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A Completely New System For Home Financing

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Bert Craytor

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Jun 27, 2017
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Certified General Appraiser
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California
I think we need a completely new system for home financing that moves the center of gravity from the lending industry to home sustainability managed by appraisers. The appraiser's responsibilities shift from rubber stamp activities to maintenance and upgrade process activities. There must always be a thorough understanding of what a subject is worth in its market area, its condition, and what kinds of upgrades can be sustained through additional financing.

1. Homes owners with less than a certain percentage equity in the home, say less than 60% will be required to maintain the home in good condition. That will be part of the financing package.

2. Loans will be packaged with maintenance schedules and associated financing options. Instead of completely refinancing a home to upgrade the windows or add an addition, there will be options in place to add additional financing with the same lending company.

3. Appraisals will be high quality and iterate every 7-10 years or so. Any serious condition issues will have to be rectified, if equity is below the given threshold.

4. More owners will be investors. More people will rent to support increased home job mobility.

5. We will drift towards a model ore like that in Europe (i.e. Germany, France), where in many cases more people rent than own a home. There is high ownership in the UK, but much of the housing is multi-family or similar, and that is also a possibility.

6. Appraisers will take over far greater responsibilities as inspectors, essentially incorporating all of the current home inspector responsibilities, plus more. The appraisers will know the house inside out.

7. Homes will have recorded histories that span decades and reside somewhere, probably in some central appraiser database.

8. Home sustainability will be managed by appraisers.
 

James Micozzi

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Joined
Jan 13, 2005
Professional Status
Certified Residential Appraiser
State
New York
I think we need a completely new system for home financing that moves the center of gravity from the lending industry to home sustainability managed by appraisers. The appraiser's responsibilities shift from rubber stamp activities to maintenance and upgrade process activities. There must always be a thorough understanding of what a subject is worth in its market area, its condition, and what kinds of upgrades can be sustained through additional financing.

1. Homes owners with less than a certain percentage equity in the home, say less than 60% will be required to maintain the home in good condition. That will be part of the financing package.

2. Loans will be packaged with maintenance schedules and associated financing options. Instead of completely refinancing a home to upgrade the windows or add an addition, there will be options in place to add additional financing with the same lending company.

3. Appraisals will be high quality and iterate every 7-10 years or so. Any serious condition issues will have to be rectified, if equity is below the given threshold.

4. More owners will be investors. More people will rent to support increased home job mobility.

5. We will drift towards a model ore like that in Europe (i.e. Germany, France), where in many cases more people rent than own a home. There is high ownership in the UK, but much of the housing is multi-family or similar, and that is also a possibility.

6. Appraisers will take over far greater responsibilities as inspectors, essentially incorporating all of the current home inspector responsibilities, plus more. The appraisers will know the house inside out.

7. Homes will have recorded histories that span decades and reside somewhere, probably in some central appraiser database.

8. Home sustainability will be managed by appraisers.

Looks like someone was hitting the superbowl punch pretty hard!! LOL
 

Elliott

Elite Member
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Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Bert,
Promise Medicare for everyone and you can be the next Democratic presidential candidate.
 

Bert Craytor

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Joined
Jun 27, 2017
Professional Status
Certified General Appraiser
State
California
We will all be under the eye of the central scrutinizer. Wonderful. :rolleyes:



What does this mean? :shrug:


Managed is too strong. If, say there is a 10 year inspection due and the appraiser/inspector (and note that per RICS we have these broader designations for "surveyors") finds that the roof is leaking water, there are termites or whatever, then he will effectively trigger corrective action. There should be a fund to pay for most of it that is packaged with the mortgage. Otherwise, the loan will have to be adjusted to make the payments.

So, one could say, that the appraiser is the one who determines the minimum corrective maintenance actions after the scheduled inspection and appraisal is completed. The appraisers could be said to "manage maintenance", but it would be more correct to say " manages minimum maintenance" at intervals of every 8-10 years or so."
 

Bert Craytor

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Senior Member
Joined
Jun 27, 2017
Professional Status
Certified General Appraiser
State
California
Bert,
Promise Medicare for everyone and you can be the next Democratic presidential candidate.

Well, you have things mixed up; I am certainly not for socialism, "Medicare for All " or any such thing.

However, be realistic, the GSEs are essentially socialism. They, the lenders, and a large part of the rest of the associated industry, beat appraisers into a pulp, and appraisers just keep bowing down to them, without shame. And then pretend they are anti-socialist freedom fighters of some type. Oh, good grief, anti-socialist freedom fighters bowing down for whoever comes along willing to pay them a few bucks. What do you call that?

Appraisers haven't got the backbone to do anything close to fight. They suck up to those that f___ them over. It has always been that way. And, to a bystander, it is totally weird. Am I being too harsh? I'm not the only one to think so. Appraisers say the same on this forum, then they turn their back and bow down to the lender Always been like that.

Appraisers pretend to be bad asses on the forum. But that is the limit, They have no clout. They are weak. They feed on each others weaknesses. They destroy themselves ... by and large, I could go on an on. But that is really not the point, as far as I am concerned.

There are some good points about the US housing market for sure. In many ways it is not that bad. But at this point, after the 2007/8 crisis, and the way things tend now to be heading into the same direction again. It is time to seriously question the ethics and intentions of the mortgage industry. They are simply not responsible to anyone but themselves. The governance, the influence that they have had, needs to be shifted to the appraiser community. And there is nothing socialist about that, at least not when you look at the broader picture. YES, what I am talking about requires homeowners WHO OWE MONEY on their home via loans backed by the US government to abide by new regulations that will require them to act responsibly with respect to maintenance and upgrades. That should improve the quality of the housing system, physically and financially.

OR, to put this another way, there is a Yin and a Yang to the world, the books have to balance, someone always has to pay.

You appraisers who are always decrying "government control" are in the very same breath robbing the American taxpayer by asking them to fund the deficits created by a reckless mortgage industry being continually bailed out the government, or i.e. me, I, you and everyone else who pays taxes and social security.

Yin and Yang, everything has to balance, someone has to pay for the sleazy good-for-nothing bums in the world, one way or another, sooner or later.

So, to reiterate, kill several birds with one stone: (1) Improve housing by making housing sustainable (https://www.thenbs.com/knowledge/sustainable-housing), (2) Improve the financial health of the US GSEs by, at the very same time, improving the quality of the collateral, (3) Reduce costs and improve the quality of life and finances of homeowners by making homes more energy efficient, healthier, easier to maintain through periodic and intelligent upgrades financed through reserves and low interest loan packages that are part of the original financing package.

The responsible actions needed are far more than the mortgage and lending industry are capable of, and are in fact more suitable to much different kind of organization.

I would have to say, that the UK RICS organization, is pretty much the right direction to go. Look at their certifications and educational courses which are much broader and more common sense than those of the Appraisal Institute. In other words, appraisal here in the US needs to be broadened to cover inspection, housing management, as well as valuation. You need the housing industry managed by people with much broader perspectives than those of lenders and banks - who are nothing more than tools to get only one of many tasks done.

RICS is probably the future. I would bet on it.

BTW, a move like this, would have some broad ripple effects of interest. You might speculate, what would the world be like if appraisals were initiated by GSEs via AMCs rather than lenders. What if the lenders answered to the GSEs, with respect to home loans? Or, perhaps AMCs would become coordinators linking lenders to approved GSE loan packages. And we might assume the GSEs answered to even higher level government organizations... The AMCs would answer to the GSEs, but in a very beautiful sense, would be the ones who could make a transition like this possible. Where would this leave companies like CoreLogic and HouseCanary? Their tenuous linkages to lenders would become nearly worthless. CoreLogic I am sure would survive, because of its sheer size and broad application base. But, other companies would likely crumble.
 
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DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
Bert's just a boy with a dream.
 

Carnivore

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Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I think all Bert is trying to say is that our profession is morphing into a different role.
 
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