Property Value/Appraisals RANT

[Loren49]

Yes and Obama and the Democrats are trying to start it all over again. They think it will 'help the economy'. It's what got us here in the first place.

Will Obama's new lending rules make it harder to get a mortgage? - The Week
I

n a move that may radically change the housing market, the federal Consumer Financial Protection Bureau on Thursday unveiled new rules designed to essentially ban the kinds of high-risk loans that contributed to the housing bubble and the devastating crash that followed. Lenders will be barred from offering deceptive teaser rates that can lure borrowers into loans they can't afford. Banks will also have to verify homebuyers' ability to keep up with their mortgage payments. The aim of the sweeping rules, says Edward Wyatt at The New York Times, is to prevent a recurrence of the "unbridled frenzy" in lending that occurred when banks could rush to issue mortgages and then resell them, making a bundle regardless of whether the loans were ever repaid. Plus, with clear rules in place, banks will be protected against complaints of abusive lending, creating, in theory, a win-win for lenders and borrowers.

The government is essentially doing nothing more than requiring a little common sense and caution from everybody, says Danielle Douglas at The Washington Post. Of course, there's a catch. The "ability-to-pay" rules, which take effect next January, will make it harder for some people to get help realizing the American dream of owning a home.
........................

This source indicates the standards have been tightened. This thread contaions a number of examples of those who had difficulty getting loan. What specifically has been done in the past four years to encourage another bubble? The appropriate level of requirements for a loan is a tough call. How many on this board would throw in $50,000 or whatever amount on a real estate loan for 90% of appraised value. What percent would make you invest your own money?

Loren

 

[sdkubota]

Did everyone forget the housing bubble a few years ago that has caused the problems associated with this post. The Banks would lend money to anyone basically. The appraisers had no problem stating that the property was worth more than it should have been. As the homeowner bought they never tried to negotiate the asking price down. They didn't need too, the bank would give them the loan no matter what. They were going to sell the paper anyway. That made the property values in the local selling area more "valuable". That caused a feeding frenzy for the property values.
In my opinion the remodel price is too high. In my area a remodel like yours would be about $40 per square foot. Including the bathroom fixtures and permits. My house "1875 sq. ft." was built for $80 per square foot. This was in 2006.

The government, led by the democrat party, demanded banks lend to NINJA borrowers. No income, no job, and no accountability. Instead of trying to revise history remember it accurately and place blame where due.

 

[Loren49]

I would really rather not have this thread turn into a political debate which we all know is against moderator rules. Let's just leave the politcal slas out of the discussion and comtinue with ideas or possible experiences that would assist with the topic of this post. There is plenty of mud that can be tossed in many directions on the bubble problem but it is clearly poitical. We can do better. I would prefer that political comments be flagged and if the content is introduced by the same person a number of times, there should be a consequence.

First political comment in thread was post #15, then again in #45,#136,#138,#141,#160,#178. I responded to #178 which was the second time the current president was slammed. So I did not introduce but I did comment. Let's just leave the specific trashing out of the conversation and it will be better.

On a positive note, almost all of the 182 posts on this thread have stayed on topic without reverting to political jabs.:thumbsup: There is a forum for the politics and many of us aren't interested in going there.

Loren

 

[riptides]

It's a catch 22.

Banks lend money, well they want too.

The housing market has tanked. Your going to have to come up with money to either come to the table with, your improve your loan to value.

 

[ultrarunner]

Did everyone forget the housing bubble a few years ago that has caused the problems associated with this post. The Banks would lend money to anyone basically. The appraisers had no problem stating that the property was worth more than it should have been. As the homeowner bought they never tried to negotiate the asking price down. They didn't need too, the bank would give them the loan no matter what. They were going to sell the paper anyway. That made the property values in the local selling area more "valuable". That caused a feeding frenzy for the property values.
In my opinion the remodel price is too high. In my area a remodel like yours would be about $40 per square foot. Including the bathroom fixtures and permits. My house "1875 sq. ft." was built for $80 per square foot. This was in 2006.

Nope, I sure didn't forget and again the innocent are tarred with those that are not so innocent.

Thought the entire mortgage market went crazy. I couldn't pick up the phone without someone trying to loan me money.

I also think not enough credit has been given to those that stayed the course, honored their commitments and didn't surrender their property or their morals during the meltdown.

I know way to many that opted for strategic defaults. In other words, they had the capacity to honor their commitments and CHOOSE to bail... this goes for lawyers, accountants and even doctors in addition to the Joe down the street.

A simple return to at least 20% down would have stopped much of this nonsense...

The new rules still permit small down payments under the programs.

I onced offered to buy a home from an estate with 25% down... I got to know the principals and the home needed work. They offered to carry with 10% down.

It was a win/win. I was able to buy the property and they had set up a superior income stream.

Seven years in I let them know I was going to pay off the balance. They offered to lower the rate if I didn't. So now I pay 4% with 6 years to go.

 

[MossflowerWoods]

Nope, I sure didn't forget and again the innocent are tarred with those that are not so innocent.

Thought the entire mortgage market went crazy. I couldn't pick up the phone without someone trying to loan me money.

I also think not enough credit has been given to those that stayed the course, honored their commitments and didn't surrender their property or their morals during the meltdown.

I know way to many that opted for strategic defaults. In other words, they had the capacity to honor their commitments and CHOOSE to bail... this goes for lawyers, accountants and even doctors in addition to the Joe down the street.

Amazingly well said.
I agree 1000%

David

 

[MossflowerWoods]

I would really rather not have this thread turn into a political debate...

As the OP, I too would like this to stay out of politics.

But the guilty parties who created this fiasco are well know, and should not be free on their own recognizance...

David

 

[murphy1244]

As the OP, I too would like this to stay out of politics.

But the guilty parties who created this fiasco are well know, and should not be free on their own recognizance...

David

The people had a little to do with it too, you think.

 

[two_bit_score]

The people had a little to do with it too, you think.

They just drank what was before them.

 

[murphy1244]

They just drank what was before them.

They could of passed. I did

 

[sdkubota]

This is why we are in the fiscal situation we find ourselves. A certain party rams legislation that everyone knows is bad and once it totally screws up the economy they resort to being revisionists and state "let's not blame one side or the other...mistakes were made on both sides". They take zero responsibility for their good intentions and instead try to remake history to cleanse themselves of responsibility. Ban me if you want but without knowing the facts on how we arrived to where we are it this entire post is meaningless.

 

[Loren49]

An open minded look into the reality of the housing bubble will see that it was the result of many things and no single party is to blame. Each party or its supporters blame the other and I feel neither is without some blame. Each party controlled Congress or the Presidency during this time and I don't recall legislation to work on the problem which many with wealth outside the government did not see as a problem as they were making big money. Many of us took some profit from the bubble. Here is a basic look at the things involved. (I will show the headings)
Causes of the United States housing bubble - Wikipedia, the free encyclopedia
Housing tax policy
Deregulation
Criticism of mandated loans as the cause of the crisis
Mortgage interest rates
Regions affected
'Mania' for home ownership
Belief that housing is a good investment
Promotion in the media
Speculative fever
Buying and selling above normal multiples
Crash of the dot-com bubble
Historically low interest rates
Return to higher rates
Expansion of subprime lending
Risky products
-----------------------

We each have our own opinion but the information gives good reason to reject a one party cause.

Loren

ps:sdkubota - we just had an election which made it clear that many do not see it your way. You made debatable claims. I'm not trying to blame it on your party or views but am defending mine. I'd just as soon let it go if you stop blaming a specific group.

 

[sdkubota]

The election was 50/50 ...another revisionism.

 

[deezler]

Actually it was 51 to 47 %. A difference of 5 million votes. Look it up, the data is just so ridiculously easy to find. In a down economy, with unpopular wars ongoing, not much getting done, and lowest approval rating of our government ever.... he still easily won re-election.

Look, the housing bubble is just not a partisan issue. Both parties share some blame, but the majority of responsibility should fall upon the banks and American people for mutually engaging in unsustainable lending/borrowing practices. I'm just glad we are starting to emerge form this mess now. It will be a slow process, but we're on a much more sustainable track as a nation now.

 

[newbury]

The election was 50/50 ...another revisionism.

Take it to politics.
The election BY POPULAR VOTE was 51.03% to 47.18%, BY ELECTORAL VOTE 61.7% to 38.3%.

Compare that to the 2000 election:
George Bush - Popular vote 47.87% Electoral Vote 50.4%
Al Gore - Popular vote 48.38% Electoral Vote 49.4%

Dave Leip's Atlas of U.S. Presidential Elections

/edit
The housing bubble and stock market "bubble" was just like many other economic "bubbles". It's great when your on the surface of the expanding bubble, but when it bursts it's not so great.

When EVERYONE including the cab driver starts "getting in" on something it's time to get out. I've been thru two stock market crashes and two housing bubbles since the '90's. Virtually nothing goes up forever. I got out of the last stock market crash just before it slid. I've used my meager $$ to buy near the bottom of the housing market and tractor market.

I should have sold what I need to eventually sell when the market was peaking but I held on because I still needed to live here. Plus I live in the capitol of the free world and expect the markets will come back here soon. The properties are about back to their 2006 assesment values.

Unfortunately the OP also did not sell his other properties before the crash, and is not in an area of 4% unemployment, like I am.

 

[murphy1244]

The Truth will set you free

 

[Loren49]

Mossflower purchased his property in 2010, well after the housing bubble collapse in 2007. A number of posts were those who were on the bad side of the bubble and are suffering because of it. I'm sure some ont this board could give examples of profitting from the rapid increase in property value.

In Mossflower's case the problem was caused by a bad appraisal, either the first or the second. It is a local problem and the bottom line is, what advice or possibilities can we offer? His is not a housing bubble problem. Many have been caught in a similar situation for other external reasons (major corporation leaves area or military base closes, etc.)

Sometimes there is an advantage in the long run when something causes a delay in aquiring more debt. He has been offered many options and will make his choices. As I pointed out earlier I would probably do a small project on my own and make do with the space I have.

Loren

 

[KTurner]

without knowing the facts on how we arrived to where we are it this entire post is meaningless.

I think there's some truth to this. The forces that brought about this situation should be fair game. But not in the normal political mud slinging way. Just saying it is the fault of ___ and ___ is not providing facts. If you want to quote from legislation, press releases or stock holder meetings where ___ said we're doing ___ so that ___, then I think that would side step the political mudslinging and be sticking to the facts of the original post.

For example, look at this old copy of fannie maes website which says "Our mission is to tear down barriers, lower costs, and increase the opportunities for homeownership".

or this one that says "The Fannie Mae Foundation is showing America a new way home both by expanding affordable housing opportunities for low- and moderate-income families, minorities, new immigrants, and other groups facing barriers to homeownership"

Or this one that says "In addressing HUD痴 percentage-of-business goals for 2000, the company reported that of low- and moderate-income units financed by Fannie Mae last year, 72 percent went to those with incomes at or below 80 percent of their area痴 median income, 36 percent went to those with incomes between 60 and 80 percent of the median, and 36 percent went to those with incomes at or below 60 percent of the median."

So you have an entity that basically runs the mortgage industry by buying loans from banks so banks can loan again, that is backed by the government, that is getting told by the government (HUD) to make sure low income people can get financed. Obviously the 'free market' was not getting financing to those people else the govt wouldn't have to force it. And they are proud that they are getting homeownership into markets defined as below 60% of the median income.

Trying to get more people to buy homes is going to create greater demand for homes, driving up the prices. The reason that low income people weren't getting homes before is that the market didnt 'think' the reward was worth the risk. If the risk reward ratio was right, you'd bet that some investor would have been setting up loans for these people before the govt had time to think about it.

The same thing is happening to college degrees. "we need to increase number of people with college degrees" hmmm.. college costs SKYROCKETING. people coming out of college with degrees have huge debt from college and CANNOT find work. Employers looking for non college degree level jobs cant find employees. How does this make sense?

It's already happening again folks.

Keith

 

[newbury]

Some of the housing market crash could be blamed on dishonest borrowers, appraisers and banks. I remember reading about sections of Atlanta where prices were skyrocketing. Owner sells the property basically to himself with a drastically inflated appraisal, pockets $100K. Then defaults on the loan and gets his hand slapped.

Perhaps all of you missed the news stories of low wage earners defaulting on high end homes. These were not people who realistically expected an increase in income, rather they acted like they won the lottery.

Remember the problems with mortgage bundling - where bad loans were bundled with good and resold as good loans?

There were a lot of people making money hand over fist by loosely following the rules because of greed.

 

[dave1949]

KTurner:
For example, look at this old copy of fannie maes website which says "Our mission is to tear down barriers, lower costs, and increase the opportunities for homeownership".

or this one that says "The Fannie Mae Foundation is showing America a new way home both by expanding affordable housing opportunities for low- and moderate-income families, minorities, new immigrants, and other groups facing barriers to homeownership"


It isn't enough to consider actions without also considering motives and goals. Remember the "ownership society?"
Ownership society - Wikipedia, the free encyclopedia
The term appears to have been used originally by President Bush (for example in a speech February 20, 2003 in Kennesaw, Georgia) as a phrase to rally support for his tax-cut proposals (Pittsburgh Post - Gazette, Bush OKs Funding Bill for Fiscal '03, Feb 21, 2003 Scott Lindlaw). From 2004 Bush supporters described the ownership society in much broader and more ambitious terms, including specific policy proposals concerning home ownership, medicine, education and savings.
The idea that the welfare of individuals is directly related to their ability to control their own lives and wealth, rather than relying on government transfer payments, is a longstanding one, particularly in British conservatism[citation needed].
In a modern form its implementation was developed as a main plank of Thatcherism, and is traced back to David Howell, before 1970, with help from the phrase-maker Peter Drucker.
In political practice under Margaret Thatcher's administration, it was implemented by measures such as the sale at affordable prices of public housing to tenants (right to buy program), and privatization.

Politicians and policy makers of all stripes are committed to the idea that personal ownership is something that benefits the common good. I think that is a defensible concept even if the execution failed.