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Financial Rescue Bill & Appraisers.

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mpb5431

Thread Starter
Freshman Member
Joined
Apr 3, 2007
Professional Status
Licensed Appraiser
State
Arizona
National press secretary Bill Burton noted that the "rescue bill includes authority for the Treasury Department to buy 'residential or commercial mortgages."

I believe what their saying is this would allow the Secretary of Treasury to buy up the "bad mortgages" and renegotiate the terms to current market values in an effort to help homeowner's stay in their homes.

I'd like to see this community comment on any impact this would have to our profession.

And for the record, i know at least 2 of the 3 major presidential candidates have mentioned this idea as a way to improve the current financial woes the U.S. economy is now facing.

This post is not intended to be an endorsement of any candidate.
 

Green Hornet

Senior Member
Joined
Dec 29, 2006
Professional Status
Certified Residential Appraiser
State
Washington
National press secretary Bill Burton noted that the "rescue bill includes authority for the Treasury Department to buy 'residential or commercial mortgages."

I believe what their saying is this would allow the Secretary of Treasury to buy up the "bad mortgages" and renegotiate the terms to current market values in an effort to help homeowner's stay in their homes.

I'd like to see this community comment on any impact this would have to our profession.

And for the record, i know at least 2 of the 3 major presidential candidates have mentioned this idea as a way to improve the current financial woes the U.S. economy is now facing.

This post is not intended to be an endorsement of any candidate.


Mpb,

Curious...who is he 3rd major presidential candidate?
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
The bailout bill does crud for us.

They are not going to renogotiate to market value, but to what a buyer can afford. If they did the former, eveyone in the country would be eligible and with a drop in national value of 7% on 100,000,000 houses that have a median value of $220,000 you'd be looking at a cost of $1.54 Trillion, which is insane, especially considering the candidate who proposed it last night also proposed a freeze on all spending not military.

In addition, let's say it does happen, What does that do for the market? You still have millions of houses for sale, only now they compete at a lower price. They will merely be depreciating house value even further, thereby only putting foreclosure on some. Sure, the mortgage amount may be a level they can afford - today. Last year I could afford a much higher mortgage payment than this year.

What is desparately needed is a plan that attacks the root of the problem, which is inventory. I've heard of several, I really like one of them, but something that directly attacks inventory and does nothing else is better than just buying people another few months in their house. With programs that absorb inventory levels, values would increase naturally, as would incomes.
 
Last edited:

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
The bailout bill does crud for us.

They are not going to renogotiate to market value, but to what a buyer can afford. If they did the former, eveyone in the country would be eligible and with a drop in national value of 7% on 100,000,000 houses that have a median value of $220,000 you'd be looking at a cost of $1.54 Trillion, which is insane, especially considering the candidate who proposed it last night also proposed a freeze on all spending not military.

In addition, let's say it does happen, What does that do for the market? You still have millions of houses for sale, only now they compete at a lower price. They will merely be depreciating house value even further, thereby only putting foreclosure on some. Sure, the mortgage amount may be a level they can afford - today. Last year I could afford a much higher mortgage payment than this year.

What is desparately needed is a plan that attacks the root of the problem, which is inventory. I've heard of several, I really like one of them, but something that directly attacks inventory and does nothing else is better than just buying people another few months in their house. With programs that absorb inventory levels, values would increase naturally, as would incomes.


How do you reduce inventory if there are no buyers?

How do you reduce the cost of the products so buyers can afford the product?
 

Dan/Fla

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
National press secretary Bill Burton noted that the "rescue bill includes authority for the Treasury Department to buy 'residential or commercial mortgages."

I believe what their saying is this would allow the Secretary of Treasury to buy up the "bad mortgages" and renegotiate the terms to current market values in an effort to help homeowner's stay in their homes.

If the question is how will this effect us. For my 2 cents I believe this bill is designed to bust the log jam in the river of lending. For years the logs (loans) have been flowing with a few minor clogs along the way. Then about a little over a year ago the logs started piling up till eventfully almost everything was became almost a stand still. Yes a few were getting thru but only after much more time an effort. Hopefully if this bailout works. It will be like a Treasury using a crane and pulling the logs which is damming the river out of the river and holding them on the shore till the logs in the river are free flowing and putting them back in one at a time. The Credit crunch is the log jam. If the loans start flowing again the appraisers phone and faxes starting ringing again. For me I consider that to be a good thing. The other thing which might help us. I can see AVMs not being relied on as much. More second opinions of value may become the norm, especially when loans are sold. I know in the past when homes were valued over million it was not uncommon for a second appraisal, I know because that was a large part of my business. It may become more a practice on lower size loans or on borrowers with lower credit scores. This to can be good for us. Anytime more appraisals are needed is a good thing for appraisers.

Just for a side note Citi is almost getting out buying loans from Mortgage Brokers, Prior to what was stated today they were buying loans from 9,000++ Mortgage brokers that is being cut down to 1,000 nationwide. Many others are also getting out of the wholesale market and only doing inhouse loans. Will this be good or bad for us I am not sure as of yet.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
If the question is how will this effect us. For my 2 cents I believe this bill is designed to bust the log jam in the river of lending. For years the logs (loans) have been flowing with a few minor clogs along the way. Then about a little over a year ago the logs started piling up till eventfully almost everything was became almost a stand still. Yes a few were getting thru but only after much more time an effort. Hopefully if this bailout works. It will be like a Treasury using a crane and pulling the logs which is damming the river out of the river and holding them on the shore till the logs in the river are free flowing and putting them back in one at a time. The Credit crunch is the log jam. If the loans start flowing again the appraisers phone and faxes starting ringing again. For me I consider that to be a good thing. The other thing which might help us. I can see AVMs not being relied on as much. More second opinions of value may become the norm, especially when loans are sold. I know in the past when homes were valued over million it was not uncommon for a second appraisal, I know because that was a large part of my business. It may become more a practice on lower size loans or on borrowers with lower credit scores. This to can be good for us. Anytime more appraisals are needed is a good thing for appraisers.

Just for a side note Citi is almost getting out buying loans from Mortgage Brokers, Prior to what was stated today they were buying loans from 9,000++ Mortgage brokers that is being cut down to 1,000 nationwide. Many others are also getting out of the wholesale market and only doing inhouse loans. Will this be good or bad for us I am not sure as of yet.

I think it is just the market correcting its self, getting back to normal. Work load will be thin for most appraisers. Very few will be full time appraisers agin.

Time to hook your wagon to another team.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I still prefer my idea of extending the loan term so that the borrower can afford the monthly payments. The feds would not have to buy up bad mortgages and inventories would be reduced by the fact that there would be fewer foreclosures. This will keep owners in their homes and, perhaps, the maximum of a 30 year mortgage might become a thing of the past.
 

Rrebera

Junior Member
Joined
Jan 21, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
with the economy getting worse over the past 6-8 years and all the the inflated values across the country I am shocked that we are in the position we are in.... the problem is all the bad paper that will going into default in 2009 and the 1-3 trillion that the fed will have to kick back into the markets to cover and already inflated and corrupt market.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
How do you reduce inventory if there are no buyers?

How do you reduce the cost of the products so buyers can afford the product?

You have to create demand, and one way to do it is by restructuring the tax code. As I have posted in the thread "This Will Help", in the "Improving The Profession" section, the proposal contained in the video below is now known as "The Neighborhood Recovery Act". Listen to the very simple argument of how to create demand. There are people with money out there, they just have no incentive for buying in real estate because the only investment properties worth the effort are flips, but flipping is too risky now.

Listen to the proposal, it is actually more like a 10 minute primer. If you believe it will help, call Barney Frank's office, tell them you are a real estate appraiser, and tell them you support it. It is going into committee now and hopefully in the next 3 weeks will come out as a bill before congress.

http://www.youtube.com/watch?v=ztLg0Y-u6i4
 
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