Housing Bubble Bursting?

[JSmith43]

Watch the NAR hand feuding appraisers their financial behinds to them by pairing a BPO with some sort of hedging instrument covering future performance for a $25 surcharge per BPO and a hold harmless clause from the client:new_rofl:

"I can't get any sleep and keep seeing strange visions that come true"

 

[Big ole Boy]

equit markets first - real property second ....

Equity markets will be correcting soon and help facilitate a reassessment of real property values ......

equity markets will foster the deliverance for a total busted bubble ...

 

[Pamela Crowley (Florida)]

Watch the NAR hand feuding appraisers their financial behinds to them by pairing a BPO with some sort of hedging instrument covering future performance for a $25 surcharge per BPO and a hold harmless clause from the client:new_rofl:

"I can't get any sleep and keep seeing strange visions that come true"

That's so sick..... and a real possibility!

Realtors here are now claiming, "Oh, that house sold under value and can't be used as a comp."

Here's a couple new articles about Florida. Just change the market area to any formerly "HOT" area in the country???

Home flippers' investments flop

http://www.palmbeachpost.com/localnews/content/local_news/epaper/2006/05/21/c1a_INVESTORS__0521.html


Buyers control home market

http://www.news-press.com/apps/pbcs.dll/article?AID=/20060521/NEWS01/605210428/1075

 

[JSmith43]

What is stopping appraisers from distinguishing their products in such a way as suggested for the BPO? There might be something, but I haven't thought of it.

Another product that might be developed is a-la-carte E & O for appraisers that don't like E & O as it enhances their chance of being a target, but don't want to pass on certain designated assignments. Kind of the pre-paid cell phone approach It might be an underwriting impossibility for the insurance companies, or they could price it right and maybe the numbers would be good

Both would be market solutions, given the rules of the game. Investors have chipped away at UW and Appraisal costs with their avm models. They expand the pool of buyers that qualify with flawed credit or 100% down using risk based pricing. You know it and I know it, we all know it.

My former employer did what it could to essentially originate loans from call centers. My previous customers were constantly bombarded by solicitations, promotions that had the potential to cut me out of the loop. But, they were essentially doing what the competing banks were doing to stay competitive, only a bit more aggressively, IMO.

 

[Brad Ellis]

Randolph, Moh, Roger, Pam, et al,

An interesting twist:

I think that many of us are at least saying the RE market is in a correction and a correction does mean declining prices. When we see what has transpired in Carlsbad- from Randolph's much earlier posts, what Pam is saying, etc. we might all be on the same page.

So the interesting twist is the latest issue of Money Magazine. Sorry I do not have the article or link posted- could not find it on the web, perhaps because it heabily laden with graphics- but-

This issue tries to predict the future of the various regional markets. Data and projections are from Fiserv and from another (do not recall who). In it there is not one single regional market that they predict will actually decline by mid 2007. The rank markets from hot to cold but even the coldest- San Diego county- is still projected, by them to increase 0.9%.

The plot thickens.

Brad

 

[moh malekpour]

Randolph, Moh, Roger, Pam, et al,

An interesting twist:

I think that many of us are at least saying the RE market is in a correction and a correction does mean declining prices. When we see what has transpired in Carlsbad- from Randolph's much earlier posts, what Pam is saying, etc. we might all be on the same page.

So the interesting twist is the latest issue of Money Magazine. Sorry I do not have the article or link posted- could not find it on the web, perhaps because it heabily laden with graphics- but-

This issue tries to predict the future of the various regional markets. Data and projections are from Fiserv and from another (do not recall who). In it there is not one single regional market that they predict will actually decline by mid 2007. The rank markets from hot to cold but even the coldest- San Diego county- is still projected, by them to increase 0.9%.

The plot thickens.

Brad

Brad,
There is no twist. You just didn’t look at few threads down to see the home forecast that I posted there last week. If you click on the link below, it will take you to another page with 6 links, 2 slowest and fastest growth forecasts, 2 slowest and fastest gainers and 2 lowest and highest prices. If you click on the slowest growth forecast, you will see [highlight]5 areas with negative growth and 5 with 0 growth[/highlight].
http://appraisersforum.com/general-...s/105710-home-forecast-where-growth-isnt.html
Slowest forecasted growth, June 2006–June 2007
Santa Barbara, CA -3%
Las Vegas, NV -3%
Carson City, NV -2%
Nassau-Suffolk, NY -2%
Greeley, CO -1%
Salinas, CA 0%
Stockton, CA 0%
Providence, RI 0%
Yuma, AZ 0%
Pascagoula, MS 0%

 

[George Hatch]

For appraisers to complain about having to compete with other forms of valuation is like when the designated appraisers complain about having to compete with unaffiliated appraisers; or when fee appraisers complain about having to compete with AMCs. After a while the arguments are reduced to nothing other than competition control and self-interest. If you have the better product - the one that the markets will recognize to be superior - then bring it. Everything beyond that is just whining.

(And just to be sure, I will be the first one to admit that I do a lot of whining)

Appraisers should recognize that the requirements for lenders to have appraisals was/is effectively a subsidy program for the appraisal profession, courtesy of the government. It's similar to when a state requires everyone who wants to drive on the road to obtain car insurance - the insurance companies benefit from this regulation and abridgement of our priveleges. As our benefactor reduces and removes that subsidy our profession will continue to face a more open and competitive environment.

If lenders decide a $35 BPO or a $15 AVM is a good substitute for an appraisal or if they decide to operate without any appraisals or other valuations of any kind then let them take responsibility for that decision. The fact that we grew accustomed to them ordering appraisals even when they clearly didn't need one is not the lenders' fault. The fact that we have not proven our performance to be so much better than our competition is also not their fault.

We need to come to terms with the idea that we are not entitled to a corner on the valuation market. Just as with the appraisal organizations or with fee appraisers, if we want to corner the market we will have to earn it, not rely on the government or the markets to just hand it to us.


But if you do want the governments to step in, the big step is to have the government require that all third party valuations for lenders conform to the same standard, regardless of what that standard is. If the gov't thinks that BPOs are performed to a reasonable standard then make that the standard for everyone, including appraisers. If the gov't thinks USPAP + supplementals + extras is a reasonable standard then make that the standard for everyone, including AVMs and brokers.

 

[Steve Owen]

If lenders decide a $35 BPO or a $15 AVM is a good substitute for an appraisal or if they decide to operate without any appraisals or other valuations of any kind then let them take responsibility for that decision.

George, are you certain that you didn't mean to post your generally excellent analysis here?

http://appraisersforum.com/improving-profession/105507-controversial-thought-day.html

Seems more like where it belongs.

Anyway, the primary problem with the analysis is the part of it that is quoted above. Today, lenders do not take responsibility. Making them do so would be a first good step toward improving the appraisal profession.

 

[JSmith43]

Today, lenders do not take responsibility. Making them do so would be a first good step toward improving the appraisal profession.

Why wouldn't you count risk based pricing as a form of taking responsibility?

Andrew posted about a rating company indicating a discount for mortgages underwritten via AVM compared to a traditional appraisal. The invisible cleverness of the market is working, but not in ways destined to assure the fortunes of appraisers or LO's for that matter.

Your comment was probably directed toward mortgage broker serial comp checkers, etc.. Many of the bad ones get theirs eventually & at least they have had to run a deadly financial minefield gauntlet. It is the time lag that is reminiscent of the Enron prosecutions and can be a bit exasperating.

 

[JSmith43]

Telegram for Randolph

Here's some bond trading art for you. I'm not a technical analyst but my friend Mike, that's his world. Strong indication of a new low for 10 year and much to our surprise downward leaning LT rates for 2-3+ years with potential for record inverted yield.

My interpretation: If so, one last refinancing as the hordes of hybrid arms hit first adjustment. Lots of tricky refi appraisals on the horizon, with investor inspired enhanced scrutiny?

You can study for the bond geek exam here: http://www.stomaster.com/stopdfdc.pdf Mike likes this site. It just made me laugh