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(English) The 4 C’s of Mortgage Underwriting

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5 comentarios
  1. David Mott
    David Mott Dice:

    «cost to rebuild the home»

    It’s good to see this mentioned. One insurance agent here in Oregon mentions $130 a square foot rebuilding costs. Another mentions $145 a square foot, even up to $170.

    It’s in the appraiser’s arsenal to use the ‘cost to build’ approach to establish value, yet most seem to use depressed sales information.

    We had an appraiser use the local sales info in the MLS to find ‘comps’ for our property. He used $50 a square foot to make square foot adjustments. No one can get anything built for $50 a square foot here. Had he used the cost to build approach, the property would probably be unsellable as the price would be too high for most buyers. This appraiser even used a foreclosure in the comps. If you pick 5 comps, and one of them is a foreclosure, then you are saying that 20% of the market is made up of foreclosures.

    When houses are selling for less than the cost to build, and the underwriters are taking their sweet time to process loans, it tells me that maybe the demand for low interest bearing paper is just not there. For this reason, I don’t think we’ll see the real estate market rebound until the mortgage rates start to climb above 6%.

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  2. TECHNOPEASANT
    TECHNOPEASANT Dice:

    Its now Sept, rates have dropped to 60 years lows but lenders arent offering the lowest rates because they already have too much paperwork in the pipe to handle.
    30-day rate locks are often unrealistically short.

    Big deal, according to some estimates 1/3 to 1/2 of applications cant get thru the underwriting process so the deal falls thru.

    Its sadly ironic that 5-7 years ago the banks so badly wanted to get into the RE business they lobbied hard and now they’re stuck with the mess they help create.

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