The best defense against lying agents is the disclosure laws. It gives verifiable information. I can imagine having a Realtor tell me one thing and telling another something else....then the two different values have to be argued out. Further, if you pz a Realtor off...don't expect to get any cooperation in the future. The disclosure law would bypass that issue. I really don't understand why any appraiser would oppose it.
Terrel,
Full disclosure would open the door for lending giants to replace interior inspection appraisals in New Mexico with computer valuations. These valuations, which could be performed in another state or even in another country do not account for seller concessions, sales that are not arms length or sold under duress, condition of the property, marketability, functionality, unique features, sudden changes in the market, school districts, views, or other variances in location. Instead they focus on mean averages, which generally does not represent the true market value of the property.
Risk managers in the banking industry are questioning the role of computer valuations in the sub prime crisis and it should be noted that the states which are facing the largest declining markets and contributing the most to one of the largest financial debacles in American history are full disclosure states with prolific use of computer valuations.
In addition to adding havoc to the lending industry, computer valuations have frequently misinformed FSBO homeowners with inaccurate (and costly) valuations for listing their homes.
Privacy concerns abound and many New Mexicans feel that the price they paid for their home is their business and that prospective employers, nosey co-workers and the public in general should not be privy to such information. Several voices have suggested that opening up private information on home purchases will aid and abet identity theft. In addition some full disclosure states require floor plans be made public which would certainly help potential criminals.
New Mexico is fairing the mortgage crisis well due in a large part to honest lenders, brokers, appraisers and being a non-disclosure state. Allowing large corporations with their focus on short-term profits to disrupt our economy thru lack of oversight is not in the interest of the New Mexico public. It would seem ill advised for New Mexico to change from a non-disclosure state before the facts on computer valuations are fully known.
It is a shame that people are not seeing the larger picture of lending entities being able to give value to their own loans without oversight.
Fannie is primarily a secondary market entity (which means it buys other loans and repackages them for resale). In fact their original charter mandated by Congress forbade them from originating loans in the primary market. Their Desktop Underwriter program skirted this mandate and allowed them to operate in the primary market in conjunction with the originator of the loan. Full disclosure opens the door for them to be able to use their proprietary AVMs to establish value for loans in the primary market. They would then take the loan into the secondary market, where they bundle it and sell it, thereby transferring risk to investors and liability to taxpayers without the oversight of an independent local appraiser doing an interior inspection.
Common sense would suggest that Fannie should only become involved with the loan after it closes in the primary market and that a conflict arises when compensation for an entity is tied to the value that it gives for a loan. If you can see that a situation like this could contribute to a mortgage crisis do not feel alone. Many people felt that Fannie being in the primary market could lead to just that and in 2005 Senators Hagel, Dole and Sununu tried to pass a bill (S.190) forbidding Fannie from any primary market activity at all. Unfortunately it did not pass.
A local board member has suggested that New Mexico should become full disclosure because local appraisers are cooking the appraisals and that full disclosure will allow AVMs to correct this problem. With all due respect to this board member my comment is first of all, if this is going on there are other ways to deal with it then becoming full disclosure. Second that full disclosure has not stopped bad appraisals in other states. Third, any damage done by rogue local appraisers would be very small when compared to the damage done by large lending entities in the current mortgage crisis (i.e. creating stated income loans and using AVMs to establish value for in house loans without oversight).
Appraisals and valuations should come from unbiased experts, not large corporations who by nature are concerned more about short term profit then the public welfare. Trusting the health of our economy to a company (Fannie) known for accounting malfeasance for profit is not wise. Full disclosure means lowering standards for appraisals (AVMs and drive-bys), and allowing Fannie Mae to operate without oversight. Considering the current mortgage crisis we should be tightening appraisal standards not loosening them.
Thanks, Mark
