Value of An Honest Appraisal

[Randy Beigh]

Graindart and Dee Dee

I agree with you and so stated in my post. I clearly stated the homeowner likely wanted that value. However, it is the appraiser's independence and lack of interest in the loan that should have prevented this. If he had done his job, this loan would not have happened.

As an industry/profession/field, appraisers can and should have a major positive impact on the making of bad loans. Sooner or later, the conversation can get to AVM's. If, I, as a lender am going to get bad information, why not spend $50 for it, rather than $300?

 

[bradellis]

Randy,

We MAY need a little more info.

You say the ranch was appraised for $280K. Appraisal had 9 comps. Better tell us IF those comps were NOT the best available. I assume that is the case, but you did not say so. 9 comps are not a problem if they are truly the best. Is this home superior to the others in the neighborhood?

As to the current listing: did it get listed AFTER the appraisal was done? Is there a reason why it is so low? Is the broker's opinion accurate?

I am assuming that these answers all will support your belief that it was over valued, but I think I'd need to know these answers.

DaveM-

Sue the appraiser? What if he/she was correct? Naturally, if he/she was not, then fine. But, I'd be re-thinking what you hope for.

Brad Ellis, IFA, RAA

 

[larryhaskell]

graindart,

Your right on. Completed an appraisal a month ago and the homeowner (married mother of three) kept telling me they needed $350,000 to make the deal work. Wanted to consolidate some bills. Valued the property at $305,000 (more than fair). The LO suggested she call our office and tell us how they were going to lose their home and be out on the street. She called crying telling us her three little kids were going to be homeless and she didn't know what to do. Supposedly a model match home two doors down had just appraised for $350,000. The builder is still building the same home (base price) for about $295,000. Sob story didn't work but I did nominate her for an Oscar. Two weeks late and I'm in the area so I drive by. Yup, the house is listed for sale. I check MLS and find out the property is listed for $310,000. My first impulse was to go back and ring her neck. And some say laws against assult and battery don't deter crime. It did in this case. Needless to say, I no longer feel sorry for those who believe that buying a home and then continuously refinancing will solve all of their financial problems they likely caused themselves.

 

[Randy Beigh]

Larry

You did your job and you did it well. My contention is that the appraiser should be the one to provide that unbiased opinion and if we do our jobs, appraisers do have value in the world. If the only thing we do is justify somebody's expected value, appraising is useless to the world.

Brad

You are observant and quite right that I didn't give you the entire report. For instance, the owner paid $163,000 in 1993 and it was listed in 1997 for $237,000. Now, it is listed again at $225,000. All of this in a market that has been flat since 1994. Some of the sales that were used were acceptable just pushed up by $100,000 to get to the $280,000 estimated value.

 

[Bemis Pownall]

sure graindart in a perfect world

ive seen plenty of instances were the HO was rushed into a deal.
they were not given the whole story, good faith etc.
They were told not to make the mortgage payment becuse they would close soon.
Terms were changed, lender dragged their feet so long that HO had little choice but to go through with it.
Sure the HO are usually unsophisticated and trust the Lender and LO who present themslves as professional.
Sure no one put a gun to these peoples heads but had they started with a respectible lender this would have never happened.

If people aren't being douped why is ACORN trying to help people? Why are states trying to pass bills on predatory lending? Why did Ford change their name to ASSociates or whatever the case is? Why does Greenspan mention Predatory Lending occasionally? Why have numerous lenders been found quilty of numerous misrepresentations and had to make refunds to HO's.

Why did Chase and other lenders lose millions in the Pocanos?(Ill supply links to all these if you wish).


We apprasiers didnt coin the term of Predatroy Lending we just have to play the game.

I trust no one especially lenders.

 

[graindart]

Bemis, I think I already answered most of your questions in my previous post......lazy irresponsible people that don't do their own research......and when something goes wrong they want to blame everyone but themselves. As for all of the recent stuff about Predatory Lending, you really think that this is do to some banks preying on people that just go along with it because they don't think that they have a choice? come on! If people blindly trust someone sitting behind a desk (whom they've probably never even seen, met, or heard of before) and go along with whatever this person says, not ever put in writing, then these people fit into my lazy and/or irresponsible classification. As for all the press coverage and discussion of this supposed problem, I guess my only response is........Election Year.

People aren't being taken advantage of because the loan officers are so smart, people are being taken advantage of because they refuse to educate themselves. Most people that have these problems go to one lender and accept anything and everything they're told, sign on the dotted line, leave with a little cash, and have no idea what just happened. I have nothing against these people, it's their choice, just don't come crying to me when you've already spent the money and want someone responsible to bail you out of your mistake. You make the decision, you pay the price.

 

[BarbaraNJ]

WHEW !!!

A lot to read, and a lot of opinions---hope you all don't mind if I add mine.

While there is the occasionally bad situation, such as someone who is in a TEMPORARY bind due to loss of job or illness, the GENERAL truth is that the vast majority of people Do Not look at their home as something to eventually pay off and live in for most of their life which will sooner or later be free and clear and a "cheap" place to live in retirement.

Now a days, Most people use their home as an (apparent) unlimited source of funds when they MUST go on vacation or HAVE to have the New truck, or CANNOT stand to use that old kitchen anymore. The vast majority of people are very happy to live "hand to mouth", as long as they do not have to "do without".

The trouble arises when (and most of us have been through it) there is no more money to suck out of the home, usually due to a slowing or stagnant market. Then we all know what happens---they are called foreclosure appraisals.

This has little to do with lenders or appraisers. Lets face it, the economy is driven by spending. As long as there are people willing to borrow at any interest rate, there are lenders willing to give them money. The money that they spend when they get it fuels the economy, so the government (both parties, none are blameless) is reluctant to stop people from getting money.

Yes, appraisers need to remain honest. But I truly believe that even if 100% of appraisers were 100% honest 100% of the time, lenders would find another way (AVM's, Change Legislation) to get money into the homeowner's hands. Doesn't FNMA itself push AVM's and other "quick" approvals? Didn't the government "bless" raising DeMinimus???

This is no reason to give in to comprimising your integrity.

However, you need to understand spending has become a national pastime that will not change. We all know people who are five digits into credit card debt, suck the tiny amount of equity they have built up in their home to pay off the credit card debt and then six months or a year later have the same old big credit card balance.

Just do your best, at least you can sleep at night.

 

[bradellis]

Randy,

Thanks, dude! Assumed as much, but the deveil is in the details. Have a good one,

Brad

 

[Dee Dee]

I'd like to mention at this point that I'm seeing a SHARP increase in homeowners who have been to several honest lenders looking to refi and been rejected, then willingly jump straight into the jaws of a smiling shark as long as they can 'do the deal'. These people HAVE TO KNOW they are in trouble.
I think the biggest myth that the majority of people believe is that they 'own' a house. They don't 'own' anything until it's paid for. The truth is that they have home 'stewardship'. Their name on a piece of paper that gives them permission to live in a dwelling as long as they keep up the payments...nothing more. It doesn't belong to them, it belongs to whoever holds the note.

 

[Randy Beigh]

Dee Dee and BarbaraNJ

Correcto. However, it is not up to the appraiser to be concerned with such things. If the appraiser did his job, then the inflated loan would not have happened. It matters, not, that the homeowner wanted the loan, knew she was in trouble, the lender could find another way or whatever or however else one wishes to rationalize what happened.

Appraisers have a responsibility and an obligation and throughout this country, we are failing.