(English) Common Sense Isn’t Common Practice
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Amen brother! They have gone from one extreme to the other. I feel sorry for the appraisers. They were forced to appraise before and now the banks are tying their hands behind their backs! But then you look at the world these days and it seems common sense is a thing of the past.
Tami it is not only the appraisers , but the Realtors, the Sellers, the Buyers and all the businesses that are being affected by the down real estate sales. When people buy houses it is like a dommino effect. Sellers move on and spend what they make and Buyers remodel, paint, buy new furniture, appliances, home deco etc, landscape, buy tools, art etc. It helps keep the economy moving. We need a boost to the Real Estate Market.
I couldn’t agree more. Just last night I was contacted by clients who purchased their condo with me two years ago. They want to refi. The appraisal came in at least $10,000 lower than I would have valued the property. So I review the appraisal report, and was aghast at the shortcomings of that report. Key features were simply overlooked by the appraiser as he comp’ed the subject property against nearby condos. Example: he deemed as equal in value a SHARED roof deck (meaning you have to climb stairs through an ugly roof area to get to a deck where you will find several of your condo neighbors also hanging out, maybe in various stages of sobriety or clothed status while you try to entertain your inlaws with a private party) with the TWO PRIVATE decks owned by my clients, one on each level of their duplex unit (including the deck off their master bedroom that is outfitted with beautiful outdoor furnishings and obvious extensive gardening efforts, a true urban retreat. That’s just ONE example of the failings of that report. I detailed all the issues that I could identify and passed that info back to the mortgage officer who is working with my clients. He promised to let me know how effective that information might be in challenging the appraisal they received.
Indeed! I wish “they” would stop fixing the system that is already back on track. It was the subprime debacle that got us in this mess – and those types of loans are no longer available. We really do need some common sense injected back into the system.
When I first got into mortgage lending 22+ years ago it was all about common sense. You had to have some skin in the game and stated income was for self employed w/ equity and money in the bank…
Nice post! Maybe common sense will return, some day.
Dean thanks for a realistic view of how the risk pendulum has swung to an overly-cautious extreme.
the fact is that by law, (thank you Frank/Dodd and clan) mortgage lenders can no longer lend unless there is written evidence (formula-based) in the file that documents that the borrower meets all the underwriting criteria. All these new laws were passed within the past 3 years. Our hands are tied.