Posted on: 02nd Feb, 2008 06:43 pm
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Washington Post Writers Group
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And Again,
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Jbarto, it's not that appraisers always inflate values. What I've come to know is, at times they have to do so so that lenders agree to avail their services. I'm not saying all lenders follow this but there are a few who do this. I think Mike and some of the community lenders would be able to explain this better.
jbarto what you saying is not really making sence. the appraisals are but a small part of the big problem. and most of them are a victim of mortgage politics as much as anyone else. i have known alot of loan officers who whould not work with an appraiser if they did not get them the value they want. so its either do what is required of you or lose business.
if anyone to blame my top whould be the lenders such as wamu, who come up with programs that put people in the position of having to go into foreclosure.
as to your example in this particular case they might have been had by a salesman/broker but why whould they taek out money they cant afford to pay back?
how come people buy houses for 500k when they can only afford 200k home?
if a person bought a home to live in and got what they can afford market issues dont affect them. they can afford the payment and are not looking to sell or refinance anytime soon.
so the blame is not with one aspect of the business but the greedy human nature is definately a large part of the issue
if anyone to blame my top whould be the lenders such as wamu, who come up with programs that put people in the position of having to go into foreclosure.
as to your example in this particular case they might have been had by a salesman/broker but why whould they taek out money they cant afford to pay back?
how come people buy houses for 500k when they can only afford 200k home?
if a person bought a home to live in and got what they can afford market issues dont affect them. they can afford the payment and are not looking to sell or refinance anytime soon.
so the blame is not with one aspect of the business but the greedy human nature is definately a large part of the issue
unquestionably, greed is the defining factor in many of these situations.
however, "steering" of an appraiser to deliver a specific value is an egregious method. for the regulatory agencies to crack down on this sort of thing is perfectly appropriate. i will agree, in every case, that some unscrupulous loan officers were quite involved in the appraisal process and twisted an arm or two - but many of those arms were eminently twistable.
should borrowers be smarter?? absolutely! personally, i think it is reckless and counter-productive, however, for a loan officer to fail to recognize and attempt to correct the misconceptions of the borrowing public. most people entering the mortgage marketplace are naive and intimidated. it is all too easy for them to swayed by a sweet-talking LO.
as for the question about the "good old days" when banks sent appraisers out...one of the reasons for independent appraisal firms is that too many of the lenders in those days acted in their own best interests rather than on behalf of the borrowers.
wait...did i just say that? so that means that perhaps truth-in-lending came about because there was too many lies in the lending process; that means the equal credit opportunity laws came about because there might have been discrimination in the marketplace????? horrors!!! how dare i say that?
oh yeah...i guess i said that because each of those circumstances was all too true.
however, "steering" of an appraiser to deliver a specific value is an egregious method. for the regulatory agencies to crack down on this sort of thing is perfectly appropriate. i will agree, in every case, that some unscrupulous loan officers were quite involved in the appraisal process and twisted an arm or two - but many of those arms were eminently twistable.
should borrowers be smarter?? absolutely! personally, i think it is reckless and counter-productive, however, for a loan officer to fail to recognize and attempt to correct the misconceptions of the borrowing public. most people entering the mortgage marketplace are naive and intimidated. it is all too easy for them to swayed by a sweet-talking LO.
as for the question about the "good old days" when banks sent appraisers out...one of the reasons for independent appraisal firms is that too many of the lenders in those days acted in their own best interests rather than on behalf of the borrowers.
wait...did i just say that? so that means that perhaps truth-in-lending came about because there was too many lies in the lending process; that means the equal credit opportunity laws came about because there might have been discrimination in the marketplace????? horrors!!! how dare i say that?
oh yeah...i guess i said that because each of those circumstances was all too true.
There are many many many factors that play into this. We have had this conversation about appraisals here before. It is not always cut and dry on who is to blame for appraisal issues. I will say this though about the inflated appraisals. Regardless of the overvalue it comes down to this basic thing... if you can't afford the payment on the loan no matter what... the true LTV is irrelevant.... because you can't afford the payment anyhow. Do you see what I am trying to say? I get sick of people placing the blame anywhere but on themselves. A lot of the "cash out" deals I have heard people say things to me like well I will just use some of the cash I get to make the payments until I can refinance again. That is foolish in most situations and I won't do the loan if I know someone can't afford it. But that's me ... but honestly can you truly blame the LO who will being the fact that the borrower knows full well what he/she is getting into.
As for the incompetence comment above, about the people who weren't mentally capable... that is as illegal as it gets and they should get an attorney immediately. I would bet they will get a free house. Mentally incompetent people are not allowed to sign contracts and everyone involved from the Realtor to the underwriter to the appraiser would be liable. Anyone who met them throughout the process would be in big trouble for allowing the deal to proceed.
As for the incompetence comment above, about the people who weren't mentally capable... that is as illegal as it gets and they should get an attorney immediately. I would bet they will get a free house. Mentally incompetent people are not allowed to sign contracts and everyone involved from the Realtor to the underwriter to the appraiser would be liable. Anyone who met them throughout the process would be in big trouble for allowing the deal to proceed.
That is pretty messed up. What a horrible story.