Hybrid Appraisals

[NC Appraising]

Joe what's going away is Fannie Mae and once the Money Center Banks and Private Wall Street MB investors will be the buyers of newly originated and sold mortgages.

That ended well in 2008. Do we really want Wallstreet in charge?



By the end of that decade, however, Wall Street had figured out how to purchase and securitize mortgages without needing Fannie and Freddie as intermediaries, leading to a fundamental shift in the U.S. mortgage market.

Fannie and Freddie lost market share as the bubble grew: The companies backed roughly half of all home-loan originations in 2002 but just 30 percent in 2005 and 2006. In an ill-fated effort to win back market share, Fannie and Freddie made a few tragic mistakes. Starting in 2006 and 2007—just as the housing bubble was reaching its peak—Fannie and Freddie increased their leverage and began investing in certain subprime securities that credit agencies incorrectly deemed low-risk. Fannie and Freddie also lowered the underwriting standards in their securitization business, purchasing and securitizing so-called Alt-A loans.

 

[George Hatch]

"Bad deals are made during good times"

 

[glenn walker]

That ended well in 2008. Do we really want Wallstreet in charge?



By the end of that decade, however, Wall Street had figured out how to purchase and securitize mortgages without needing Fannie and Freddie as intermediaries, leading to a fundamental shift in the U.S. mortgage market.

Fannie and Freddie lost market share as the bubble grew: The companies backed roughly half of all home-loan originations in 2002 but just 30 percent in 2005 and 2006. In an ill-fated effort to win back market share, Fannie and Freddie made a few tragic mistakes. Starting in 2006 and 2007—just as the housing bubble was reaching its peak—Fannie and Freddie increased their leverage and began investing in certain subprime securities that credit agencies incorrectly deemed low-risk. Fannie and Freddie also lowered the underwriting standards in their securitization business, purchasing and securitizing so-called Alt-A loans.

Thats a new discussion not what you or I want .

 

[George Hatch]

I don't think it's too soon to have that discussion. The appraisers complained in 2001 about being pressure to hit values and some appraisers are complaining about being pressured to hit values today, even if not to the same extent. The appraisers were subsequently proven factually correct before and I daresay some of the more recent allegations probably will also be proven correct after the fact.

Even if it's less in 2025 than it was in 2005 that "less" is still unacceptable and bears improvement.

 

[glenn walker]

I don't think it's too soon to have that discussion. The appraisers complained in 2001 about being pressure to hit values and some appraisers are complaining about being pressured to hit values today, even if not to the same extent. The appraisers were subsequently proven factually correct before and I daresay some of the more recent allegations probably will also be proven correct after the fact.

Even if it's less in 2025 than it was in 2005 that "less" is still unacceptable and bears improvement.

The mortgage real estate meltdowns resulting in upside down loans and losses of hughe equity were the result of ststed income loans not bad appraisals.

Chase and Wells gave up after they couldn't collect from private mortgage insurers because once the markets hit the first 15% decline the rapid decline just fed on itself and then by year two appraisers were making large negative time adjustments resulting in each new sale comp being lower. That's when the GSEs and Fed's realized the appraisal in a fast declining market is worthless the month after it had been completed.

Fast forward that's why today forbearance and new loan terms or short sale replaced large amounts of REO sales.

Today Black Rock can purchase hundreds at a time to turn into rentals. Those are off book and we rarely know the terms and conditions of sale or transfers of those mortgages.

 

[Surf Cat]

then by year two appraisers were making large negative time adjustments resulting in each new sale comp being lower.

And.....most of the sales in the grid (in some areas) were short sales and REO's. The AMC's were btching and moaning that appraisers weren't using arms length transactions..... because there weren't any. The short sales and REO's were the market.

 

[glenn walker]

And.....most of the sales in the grid (in some areas) were short sales and REO's. The AMC's were btching and moaning that appraisers weren't using arms length transactions..... because there weren't any. The short sales and REO's were the mark

Not anymore we haven't purchased a property at a trustee sale in over 6 years and only attend one a year but just the carcasses the Black Rocks didn't buy directly from the GSEs and major banks.

They literally remade the entire process to keep small investors and buyers out. Hell when's anyone seen a REO in California unless it's some odd ball weird property or 100 miles into the desert.

 

[Surf Cat]

Not anymore we haven't purchased a property at a trustee sale in over 6 years and only attend one a year but just the carcasses the Black Rocks didn't buy directly from the GSEs and major banks.

They literally remade the entire process to keep small investors and buyers out. Hell when's anyone seen a REO in California unless it's some odd ball weird property or 100 miles into the desert.

I was talking about during the Great Recession....

 

[Terrel L. Shields]

It's hard to fathom that it has been 20 years since the crisis really started building. I wrote in Realty Times in Feb of 2005 that the pressure was on and increasing prices forebode a disaster ahead. 20 years prior to that was the midst of the S & L crisis. History may not be on our side.

 

[sputnam]

I think most hybrids will be mainly confined within the AMC realm when an AMC uses staff appraisers.

It is too cumbersome a process for lenders or non staff AMC's to bother with it.

AMCs provide the products that their Clients want.