REO sales and "Market Value"

[cejack]

And here's "Duress":

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S: duress (compulsory force or threat) "confessed under duress"

http://wordnetweb.princeton.edu/perl/webwn?s=DURESS

 

[J Grant]

It almost seems like the REO meets distress sale value excect for within future market exposure time. The definitions posted (Thanks!), says the distressed sale value can be expanded to market value.

The liquidation value is too short and atypical a marketing time and most REO's that compete on the open market and are listed on MLS etc are not LV.

As to buyers being resposnible for their own bad choices...painfully learned by people in ruined credit, ruined finances, ruined lives . A greek tragedy and a geek tragedy because some of the buyer's confidence in taking on the debt was just being misled and being too niave.

For example, it was common when buyers questioned if what would happen if they could not pay the mortgage, for realtors to promise that RE always goes up, you can always sell it for more, look how hot the market is! Mortgage brokers said much the same thing, plus structured the debt so the first year's payments were low, luring people into a false sense of security.

I don't think the private market would solve much and might make things worse. Rates would shoot up to 10-12% and the prices would collapse even further.

People can't expect a quick recovery, anticipate 10-20 years for a full recovery, we have to be patient.

 

[JSmith43]

Joyce, when I do REO work requested on a Fannie 1004 form set, I deliver Market Value opinion as MV is defined on the form. If they (usually) want a REO addendum and provide client specified time frames, I usually end up providing the Disposition Value definition & its source in most instances and explain that that definition fits more closely the type of value they seek on the REO addendum. When it is an very short time frame requiring deep discount for likely success, I include & reference liquidation value definition and its source.

I've never received a stip asking me WTH I was doing. Perhaps I communicated the assignment results successfully.

Of course, I have wondered what they make of it all since I realize for expediency sake most residential appraisers would rather do it wrong than rock the boat. No doubt, they get MV & purported multiple flavors of MV, supposedly under the same definition. The Sybil syndrome applied to MV

If the market is moving in 30 days in that segment, and that is their restriction, an added definition may not be necessary. A comment that their restriction happens to fall within the likely marketing time under MV definition conditions would let the client know you most likely considered their desired condition in the development and in the report.

 

[JSmith43]

I don't think the private market would solve much and might make things worse. Rates would shoot up to 10-12% and the prices would collapse even further.

I doubt rates would shoot up that much to attract investors in real estate backed securities that are private label & not Fannie/Freddie. The rate of return just has to be better than the rate of return for securities/alternate investments with a similar level of risk. Right now, rates of return on alternative investments suck.

Do we really want to keep subsidizing home purchasers, shielding them from actual cost of home ownership? We do so at the cost of busting the medicare and Soc. Security accounts, defense, etc. If housing including financing for housing were priced more rationally, it would be much better for the country & buyers & sellers would make much better decisions.

Example: Should we subsidize SUVs? People are safer in them statistically. It would be bad for the auto industry in the short run if we stopped subsidizing them (if we had been), but wouldn't that be the right direction to go, since then only people that really needed them would buy them because they would be exposed to their true cost? You Betcha!

There is a separate problem,where we will have to pay the piper for all this deficit financing & quantitative easing & other money multiplying games. Who knows when that will happen? It is a game of chicken the Fed and the politicians that vote for deficit funded expenditures are playing & it will crack over night or more slowly, when safer havens to the dollar become clear. That might get us to 10% or higher. Guess what? We couldn't pay debt service on our outstanding national debt at any where near those rates & if mortgage rates are that high you can bet government bonds would need to be priced quite high as well to sell.