Reconsideration of Value: How to respond?

[J Grant]

Appraisers opine values based on market prices.

Appraisers opine values based on the interaction of many forces upon prices...such as financing, market conditions, motivation of particpants etc....they don't just opine values based on "market prices"

What does market prices mean? Where do you get that hybrid term from? You make it sound like whatever prices are, we just go along for the ride (and where did that land the housing market?)

Nothing much more. It's neither my job to make deals, kill them, or to make sure the borrower isn't in over his head.

Many appraisers believe it is their job to "make deals", with the end result that the borrower is in over their head. When appraisers do their job properly, the end result is that far fewer borrowers will be in over their heads.

We're not the guard dog to the lender's capital vault. We merely give a specific opinion that lenders use in a lending decision.

The specific opinion is supposed to be developed to a standard that is indeed "guard dog" like. The fact that appraisers changed from guard dogs to lap dogs is why their (our ) role was denigrated, appraisers became distrusted and then expendable, and draconian legislation was passed. The legislation ended up hurting honest appraisers more than the number hitters, and drove honest mtge brokers out of business along with their dishonest coulleagues.

 

[J Grant]

Glad you are so flippant, Calvin! Carry on with generating good will!

 

[J Grant]

BS...they were at fault and needed someone to take the heat off of them. There was no regulation of the mortgage industry. Home ownership was declared a right.

I am a strong advocate for enforcement against bad appraisers (of which HVCC, Dodd and other bills are NOT). But I also know that bad appraisers were not a significant cause of the bust. Search the causes of the bust - we're not mentioned.

There were many causes of the bust, but too many appraisers were right up there as enablers.

Appaisers are "mentioned" every week in the media in yet another fraud ring busted, in every state .

If appraisers had held the line and stood up for values, even Cuomo could not have done what he did. The media investigates everything and the HVCC did not come about just because a deal was made...a version of the HVCC would have come about without Coumo, the problems were that bad and being exposed in the media daily.

 

[Calvin the Airedale]

Appraisers opine values based on market prices.

Appraisers opine values based on the interaction of many forces upon prices...such as financing, market conditions, motivation of participants etc....they don't just opine values based on "market prices"

Sure they do. Your SC starts with the price of the comp then makes adjustments for differences. All those forces you're prattling about are subsumed in each price.

What does market prices mean? Where do you get that hybrid term from? You make it sound like whatever prices are, we just go along for the ride (and where did that land the housing market?)

Market Price: The amount actually paid, or to be paid, for a property in a particular transaction. Differs from market value in that it is an accomplished or historic fact, whereas market value is and remains an estimate until it is proved. Market price involves no assumption of prudent conduct by the parties, of absence of undue stimulus, or of any other condition basic to the market value concept.

Real Estate Appraisal Terminology; AIREA, SREA; compiled by Byrl N. Boyce, Ph.D.; Ballinger Publishing Co.; 1975.

Buy a freaking dictionary for goodness sakes.

Nothing much more. It's neither my job to make deals, kill them, or to make sure the borrower isn't in over his head.

Many appraisers believe it is their job to "make deals", with the end result that the borrower is in over their head. When appraisers do their job properly, the end result is that far fewer borrowers will be in over their heads.

Those appraisers are wrong but have little influence overall in putting people underwater.

We're not the guard dog to the lender's capital vault. We merely give a specific opinion that lenders use in a lending decision.

The specific opinion is supposed to be developed to a standard that is indeed "guard dog" like. The fact that appraisers changed from guard dogs to lap dogs is why their (our ) role was denigrated, appraisers became distrusted and then expendable, and draconian legislation was passed. The legislation ended up hurting honest appraisers more than the number hitters, and drove honest mtge brokers out of business along with their dishonest colleagues.

If appraiser's have suffered a lower esteem from their collateral lending partners, it likely because many display an incredible ignorance not just for the dynamics of markets but for how collateral lending works and their roles in it.

 

[residentialguy]

Yes, there was fraud. Appraiser's peeing in the bushes may have contributed to the fall, too.

Not only was it caused by the real reasons I posted above, the fall was caused by the repackaging of the mortgages into mortgage-backed securities, and then the repackaging of those mortgage-backed securities into supposedly safe, but truly very risky derivatives. Banks then leveraged their borrowing to the point where for some of them, as small as a 2% decline in their portfolio would leave them in the red. This was about fraud and incompetence of a much higher level than the appraisers. Take the bad appraisers out and it still would have happened...the homeowners would still be underwater and there would be just as many foreclosures. Well...maybe not quite so many...HVCC put a lot of appraisers out of work and cause many of them to lose their house, I'm sure.

 

[J Grant]

Res Guy, I am aware of all the reasons for the housing market debacle, including repackaging notes, no income doc mtges etc. That still does not excuse the apprasier's faciliation in it, which you will never acknowledge , so it's pointless to keep on with it.

Calvin resonds with either flippant remarks or stating that others don't undersand lending or the like...vague unsupported accusations.

The denial is truly breathtaking and endless, but that is how people justify their actions...take no resposnbility, blame everybody else.

 

[residentialguy]

I've said a number of times that appraisers were involved with fraudulent appraisals...there will always be bad appraisers. You'll see some headlines once in a while. But that did not have a significant impact on the housing crash. It just didn't, JG. You won't find it on any reputable research on the market. It would have crashed, regardless. The problem is that, aside from a few, they have not enforced the punishment of bad appraisers, nor do they have plans to start.

 

[Calvin the Airedale]

Res Guy, I am aware of all the reasons for the housing market debacle, including repackaging notes, no income doc mtges etc. That still does not excuse the apprasier's faciliation in it, which you will never acknowledge , so it's pointless to keep on with it.

Calvin resonds with either flippant remarks or stating that others don't undersand lending or the like...vague unsupported accusations.

The denial is truly breathtaking and endless, but that is how people justify their actions...take no resposnbility, blame everybody else.

Pot, meet kettle!

You're the one doing all the blaming. My accusations are supported by your posts, prima facie.

 

[Terrel L. Shields]

repackaging of the mortgages into mortgage-backed securities, [that were] truly very risky derivatives

Exactly. Had banks had to keep the loans, they would have been more conservative. There is no hazard to selling crap to others or deliberately bundling it into packages that were bought by unsophisticated buyers, such as pension funds in small Norwegian towns...The appraiser's role was significant, but not really the "cause" but appraisers are relatively powerless in the face of pressure from others to inflate appraisals. Only a few folks apparently recognized that property was being inflated and refused to play the secondary market game. I gave them up 10 years ago because I realized it was simply wrong...it was unsustainable. I was reading Shiller, Taleb, and MacKay years before the bubble started leaking.

 

[KD247]

... it is markets which set the price of things, not appraisers, ...

Couldn't decide between "Heresy!!!" or "Them is fightin' words."

Is there a legendary appraiser out there who, in 2005, was offering opinions of "true value" that were 50% below contract price? If there was, I'd like to meet them and find out how they stayed in business.