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VVance
6599 Posts |
 Posted - 12/01/2007 : 05:50:06 AM
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| http://iamfacingforeclosure.com/blog/2007/12/01/foreclosures-arent-the-result-of-arm-resetsyet/#more-27 |
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darkstar
26263 Posts |
Posted - 12/01/2007 : 05:58:55 AM
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"""The prediction is significant because the majority of the foreclosures documented to date are not the result of ARM resets but other factors like falling home prices(inflated) and lax underwriting standards(stated)."""
See, we were right, it was the appraisers and lenders, not brokers! :-) hehe |
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peter
6465 Posts |
Posted - 12/01/2007 : 5:53:44 PM
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In today's Wall Street Journal, there is a criticism on
the proposal to lenders by Paulson to freeze the reset and
allow borrowers to keep the existing rates of interest before
the reset. This is almost like rewarding the delinquent
borrowers along with the good borrowers, especially those
homeowners who had already cashed out to the max with
the 2/28 ARM subsequent to their purchases. So, those who
had pulled out 100% of their 2005 equity level and are unable
to pay on time will also be helped out too before the reset.
Also, instead of allowing the market mechanism wash out the
unqualified homeowners the proposal will further prolong the
housing recession because given the freeze these homeowners
won't be able to pay anyway because they were not earning
enough to buy the house to begin with.
And the lending community will be asked to continue
refinancing high inflated assets whose market values may just
be only 60% or 70% of the loan amounts financed on under the
propose rate freeze! The notes receivables as recorded by
the big banks and lenders will be so impressive while the
values of the collateral are not marked to market by
current accounting standards, thus creating a false networth
of the banks and the lenders who will freeze the rate and
will hurt investors whose streams of future income will be
disrupted or diminished by the freeze. It is just a foreclosure
installment plan really.
Anyone goes for or against the proposed rate freeze?
Peter |
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ritabradley01
4945 Posts |
Posted - 12/01/2007 : 7:28:33 PM
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quote:
Originally posted by darkstar
[br
See, we were right, it was the appraisers and lenders, not brokers! :-) hehe
I think inflated appraisals were only a small part of the problem. I think the reason values went up as high as they did was because of the frenzy that was created because of low interest rates and other new possibilities made possible by "creative financing". People would buy anything because they had to have it NOW.
I appraised a potential short sale property today and the seller's agent went on and on about all the problems with the house, foundation, plumbing yadda yadda. (For those of you who don't know this the agents and homeowners always want the appraiser to come in low on short sale appraisals so they try to convince the appraiser that the house is a peice of junk.)So I'm thinking, the homeowner bought this house, what, 6-12 months ago? Where was the home inspector during all this? Or was the home inspector the kind that never killed a deal (my guess is that those might be the only kind of home inspectors who get much work) Or was a proper home inspection done and the homeowner just didn't care because he was going to flip the place?
I must say though, that even the most honest appraiser many times inadvertantly came in too high by using comparables whose prices had been inflated.
I know you were just kidding Stephen. I'm just always looking for an opening to voice my opinions. |
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cpruitt
1775 Posts |
Posted - 12/01/2007 : 9:35:45 PM
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It's easy to look backward with 20/20 hindsight and place blame. Most of what we call inflated appraisals were market value appraisals based on public records at the time. Artificially low interest rates, loose credit and fraud raised prices faster than normal market processes would have.
But it is also a fact that in a large part of the country, people with ARMs aren't having all that much problem refinancing. However, people without income, straw buyers and investors who bought as owner occupied are having trouble refinancing.
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peter
6465 Posts |
Posted - 12/01/2007 : 10:31:19 PM
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During the go-go years of 2002 thru 2005, most lenders
do not do desk reviews even. They'd accept any appraisals
outright and probably perfunctorily perform a review. I never
had any appraisal cutback by any subprime lender and my
appraisers were as aggressive as they could be. In fact,
lenders were under the pressure from their investors to
perform -- sending them more loans regardless of the quality
of the appraisal as the tide of the market was rising monthly.
When times are good, tolerance abounds. When times are bad,
tolerance is not allowed.
Peter
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darkstar
26263 Posts |
Posted - 12/02/2007 : 04:56:07 AM
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>>>I know you were just kidding Stephen. I'm just always looking for an opening to voice my opinions.
And they are always insightful and welcome!  |
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Mandyvilla
6395 Posts |
Posted - 12/02/2007 : 05:30:29 AM
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"Where was the home inspector when they bought this home?"
In 2005, if an offer to purchase contained a contingency for a home inspection, the purchase offer was not even considered....it went on the pile labeled too "low to consider." If a buyer were fortunate enough to get a home inspection written into a contract, it was for informational purposes only. Most buyers were already scraping money to meet the seller's demands, a home inspection was the last thing on their minds.
Amazing how the tune changes in two short years. |
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cpruitt
1775 Posts |
Posted - 12/02/2007 : 06:02:19 AM
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I didn't do any significant number of subprime loans during that time, since I
try to direct everyone toward FHA if I can find any reasonable excuse to, and
if I can't find such an excuse I only work with them if they are family or close
friends.
But I actually do remember quite often being asked for extra comps by the subprime lenders
that I did send some loans to - New Century, Ownit, First Franklin in particular -
but I never had any of them cut back. I think in a lot of respects this trouble has
necessarily caused them to be too strict. In my area, there hasn't been any significant
drop in values, but because it is on the edge of the suburbs, failure to get a hit on an
automated appraisal always draws more scrutiny if it isn't a local UW.
But in my mind, I'm comparing that to the couple of "go-go" years prior to the first
subprime crash when the only thing they ever did was check what the value said on the
appraisal, so I guess I thought asking for another comp was being strict!
quote:
Originally posted by peter
During the go-go years of 2002 thru 2005, most lenders
do not do desk reviews even. They'd accept any appraisals
outright and probably perfunctorily perform a review. I never
had any appraisal cutback by any subprime lender and my
appraisers were as aggressive as they could be. In fact,
lenders were under the pressure from their investors to
perform -- sending them more loans regardless of the quality
of the appraisal as the tide of the market was rising monthly.
When times are good, tolerance abounds. When times are bad,
tolerance is not allowed.
Peter
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