Appraisers ‘Asked’ To ‘Hit The Number’
The Grand Rapids Press reports on appraisal fraud. “Not a week goes by that appraiser John Meyer does not get a request to ‘hit the number’ on a home’s value to ensure a loan goes through. ‘I had a guy from New Jersey last night call, and he wanted me to do the appraisal if I can assure him I would hit $800,000,’ Meyer said recently. ‘I told him I couldn’t do that.’”
“Walker appraiser Fred Vander Wal has similar stories. ‘I had two last week screaming at me about what they wanted me to do,’ Vander Wal said. ‘It was a 7-year-old home, and it was just trashed, holes in the walls, carpeting all ruined. They said, ‘They’re not going to loan on this if that’s the real condition. Can’t you tone it down a little bit?’”
“That would be appraisal fraud, and Meyer said it’s ‘one of the primary problems out there.’ A recent example is the $325 million settlement by lending giant Ameriquest for what 49 state prosecutors call deceptive lending. Many of those allegations included inflated appraisals.”
“Marge Eppes believes her Holland home was subject to an inflated appraisal. In 2002, she was trying to refinance the loan on her 3-year-old, three-bedroom home at a lower rate. The appraisal came in at $148,000. Eppes said the mortgage company told her it was not enough to cover the refinance.”
“‘Two months after that, they sent another person out,’ Eppes said. ‘They said it was worth $175,000.’ The closing fell through for other reasons, and Eppes has since refinanced with another organization, but she was troubled by the difference in values.”
“Appraisers across the country say they are asked to do it. A recent survey by Ohio-based October Research Corp. found 55 percent of appraisers reported being pressured to overstate home values. ‘We get the requests all the time,’ said Meyer in Kentwood. ‘They say, ‘Unless you can come up with another $20,000 more, we’re not going to pay you.’”
“‘We run into it all the time,’ said Fred Skidmore, an associate broker. ‘They’ve refinanced within the past year and a half, and the refinance appraisal came out higher than what we’re able to sell it for today.’ To settle with their lender, ‘they’d have to come to the table with money,’ he said.”
“Remember the savings and loan debacle of the late 1980s that required a $200 billion taxpayer funded bailout? ‘A lot of appraisers were complicit in that,’ Meyer said.”
“Vander Wal said much of his business is reviewing others’ appraisals, many of which are problematic. He declined to name companies requesting them or the original appraisers for fear of losing business. ‘Out of the reviews I’ve done in 10 years, easily 95 percent of them had serious problems,’ he said. ‘They would overvalue the properties by 20 or 30 percent.’”
“‘We’ve reviewed some in which we looked at the appraisal, and everything looked right,’ he said. ‘We pulled the listing cards (with the sale information) and every one of the sale prices was inflated by $20,000 over what they really sold for.’ He did not know the motive, but the extra money may have given the owners some extra spending money or allowed a buyer to have a 100 percent financing on the house without the mortgage lender realizing it.”
“Real estate lawyer Nyal Deems said some instances are egregious. ‘A really sad example is one where you find it was treated as a three-bedroom house and it turns out it was a mobile home parked on a lot,’ he said. As a result, the buyer took on significantly more debt than the property is worth.”
This is the dirty secret of the housing bubble, and it is showing up in the flat markets first. Any appraisers who would like to contribute to a look at what is going on in the industry please contact me at:
thehousingbubble@gmail.com
It has come to the point of find the appraisor who will get the deal done. I guess that is why most people will get a seasoned real estate agent who has a lot of connections and get you the best price. Everyone knows what is going on but it’s business as usual out there. Everything will be fine, have no worries just jump on board.
same problem over here in the Netherlands: if the appraiser does not report the required value for the loan, you just get another one. There is always someone who will inflate enough and they all know that. 1-2 years ago some banks have started to use their own appraisers though (but they also want to close the deal, so I don’t think it matters much).
We have already had some lawsuits here were banks lost millions due to fraudulent appraisels. None of the appraisers, lawyers and brokers involved was convicted while the cases were very clear.
It’s white collar crime so they have nothing to fear until the sh** hits the fan on a massive scale (and by that time the courts will have more urgent stuff to deal with).
Scores of honest legitimate appraisers have been put out of business in the last decade by the legions of number-hitting hacks who emerged from the ineffective government licensing programs of the early 90’s.
If the conflict of interest circumstances which exist in the real estate game where to exist on Wall Street, the entire system would collapse from a crisis of credibility.
The mortgage originating/appraisal racket is very simple in concept. It all runs on coercion from the lender. Hit a pre-determined origination dollar number-or you won’t get any work. Black-mail at it’s worst.
Usually the process is initiated by the real estate agent who says to the mortgage broker-I’ll bring you my deal if you use Mr. Z as the appraiser. He give me the numbers to do my deals. If not, I’ll go elsewhere.
And once an appraiser gets a reputation a “rubber stamper”, he and his associate “trainees” can literally control and entire market. Even legit lenders get caught in the vortex, because they have to compete. So they go with the number hitters too. What difference does it make. The loan gets sold anyway. Somebody else’s problem now.
Meanwhile the legit guys starve.
This scenario is big with like Cendant Mortgage and it’s C21 offices. In order to get on the “approved” list for Cendant you have to be cleared as a “liberal easy to work with”by the brokerage network. F*ck one of their deals up and your history in the entire system. A corrupt system at it’s filthy worst.
Wells Fargo even owns its’ an appraisal subsidariy. LMFAO…like having the proverbia fox guarding the chicken coop. I won’t even go into garbage lenders like Ameriquest and Countrywide.
Only things important to the lenders-how cheap do you work; how quick can you get the job done; and are you going to give us the number we want.
Buyers don’t stand a chance. Like sheep to slaughter.
Yes, but in this order:
1. Are you going to give us the number we want.
2. How cheap do you work.
3. How quick can you get the job done.
Fisherman,
Yes, that’s the correct order.
However, you forgot the new free “comp check” request made to in order to assure the lender of No. #1.
No free comp check (de-facto appraisal)-no assignment.
in my hood the realtors send out info w a new category “subsidy” wow blatant or what
This is shocking for me being a retired lender from years ago. What happen to the check and balance system that was rooted in the appraisals .This is really alarming .
Everybody got greedy. Look at the slap on the wrist that Ameriquest got. I posted a good deal on how they rushed and hushed the settlement past the compliant press. There are honest appraisers out there; hundreds sent a petition to congress asking for help in spring 2005. Did you ever hear of anyone in Washington raising the issue?
Don’t want to jeapordize those campaign contribs now, do we?
Not to worry. This problem will go away quickly now that price appreciation in bubble-land has hit an impenetrable ceiling.
Appraisers did perp walks in the 80s and 90s. Incredible how this could happen again so soon.
The saying goes a lenders memory has about a 10 year retention span.
ben is right, greed at all levels. 500,000 people all hell bent on feeding the volume monster. the checks and balances that you speak of are irrelevant, as the broker is concerned with one thing, getting a commission. higher up the feeding chain is no different, as the encores or novastars of the world hype their paper to the end investors.
boulder bo-
I’d love an update on what’s going on inside the lending world. Any changes? Tightened standards? How are all those MBS selling these days? Programs just as crazy as ever?
Thanks. I always enjoy your insights and perspective.
The appraisal game will only get dirtier as the deals become more difficult to land. Oversight by government is underfunded and ineffectual. But WTF do they care. It’s all the ATM refi’s over the last decade which have kept the economy. Greespan provided the market top blow-off when he crashed rates after 9/11. The Savings and Loan fiasco will pale in comparsion to the crash that’s coming.
After this bubble pops independant appraisors might be extinct. The lender will have in house appraisors who they can trust. As it is right now you might as well toss the appraisal in the garbage, it ain’t worth sh@t.
Why will it go extinct. The independant apprasier has a real roll when the lender is a lender and not a broker.
The lender will have in house appraisors soon I think. When they lose their ass from an inflated appraisal then won’t be very happy w/ that independant appraisor who inflated value.
If the lenders WANTED accurte appraisals, they could get them. The independent appraisal is SUPPOSED to protect the person who BUYS the mortgage from the “lender” from exactly this sort of fraud. Since the “lenders” aren’t actually lending their own money, the higher the appraisal, the better the LTV looks and the more valuable the mortgage is when sold. There’s simply no check on this except the honesty of the appraiser until the defaults and foreclosures kill the secondary mortgage market.
Agreed. Why do the same paperwork on a smaller ‘hot potato’ loan when a little effort in leaning on the appraiser will get you a bigger one that will be handed off to someone else just as quickly, exposing them to the risk of getting burned instead?
Two friends working in a currently hot RE market recently ended up on either side of a transaction. One on the broker’s side and the other as the appraiser. The appraiser was told to hit the numbers, which the person refused to do and stuck by his original appraisal. The other saw it play out as those in charge just got another appraiser who they knew would get them the numbers they wanted for the deal.
Sad really. When I was actually looking at buying when the local market was white hot, I kept hearing remarks to the tune of inflation correcting all mistakes on an appraisal. It seems to me, the more I read on this subject, that there are a lot of valuation ‘mistakes’ being made out there.
As it is right now you might as well toss the appraisal in the garbage, it ain’t worth sh@t.
This is the attitude fostered by the bucket-shops of appraiser trainees, set up by a market’s most nortorious rubber stamp number hitter. Remember-everybody’s goes where the deal always goes thru.
But as a loan customer, you never know who are going to get as an appraiser for your $350.00 appraisal fee.
Is it the solo legit guy with 20 years in the biz, or a hatchling trainee makin’ $50.00, while the “shop owner” rakes off the other $300.00 for doin’ nothing more than signing the report.
I met a woman who was workin’ unlicensed along with 4 others for this hack who was uncutting everbody else on turnaround time and fee. She made a $100 an assignment doing ghetto work in Springfield, MA. This woman didn’t have an idea of what they were doing. The shop owner signed off on all the reports as having done them himself. He was making high six-figures with this scam.
And so there’s your appraisal’s ain’t worth a shite, deal.
I remember it was years ago now when I first started hearing about banks getting their own appraisal “arms”, and was honestly surprised back then that it was even *legal*. But now I’m not surprised at all, just really really scared about what happens when this huge pile of crap starts coming apart and falling all over.
The checks and balances went out the door when the bank turned from being the underwriter of the loan to the broker of the loan.
When you are the one holding the bag as the bank, you have a real motive to hire an honest apprasier, as unless you are a VASTLY overleveraged S&L trying to cover up bad loans with more bad loans, you really don’t want to lose that money.
But if you are a BROKER, so you will resell the loan to someone else, you don’t care much anymore about how good the loan is, you care about how big it is (as the bigger the loan -> the more profit).
So the apprasier, rather than becoming a tool for the lender to ensure quality of loan, becomes a tool for the lender to inflate the value. That the system becomes corrupt is obvious, as now the apprasier, the lender, and the lendee have the same goal -> write the loan no matter what.
Fannie Mae is the real lender, the banks merely borrow from them, retain 1/4 of loans written the rest are securitized and sold by Ginnie Mae to investors with a FDIC guarantee. The broker is merely the pimp for this “DAISY CHAIN”
If the loans are conforming which virtually none are in So Ca.
exactly - and really sad. Same problem here in Europe.
The appraiser is the “cop” in the real estate game who attempts to keep everything legit. Corrupt the “cops”, by withholding work unless a predetermined number is hit and the ballgame is over.
Same as crooked auditing ala Enron or Worldcom..
The purpose of an appraisal is not to determine value–that is established by the agreed price. Rather, an appraisal determines whether there would be sufficient funds after foreclosure to protect the lender. These days, prudent lenders should require 20-50 percent down to cover future market declines. Those lenders who do not will risk liability for negligence.
EXACTLY
This has been going on a long time. In 1998 when I bought the half of my house I didn’t own from my ex, we each got an appraisal. His appraisal came in $200K over the one I got. I did not ask my appraiser to do anything “special” but I have always wondered if his appraiser wasn’t given “instructions”. We had agreed up front to average the two numbers but a 25% difference seems a bit over the top.
This is not news to me. When we bought our home in the Washington DC area 2 years ago, we had to waive the financing contingency in order to compete in the market at that time. My hubsand and I were obviously distressed about this, but our lender convinced us not to worry. He flat out told us that if the appraisal numbers didn’t “hit” (in other words, didn’t come in high enough), they would simply find another appraiser who would make sure they did. On the flip side–just a few months ago, a real estate agent told me that the numbers on a house that she recently sold didn’t hit (in other words, the appraisal came in below the contract price), even though she knew the comps were out there to support the higher number, and that, in her opinion, the lender just wanted the buyer to cough up more cash. This shows how lenders manipulate the numbers to get what they want. It also shows what a difference 2 years can make–2 years ago they were manipulating the numbers higher to close the deal, now, they’re manipulating them lower to cover their @ss.
Appraisers are bit players in the bubble (in fact many are Mom and Pop businesses). They simply report on what’s going on in the market and issue an opinion. Most lenders didn’t just fall off the turnip truck–they know what they’re looking for in an appraisal, and will use it as needed to justify accepting or rejecting the deal. If they accept today’s prices as reflecting tomorrow’s values, shame on them!
On the flip side–just a few months ago, a real estate agent told me that the numbers on a house that she recently sold didn’t hit (in other words, the appraisal came in below the contract price), even though she knew the comps were out there to support the higher number, and that, in her opinion, the lender just wanted the buyer to cough up more cash.
Yeah, those 3-day training course minted real estate sales agents always “know-all” when it comes to values.
Of course the higher comps she knew where located in a better regarded neighborhood with houses of superior build-quality. Unfortunately, for her, Skippie the Rubber Stamper didn’t get her property assigned to him.
Then again, If she was doin’ her job, she’d have given her “comps” to the appraiser for review, just to make sure he had “all” the data.
Just more realtor whining after the fact to screw the buyer into payin’ more than the place was worth.
The lenders should of required more money down ,not less, in these areas that were going up 20 to 39% in that short amount of a time period .We use to let the borrower take the risk , not the lender ,until the value was established and solid in any given area . These new age underwriter are crazy .
It also shows how some lenders used appraisals to inflate the bubble, and are now trying to do the opposite.
I cant believe that the PMI companies didnt clamp down on the low down loans . Insurance companies are usually conservative .
The way buyers did the 80/20 piggyback loans, didn’t that put PMI issues out of the loop, sneaky though that was?
I can’t understand how PMI insurers could be this dumb. My guess is that they turned a blind eye, because they assumed double-digit appreciation would make the 100% LTV go down quickly. Obviously this is no longer the case!
LOL
GS, you beat me to it!
The PMI companies have no involvement in an 80/20 loan, the junior lein is holding the bag, to the senior note it is as if the borrower put 20% down, the secondary is essentially an unsecured loan if prices were to fall.
So many borrowers are avoiding PMI with the 80/20 type programs. I am sure that avoiding the “headache” of the more stringent requirements of PMI was one of the major reasons buyers/borrowers were steered into the 80% first, and a second for the rest of the loan.
When I was selling homes in the early 90’s, getting a borrower to qualify for the PMI on a loan was a major hurdle in a deal.
If the seller took back the 20% on the 80/20 loan or 10/20/70%
loan ,than they eat it . Its hard for me to believe that second trust deed companies got that loose .
Something tells me the second trust deed companies have found investors willing to shoulder the risk… Any supporting evidence?
Oh, they did. Borrowers have easily been able to get an 80% first, then a 20% second. The second would have horrible terms, but that didn’t seem to bother anyone either. After all, once the house appreciates another 20% (by next year, I am sure) you just refi into a new loan!!!
The optimism of lenders, MBS buyers and borrowers has been truly off the charts. Everyone has just had $dollar$ signs in their eyes.
I’m guessing one of the many weaknesses in this system of supposed checks and balances was that ‘they’ ( ? the insurance companies) did not demand to know WHERE the other 20% came from and if it came from any source other than buyer funds that had zero payment obligations, PMI would still be in effect.
Don’t know how that would be accomplished…… Is what has been happening a loophole in the law, or just a convenient turn of the cheek?
You don’t need that pesky PMI if you have an 80% first, regardless of where the 20% came from.
Back in the olden days (read 80s and 90s) lenders wouldn’t loan unless the borrower had at least 10% of their own money in the deal. And they wanted all sorts of evidence for where the borrowers money came from. That was soooo old fashioned.
Sorry, I forgot…. it was anything LESS than 20% brought to the table that kicked in PMI
deb, et al,
the 20% piggyback was priced maybe 150 basis points above the first mortgage, sold to a different investor (had to be, as it was a whole different risk profile). today those piggy backs are approaching 14%, if you can even get them anymore. it’s still an underwater mortgage from the time the loan is originated unless the market is appreciating at a 20% clip.
Back in the olden days (read 80s and 90s) lenders wouldn’t loan unless the borrower had at least 10% of their own money in the deal.
Deb, that’s exactly what happened in the 70s (’79- older olden days :-)). When I bought my first house in Berkely, CA, -$39K- we had to have 10%. At that time, my hubby (ex-spouse now)and I were very young, had a 1 yr old, and not more than a pot to piss in. My father-in-law gave us $2500 of the $3900 that we needed, BUT we had to have a letter from him in our paperwork that stated that it was a GIFT and not a LOAN before it was allowed. They were very strict about it, too, as I recall.
BayQT~
This is how it use to be . It should of stayed that way
I agree. Crazy how $$$….lots of $$$ can virtually change rules…across the board even. And involve people from the bottom of the rung to the highest.
BayQT~
Sorry OT, but the Sunday SD Union Tribune Home section is chock full of red meat for bubble bloggers today, and I feel compelled to share the spoils. Here is a sampling:
1) Time to invest in NO?
“New Orleans prices take off after Katrina”
http://tinyurl.com/pedd7
2) Time to join the “Third wave” and buy a second investment home?
“Third wave: For some, 2 homes are not enough”
http://tinyurl.com/pmk6v
3) On second thought…
“Pending home sales on a slide”
http://tinyurl.com/sx6pd
4) Some bad advice for prospective buyers:
“NATION’S HOUSING KENNETH HARNEY
Buyers and sellers should have a plan in place for spring”
http://tinyurl.com/rjov3
“On the flip side, buyers shouldn’t expect to negotiate prices that are far below 2005 levels, unless the property they want to buy is located in an area that has been affected by heavy employment layoffs or excessive supply in a niche segment such as investor condos.
Equally important: Keep your eye on interest rates. As long as 30-year mortgages hover near the 6 percent range – cheap money by any historical measure – home prices are not going to budge much.
In setting your strategy, talk to multiple experts on the front lines – top real estate agents, appraisers, locally based loan officers – to find out where prices are trending. ”
Unfortunately, the experts you talk to are all likely to have a vested interest in getting you to pay more than you should in a sagging market, where you will end up losing money short-term if prices tank. Further, this is last-year’s advice, predicated on the myths that renting is throwing money away, and that delaying a purchase will price you out of the market forever, as inflation continues to clip ahead at double-digit rates. A comment in the article by none other than an NAR price forecasting expert belies the folly of this mindset: ‘Lawrence Yun, the association’s senior forecast economist, puts it even more bluntly: Looking ahead in 2006, he says, “double-digit price appreciation mostly is history. Home sellers will have to adjust their expectations and sell at more competitive prices.”’
A better strategy is as follows:
1) Position yourself to not be in a hurry, as there may have never been a point in real estate history when the rewards to patience would be higher than now. For formerly hot bubble markets, this probably means renting. The Sunday rental listings in the SD Union Tribune show that an increasing number of high-quality new SFRs are showing up on the rental market, so this option does not entail discomfort, at least in San Diego.
2) Become a serial lowballer. Figure out what price you are willing to pay, considering that prices have flattened out and are likely to begin falling soon, and start making offers in line with long-term expectations. Forget about the comps from last-year, they are ancient history, and irrelevant to a market undergoing a crash! You need to gird yourself for rejection shock, but if you continue this strategy for the next couple of years, you will eventually find a pretender who lists just as unrealistically high as all the other sellers, but whose bottom line is much lower, as some will really, really be motivated.
GOOD LUCK!!!
One story mentioned that upper 1/5 of earners got 50% of income. Sports Fans- the upper 50% of earners paid 95.4% of income tax. The upper 1/5th of earners also paid a disproportion amount of the income tax. By the way, did the ‘5 Mustard’ house owners include Coleman’s hot English mustard? Just asking!!!
IMO, lenders get their appraisers to inflate the prices so that the loan looks better in their books. Friends of ours bought a house recently, no money-down interest-only, and the appraisal came in 10% higher than the contract price. The house had been sitting on the market for awhile and our friends were the only bidder, so I know it could not have fetched the higher price. I’ve always believed that the appraisal was rigged to make the loan looks less risky since it was going to a couple who had no money to put down and no money in the bank. It gave the appearance that there was a $30k cushion on the loan.
IMO, lenders get their appraisers to inflate the prices so that the loan looks better to investors willing to buy the paper…
P.S. I am guessing a lot of the risk is getting funneled into pension funds which are buying MBS in order to get slightly higher yields than, say govt bonds. When the sh!t hits the fan, lots of these pension funds will have a big hole blown into their asset bases, and all the fund managers will claim it was not their fault, as they were just doing what all their peers were doing. Safety in numbers will collectively shield them from a charge that they violated fiduciary requirements.
And then what? You’ll see these pensions being handed over to the US Pension Guarantee Corp. (underfunded by billions already), who will pay pennies on the dollars to pensioners. Should the average person be worried about this? Most people are oblivious to what’s going on.
one of the big holders of this US mortgage paper is the Dutch pension fund ABP (one of the biggest in the world, and a longtime supporter of Fannie & Freddy). So a sizeable chunck will be paid by Dutch pensioners.
let’s be honest, to 99% of the people out there the investments related to the GSE and other high-quality look very safe. they aren’t investing in junk bonds or tech stocks, so they’ll be blamed for losing money, not for risky investments.
Exactly!!! And there is an unintended consequence to this, too. Our friends who bought that house no money down instantly felt “rich” and “smart” because they believed they were already sitting on $30k equity just for getting into the game. So rather than save money or pay down their mortgage, they started to spend, spend, spend!!
Between the great home equity cashout and the risk that MBS will sink pension funds, I am just hoping the Bush Social Security privatization plan can go through so retirees at least have something to fall back on…
I love all the “I can’t believe…” talk. After reading this blog over the last year, there is very little any more that I don’t believe. This has got to be the largest multi-level marketing scheme of all time, and we’ve reached the point where very few new fools are joining in to pay off the last rung of the pyramid. The federal, state and local governments let this thing go because of the tax money they were generating and the feel good atmosphere the bubble generated among the newly “rich” population. All the associated industries joined in because they all made a fortune off of this monstrosity - from the builders, the lending institutions, the realtors, etc., they all benefitted from the ramp up in prices. These folks in turn pay off their friends in D.C. to close a blind eye to what is clearly unfolding in plain sight.
The money spent on the S&L bailout will be a drop in the bucket compared to what we will have to cough up this time. This story is another in a long line of stories where folks are looking for a scapegoat. If everything is just fine on the housing front, why are so many folks looking for someone to blame?
Ah, yes…. greed is good, until you get caught, and then it’s CYA and point at the other guy. The same old cycle continues.
Ok you guy . I just started reading the housing blogs about 4 or 5 days ago . Give me time to get over the shock of what happened
A huge taxpayer bailout of the whole RE situation is what worries me the most. Even if every AG decides to sue companies in the RE industry for illegal activities… it’s hard to recoup losses from bankrupt companies or the people who board up shop and move to the Caymans.
My gut feeling is the best the gov’t can do is enforce laws and provide better oversight (i.e. Fannie Mae), but let the financial losses fall where they may.
The problem is that the local and federal governments have turned a blind eye to enforcing the existing laws. The situation is such that non-enforcement should be looked upon as implied encouragement for the illegal activities. Hell, the Ameriquest settlement was so small compared to the scope of their activities that Ameriquest probably had those costs figured into their costs of doing business from the outset.
Alleged complaints against ameriquest….some sad, most are from ignorant borrowers.
http://www.consumeraffairs.com/finance/ameriquest.html
Wow. If this is a sampling of how some of the recent borrowers have been taken, and allowed themselves to be taken, we are in trouble. I can’t imagine that people signed inaccurate loan docs with a promise that they would be changed when the papers got back to the office. I read that one over and over. How ignorant can people be? How blind can regulators be when borrowers are telling the same tale over and over?
I’ll bet there is a staggaring percentage of borrowers out there that have no idea their mortgage payment is about to go through the roof in the next couple year. We will be hearing more, much more….
That site does have some sad stories, but common sense and due diligence seem to be in short supply (maybe that’s why some of these people are subprime borrowers?).
a) How can you sign a stack of financial papers (particularly when the $$ are pretty high for a house) without reading them? I read my entire apt lease end to end before signing it.
b) If you notice a mistake in the paperwork, why would you accept “don’t worry about it, we’ll fix it later” as an answer? Hasn’t anyone heard of a legally-binding contract?
keep in mind that this is not a pyramid scheme on a national level, it’s a worldwide problem. The housing bubble is certainly worse (and still growing) in some other countries, it is NOT just the fault of some guys in D.C.
But if you are looking for a culprit, some A.G. guy from New York with his FED friends comes to mind.
Yer going to jail Mr. Appraiser……. yer going to jail.
Marge Eppes believes her Holland home was subject to an inflated appraisal
She should have known the appraisal was inflated, the name says enough. Holland: the country of the biggest housing bubble, with that honest Ameriquest guy as new US ambassador
how fitting!
did you read the NYT magazine article last week about the gentlemen’s canal and the history of it’s houing market?
no, I’m from Holland so I don’t read the NYT
I guess the ‘gentlemen’s canal’ you refer to is the ‘Herengracht index’. I know that study very well, excellent piece of work.
One of my friends has one of the original Herengracht indexes from 1975 (?) in his bookcase; very impressive an valuable book.
it’s a controversial subject here. If you want to get rid of a Dutch RE broker just mention the subject (only the old ones, the current generation does not know anything about it I think).
It is fitting irony that the home of Tulip mania would be one of the great housing bubble zones of the early 21st century…
yeah, if scientists ever want to start looking for some kind of ‘mania’ gene I know where to start
The most important function of inflated appraisals is to allow the loans to be packaged into mortgage-backed securities and sold off in the secondary market. Although the banks aren’t selling off all the loans, and will surely take a hit in the crash, the real junk is probably mostly in the hands of the Asians and the hedge funds. So the scale of the next bank bailout may not be so large. But the Japanese government may have to do a bailout of Japan’s insurance companies. And the stress on the US Pension Benefit Guarantee Corp from the losses of pension funds through MBSs or hedge funds may be severe.
Our home in ABQ looks like we have about 50K of equity built in, since sellers are going through a BK and had to sell at a lower price. However, that doesn’t mean I will be going on a spending spree with new found equity. We actually want to get the house paid off so we don’t have any payments. Also glad that no other debts need to be rolled in (ie car, cc, etc). Just want to live peacefully, and take care of my family.
If this is true in a state with an ailing economy, what does this potentially say for the areas with robust business. Add to that the story I saw about Detroit property values declining by 50% in the last six months.
50%?! Where’d ya read that? I get a very very bad vibe here…people are scared. In Ann Arbor they do all they can to put a pretty whatmeworry face on it, with their feeling more like SiliconValley and LifeSciencesInitiative and such instead of being beholden to the big three, but even the University which used to feel like such a secure provider of decent jobs has been consistently lowering the quality and feel of those positions, eliminating staff, changing people’s paygrade structure so that they aren’t so well-benefitted etc.
Once Detroit finally shuts down the whole manufacturing job scene, it sooo feels like next will be the engineers who will have to compete with the ones employed ‘elsewhere’, etc. Small business start-ups and hightech are nice, but there’s just this leaving high-and-dry vibe to me. It’s hard to feel all bubbly-optimistic about real estate in that context, like you’d be buying in a soon-to-be-ghost-town.
Maybe things are peachy here in Treetown compared to the surrounds…the city planners keep talking about all the gazillion condo units they’ll be building and selling downtown and growth growth growth, but I have a really hard time buying it. they must have good news I don’t know about…
cheers!