No Appraisals__again

[Julio E. Sune Jr. (FL)]

http://www.miamiherald.com/news/business/real-estate-news/article157002859.html

What can I say???.......Well the following are parts of a letter I wrote to Congress September 15, 1998- [NEVER got a response]
Guess we are heading in the same direction again.....
.

["I say it is time to force discipline in the mortgage loan industry before it is too late. On Monday, July 13, 1998, the Comptroller of the Currency, Julie Williams said: “the problems we are seeing in the banking system today are serious. They could presage the same kinds of problems that afflicted the industry nearly a decade ago.” (Many banks were besieged by bad loans during the late 80’s, creating a crisis that led to bank failures and government bailouts.) I believe that if stronger regulations for bankers and mortgage brokers along with very stiff penalties imposed upon originators of fraudulent loans, the result will be a remarkable improvement in the lending industry and greater satisfaction and confidence by the consumer.

Many lenders really believe that the AVM (Automated Valuation Model) will completely replace the real estate appraiser. To that I say a computer is just a tool, you need to know what to measure and how to measure. If loan underwriting standards are compromised by just doing things by computer—you put garbage in and you get garbage out—the end result is a big mess if there is a turnaround in the economy. Lenders could get stuck repossessing a residential property that is worth less than the amount it was loaned on.

Please do not hesitate to call if you need any assistance. It will be my pleasure to contribute to anything that will improve the dignity of the appraisal profession, the efficiency of the government and the welfare of the consumer."]

 

[Deleted member 134708]

Below is the language politicians love. You use this as your reason why need go AVM's and done and done.

"and the total experience is better." for the consumer.

 

[glenn walker]

Nice letter but nobody cared then and they still don't so --the question is why did you waste your time ? No offense but it's always been the banks goal to make as many loans as possible because that's where the money is and volume is the key.

 

[J Grant]

Good for him for trying. Lenders (most of them) function like high end pawn brokers...they get a borrower to sign over the house as collateral and make a loan on it. They act as brokers/sales people for the deal. Unlike a pawn shop they don't hold the merchandise- they pass the risk of payment along to others ( investors and the insurers/guarantors, among them Fannie, Freddie, FHA, US taxpayer, PMI companies etc )

While lenders push for cheap/fast/deal friendly collateral assessments, and Fannie and Freddie are testing those waters, at some point, the investors and guarantors need credible information about the properties acting s collateral, and that can not come from an AVM alone. The loans granted with no appraisal are only granted if an appraisal has been done on that property within X recent period of time. So will see...lending is always a push/pull between reckless vs prudence and it goes in cycles.