agree more. Uncle Sam said let everyone be able and buy a home, the American Dream. The banks found ways to accommodate this for Uncle Sam. Many buyers, not all, when things got difficult, or they had to roll over a $300 monthly house payment to $1,000 just couldn't do it. That's when the American Dream turned into a Nightmare! The average foreclosure time in Florida is fourteen months. Some are not paying the monthly mortage to the tune of $2,000 a month or more and using the money to pay other things until they are forced out.

What is sad, is that someone living in an area that has made their monthly payments come hell or high water and is struggling, but hanging in there and several in the neighborhood walk, they get punished with the value of their home. Maybe we need to take into account some sort of factor if the buyer pays their mortgage every month there should be some sort of value placed on that with a home.

What is sad, is that someone living in an area that has made their monthly payments come hell or high water and is struggling, but hanging in there and several in the neighborhood walk, they get punished with the value of their home. Maybe we need to take into account some sort of factor if the buyer pays their mortgage every month there should be some sort of value placed on that with a home.

This is our exact situation. Got turned down for a refi today, due to our home "value" coming in way too low to get a new loan for us. That "market value" was pulled off the internet, from a company using short-sales and foreclosures in our neighborhood, NOT regular, straight home sales. Completely ridiculous.

This whole idea that the federal government "made" banks make bad loans is ridiculous. Certainly if that were the case the banks would have known they were making bad loans long before the dung hit the fan. If so, why didn't the banks complain? And if they knew they were making bad loans why didn't they price them accordingly? The federal government does not control the max rate a bank may charge on a real estate loan, state government does. And if the federal government and banks knew they were making bad loans, certainly the mortgage insurance companies, investment houses, bond insurers and rating agencies knew it. So why didn't somebody say something?

The argument that the government made banks make bad loans vis a vis the Community Reinvestment Act thru Fannie and Freddie is nonsense. Greenspan himself - Mr Ayn Rand Free Market Demagogue - stated in his congressional testimony that these entities played a minor role in creating the fiasco and the banks and investors alone were responsible for their failure to assess risk. Look it up. Then there is the fact that the majority of the bad loans originated by Countrywide, WaMu, and IndyMac - the three biggest failures - were not even subject to the CRA.

The federal government and the quasi-governmental Fannie and Freddie did not concoct the idea of stated income loans, private investors did. Typical lower income borrowers did not inflate the bubble, investors/speculators did. There is a reason the biggest collapses occurred in places like FL, AZ, NV and Southern Cal. These places are full of poseurs: pools; outdoor kitchens; fancy cars; extravagance; etc. They were chock full of not-very-bright white folks trying to live an upper middle-class or upper class lifestyle.

Phil- The Banks don't care about the people. We bought a home that we could afford and never have missed a payment in 22 years. People were talked into buying homes that they never could or should have afforded. I blame banks, real estate agents and greed!!! You are all alike, out for money and willing to screw over what's left of the middle class to steal it.

Matt:

Yes, Fannie and Freddie under direction of congress were the catalyst that started this train wreck.

Much of what you say is accurate. But... why was Countrywide et. all able to "originate" the loans? Because Fannie and Freddie would buy them! And because Fannie and Freddie didn't discriminate against sub-prime lending, neither did the "banks". I place that word in quotes because many of these business were better described as lending houses.

Then came the real poison, mortgage backed "securities". Placed in quotes because they ended up being anything but secure. A formula published by David X. Li was used by various financial institutions, who ignored warnings about its limitations, to build financial time bombs out of the newly available stream of sub-prime mortgages that Fannie and Freddie were offering in ever increasing numbers.

When these securities "cracked" under real world conditions, they had already spread so much into the so called shadow banking system, that nearly one third of the US economy froze, and nearly all liquidity was lost such that all short term lending vanished, hence the Credit Crunch.

Fortunately the Fed got it's head around what was about to happen (The Apocalypse, not kidding) and TARP was born. Though it wasn't popular, it did do it's job, thank God.

Correct. The housing market should recover with a significant drop in prices. The Fed wants to preserve the current high prices.

"RENTS ARE AND WILL CONTINUE TO GO UP!!!!!"

With no increase in wages, how can house prices and rents go up? The real estate bubble was fueled by people willing to take out long mortgages that outlast the peak in come they listed to acquire a loan.

BTW, what is the source of your expanding pool of renters? Those that lose or leave their houses?

We have 11 of them and they are mostly folks with some credit issues, and some who lost their homes and displaced. We are advertising them just under the going rents and THEY RENT IN LESS THAN 4 DAYS!!! EVERY TIME WE DO A NEW ONE THE PHONE RINGS OFF THE HOOK, AND WE GET MULTIPLE OFFERS TO RENT THEM!!! THEY ARE ALL CASH COWS!!! GETTING OVER 20% ON OUR MONEY. Try getting that return at Chase, BofA or Wells Fargo!!!!

great comment Julie

My wife and I bought a foreclosed home in florida in 2009 and when the county appraised it, they said it was worth 20% more than what we bought it for. I called BS on their appraisal and argued before the property appraisor's mediator and got it reduced down to the same price we paid for it.

Sometimes you have to put in the extra effort to fight them on these things. It isn't my fault they tied their taxes to artificially inflated home values and are now crying that they don't have enough tax revenue for all their programs. Why were they allowing property taxes to increase by 20something% every year during the housing boom anyway? If they would cap their tax revenue increases at the rate of inflation, then they would be just fine because they wouldn't have become dependant on spending excessive tax revenue on stupid pet projects and programs.

you can fight your tax assessment and after alot of your free time spend proving your real value. then go fight with your tax paid employees on your free time, you might get it lowered! this year and increased next year! law should be made if they assess at that price and want the taxes for that you can demand a check! this would keep them honest!at least on our assessments!

Yes why have a SEV (state equalized value) that the state tells me how much my home is worth each year as in taxes. But I still need an appraisal (that is lower than the SEV) if I want to refinance?

County tax assessors use a total different method to appraise properties. It's called a mass appraisal.

Don't you just love it when the AMC calls and the first thing they ask is, "What's your price and what's your turn around time?"

Yes and when I tell them my fee, they tell me we only pay xxx. I say well if you want me to do the work the fee is xx. have a nice day. Needless to say, I'm broke but i can not and will not help them destroy what is left of me and the few assets I have and believe me they are very few. Someone called today from Colorado and wanted a forensic field review for $225.00 these take as much as 3 days to complete especially in my rural area. this was a 39 acre farm on the river, no comparables anywhere and is very complex. I guess she found someone willing to do it for her fee. Next week they will offer that same person less for the same or similar work. No thanks.

I here you! Then they want it 24 hours. I laugh at them.

An appraisal is good for only one day!

many people do not realize the big banks own the management company and that is OK< ??????????????????//

if you knew anything about the process you'd be dangerous. appraisers do not work for the banks

Some banks do have appraisers working for them. They are in house appraisers and BofA uses them and keeps them on payroll. Not all apprasiers work for the banks and not all banks have staff appraisers.

Wow your a clueless little man arent you?

Mlkyl~ B of A doesn't have in house appraisers. They do have underwriters which do not have to be a licensed appraiser to the job. Bank executives can do appraisals and they also do not have to be licensed appraisers.

I knew homes were being over the value & it's been going on even before Bush stole his way into office. This country don't know how to run honest. The cut throat bankers on wall street should all be in jail with half of congress. There isn't going to be jobs for years to come. we are in an era of uncertainty, if you notice not any government officials running for office have any ideas for a quick turn around for jobs. It took decades for the bubble to pop that our elected government ignored. They failed badly. The writing was on the wall yrs ago just before NAFTA was a signed done deal. The system is rigged and the joke about trickle down economy with tax breaks for the rich is full of crock. It doesn't matter who the president is we are all screwed, exception the rich & government elected who will not feel one bit of bad times. For them the bad times are good times they have money and get it from tax payers even if they don't deserve it. They better put up gates around the neighborhoods they live in. There will be tent cities going up around them. Anarchy is around the corner. Banks will be on the burn list 1st then politicians 2nd. States will separate into smaller government by the people,for the people & of the people, something Washington DC doesn't get. People have had enough Bull Sh*t talk from the white collar crooks running the country into the ground. There will be no blue & red states anymore. there will be one party and you don't have to be rich.

and you are an idiot for making such a blanket statement

On this one I agree with you Perry.

And you know this because.......?

Again another completely clueless, small minded, ignorant, irrellevant, little person. Im am truly upset with the way the mortgage crisis has shook out, but to blanket a group like that is ridiculous. Thank God you can not run for office.

I am a Realtor and I too have lost sales due to the lending mine field and multiple appraisal madness. It is very frustrating because you have a willing qualified, buyer and a willing seller, an agreed upon price and still can't get it closed. How is this nonsence helping our housing market? It isn't! The only sales now that sail through are cash deals from investors whose sole purpose is to rent the house out. Now, don't get me wrong I believe in the right of every American to invest in real estate and plan for the future, but when qualified buyers can't become homeowners - something is seriously wrong.

The American Dream is in jeopardy of being a passing reference in a history book. And I agree with the Pottersville reference. The investor to owner- occupant ratio is way out of balance and we are certainly in danger of becoming a nation of renters. At least for the lower middle class and even moving into the middle class.

Exactly.

Ready, willing and able.......... Able means that you are able to pay for it. If the buyer is borrowing money, he then has to have a lender involved in the transaction. Lenders and banks use appraisals for CYA.

Just like the people in the article that wanted to pay $70,000 for a house that only appraised at $60,000. They paid it anyway??? That's 14%+ over the appraised value.

WRONG, again. Tell the flipping truth. Just how much did you make on these deals. 2, 3 ,4 5 pints, plus credit report fees, and the one I like best, warehousing fees, and just how many fake bank statements did you have to make for full doc loans when the real ones did not work? Oh, ya, what about the phoney phone lines installed in various places to be used as a source of job verifications. Get over yourself.

Wow, really...please for the love of all good and holy keep you and your good ol boys club in Kentucky. Perhaps you are the single sole solitary reason for the housing problem in America today. I state it like this because i want you to realize how completely abrasive and inaccurate your previous statement is to and about the appraisers profession. There may be some scandalous appraisers..i can admit that and there surely are a few (or MORE) scandalous Brokers as well. Dont place blame on others unless you are willing to accept that YOU are also a part of the problem.

Yeah Gary, and I suppose you turned down that commission when those appraisals were faulty.

No one mentioned the needs of new roofs, outdated plumbimg and new heat syswtems etc!

Appraisers are not home inspectors, we can only appraise the obvious. Shame on you for not advising your buyer to have a home inspection.

The banks are nothing but lying whores who have set up camp ready to put every American out to pasture!! It is a plan...plain and simple!!!

It's all traceable back to the prez at the time. Greenspan was ordered to reduce gov't rates to the point where it behooved banks to shovel out cash as fast as possible. It was all to make the rich richer, and it worked spectacularly.

Total debt levels are too high. Debt based monetary system reached it's end of life. We have borrowed from the future for decades. Now the future is here. When an entire population goes on a borrowing spree, this inflates the money supply and causes an inflationary boom:

http://www.tradingstocks.net/html/banks_create_money.html

When the debt reaches extreme levels, real economy cannot sustain interest burden. Then borrowing slows down. Once borrowing slows down, it becomes impossible to pay existing debt. Here is why:

http://www.tradingstocks.net/html/inflation_deflation_credit_bub.html

Borrowing must increase exponentially so that principal + interest amount exists to earn to pay debt. Once the money supply (and the velocity of money) fails to reach required levels, people start going bankrupt. Businesses fail. Foreclosures occur. This further scares people and starts a deflationary crash as the expansion of money supply not only slows, but it starts deflating.

Today Obama is running around telling the banks to lend. But bank credit is still deflating. It is hard to turn the boat around because:

1. FED makes credit available. [Yes they do]
2. Banks must lend. [No they don't, because they don't think they will get their money back]
3. Borrowers must borrow. [No they don't, because they don't think they can pay it back]
4. For inflation, consumers must spend extravagantly and chase too few products with too much money. [Consumer is a saver now]

Housing collapse is a result of deflating money supply. With less money available, it becomes impossible to sustain current prices and salaries:

http://www.tradingstocks.net/html/housing_market_bubble_bust_cyc.html

This is why we have high unemployment. The cure is to pay off debt. The cure is NOT deficit spending. Deficit spending is the morphine you take before your legs are cut off.

Prepare for the coming crash. It is likely to be the biggest economic collapse the world has ever seen.

What will really crash our system in conjunction with the deficit spending and monetizing to the tune of $3 trillion over the last 2 years is when the dollar is removed as the world's reserve currency (that is in process right now) and the U.S. moves to devalue the dollar.

Currently Russia, China, France, Japan and a few middle eastern countries are lobbying to have a new world currency called the "Bancor" replace the dollar as the world reserve. The Bancor is is currency that would be issued by a global governing body.

The reason all of the other countries at the G20 (maybe it was the G8) were upset that Obama wants to spend his way out of this is because they know we can't support anymore debt. If the dollar gets devalued that means the countries that hold lots of $ and U.S. debt will lose big time and their economies could collapse. So basically, their economies are tied to the dollar.

I'm not an economist but that's how I understand it. Maybe someone can fill in blanks or clarify some of it. But basically it means that this housing collapse will look like small potatoes (is that how to spell it Dan Quayle?) in comparison if those things happen.