Media Awakens To Lending Risk
More warnings on I/O loans, this time from Colorado. "In the Boulder-Longmont area, 54 percent of loans made last year were interest-only, up from 11 percent in 2002. In Denver, 50 percent of loans in 2004 were interest-only, up from 6 percent in 2002."
"Wil Armstrong, of a mortgage firm, said it was too early to know whether the interest-only loans will produce fallout. 'It wouldn't surprise me to see these have a higher delinquency rate, ultimately.'"
This line could have come straight out of the 1980's bust. "'There's not a cushion there if the market were to soften,' said Ira Litke. 'A high percentage of them are highly leveraged."
6 Comments:
***
The news is coming hot and heavy now. You must be like a kid in a candy store, Ben. So many stories, so little time. I've been pounding this drum for two years and, until last fall, never read a thing about the housing mania. Now there are dozens of stories a day.
Here's another interesting development: a unaffiliated group of 3,300 real estate appraisers (and growing rapidly in number) have signed a petition to submit to Congress and various agencies complaining about the frauds they are expected to commit in "overappraising" property to suit lender's needs.
Here's a snippet:
"Lenders (meaning any and all of the following: banks, savings and loans, mortgage brokers, credit unions and loan officers in general; not to mention real estate agents) have individuals within their ranks, who, as a normal course of business, apply pressure on appraisers to hit or exceed a predetermined value.
This pressure comes in many forms and includes the following:
* the withholding of business if we refuse to inflate values,
* the withholding of business if we refuse to guarantee a predetermined value,
* the withholding of business if we refuse to ignore deficiencies in the property,
* refusing to pay for an appraisal that does not give them what they want,
* black listing honest appraisers in order to use "rubber stamp" appraisers, etc.
We request that action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment. We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists. We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued."
Big time stuff. Here's the link:
http://appraiserspetition.com/
That seems like a LOT of appraisers. Any idea how many there are, total?
Historybugg,
That's a very interesting comment. Fake appraisals could theoretically be propping up home prices. I have often wondered how the tax appraisals are conducted in my county. If they are based on market values, then this would explain the huge rise in my property's valuation over the last 6 years.
This is a cool blog.
JLP
AllThingsFinancial
As I said before, the appraisers know that they will be blamed for everything, and are starting to cover their asses. Since they are still in business, how many are signing just to put "lipstick on the pig"?
NAR will crush them. Anyone ever hear Antitrust?
historybugg,
Months ago I had to look for hours just to find 2 or 3 posts. Now, I spend hours sorting them through, trying to decide which is best.
Financialsense.com is running some good editorials on appraisers. I had heard about the petition, but didn't have the link. Thanks.
Just imagine the fun that could be had by a big law firm doing a class-action lawsuit against appraisers and everybody else. They could employ clerks for years searching property records for potential victims.
I don't think antitrust can be used by the NAR against appraisers. Refusing to participate in fraud isn't an anti-trust violation.
Post a Comment
<< Home