Banks Fined $5.7 Billion Over Foreign Exchange Market Rigging

“Welcome to Freddie and Fannie’s Mortgage Shell Game”: Still As True As The Day It Was First Published

When it comes to solar, it’s super important to identify leased vs owned.  As most are leased, that’s simply a debt obligation which transfers with the home, and not necessarily a tangible real property benefit.  Don’t pay your solar bill, and they’ll take all of that equipment off the home, and leave you with an even larger bill to repair the property back to it’s non solar state of condition.  And furthermore, it is not the governments responsibility to promote one type of building over another.  If the benefits of Xeriscaping and solar are worthwhile to consumers, the free market will promote that with time.  When governments intervene into free markets, they usually end up accomplishing the exact opposite of their stated intentions.  Free markets cannot function properly, if the government is involved with the microscopic details of everything from what a person can and cannot buy or build, and what they will and will not receive credit for.  Let lenders make their own decisions, and let them shoulder the entirety of the risk, permanently.

It is important to remember that many federally chartered institutions have public offerings, stocks, bonds, investors, and are beholden to the constituents first, and are no longer properly following the mandate of their federal charters.  From regulatory take over with ex company workers now populating government positions, to outright fraud and manipulation of rates and currencies exchanges, it is obvious that major federally chartered institutions are no longer following their intended mandates.  It’s the individual against an international corporation, when it comes down to considering what the average American Citizen is up against. Best solution is to pay off your home in the quickest way possible, and never ever sell it or mortgage it again.

We tried communicating this belief to the powers that be politely, maybe we ALL need to start referring to the never ending revision to “principles” as USCRAP.

God how I miss those USCRAP updates (sarcasm). The more USPAP refresher courses that I took the more insane it all appeared to be. I was also a real estate broker for 20 years; over that 20 year period they never came close to overhauling the statutes, restrictions, and guidelines for brokers year in and year out. With appraisers it was an annual ordeal and I’m sure it continues to be so to this day. Sisyphus comes to mind; the Greek dude that was damned for all of eternity to push a boulder up the hill, only to have it roll down again. Day after day he would repeat the process. God help the guys who were damned to rewrite USPAP in perpetuity and God bless those of you who have been damned to relearn the NEW & IMPROVED USPAP year after year after year after year after year…

Well said Bubba Jay!

DONT GET ME WRONG – i do not believe we should go back to the days of the wild-wild west and start giving out loans again to anyone who can fog a window, and i certainly dont believe banks should go back to giving out loans for 110%+ of the current homes appraised value. (remember those radio ads?). but i also dont think its necessary to be in the absurd world we are in right now. someone needs to grow a little common sense and get everything to somewhere in the middle of the wild-wild west and total absurdity/ridiculousness.

until that happens . . . . .

the bleeding continues . . . . .

AFTER the crash, it took nearly a 700 FICO to get the same loan; and nearly ALL the more empathetic provisions were eliminated. But it did not stop the speculative investors willing to LIE.

The MBA was right. Laxer polices WERE and ARE needed. The trick is in only approving those that make sense and that worked well for decades. Negative amortization (in any form) financing is doomed to foreclosure when used by lower income, less sophisticated borrowers. Unrealistic graduated payment mortgages for ease of qualifying can be just as dangerous.

Conventional loans of 3% down only duplicates the efforts of HUD/FHA & VA but without the obligatory oversights. THESE are a mistake. Unless these new untested critters ALSO require the specific lenders to share in the risks by maintaining adequate reserves to repurchase non performing loans, and prohibiting bundling of individual mortgages in bulk securities in a manner that does not permit servicers to renegotiate individual loans BEFORE they can be defaulted. Such loans should NOT be backed by the United States Government & Taxpayers. I firmly believe in free enterprise. Let the other “free enterprise” investors ALSO take 100% of the risk for these type loans. They are free to profit OR free to fail without involving the rest of us.

How are 15 (or 17 year) loans a heightened risk? People that can afford such shorter term, traditionally lower rate loans have better cash flow, so of course their default rate is lower! Its a non issue unless the author(s) is upset that the type of financing is being rebranded as ‘new’. Borrowers can achieve the same or similar benefits to a 17+- year loan just by making an extra payment a year (4 week ‘monthly’ cycle payments versus 12 months a year). Loan fully amortizes in about 17 years.

I am also a (new) Realtor(r); former agent, and former new tract home sales manager. My experience is:

[1] The real estate market works.

[2] New home builders are akin to car salesman. While Realtors(r) all over the country have either grown  or been forced to become increasingly ethical, new home hucksters continue to hustle housing ‘packages’ with upgrades costing far more than they contribute to demonstrable market value.

[3] They also have never bothered to learn (or apply) what makes a comparable sale valid. They expect US to change OUR definitions of market value and techniques so that THEIR costs including profits are the metric used. They are WRONG in this expectation. I personally will not vote for ANY politician that caves to their more unreasonable pressures. Also, what developer does not already HAVE price pre approval or pre sale appraisals at their base asking prices?

[4] Appraisers DO also bring a lot down on themselves. They do cursory, half assed, low fee  work to begin with and THEN when they are asked to reconsider based on changed deals, they get on our high horses and refuse to approach it with an open mind. Sometimes they/we are prohibited from doing so by the very regulations NAHB and others imposed on us. There is room to seriously consider NAHBs legitimate concerns without undermining appraisal integrity or commencing a new witch-hunt basket full of regulations further micro managing appraisers.

[5] New construction is also usually complex appraisal. It should not be done by basic licensees or even certified appraisers that do not have adequate personal experience in appraising new construction. Hint-if you do not know what a C of O is, you are not qualified to do the appraisal!  NAHB on the other hand has to pay MUCH more for appraisals involving new construction. If they are upset because they are getting ‘bad’ appraisals, then START PAYING REASONABLE FEES for them, sufficient to attract GOOD appraisers-rather than bottom of the barrel or inexperienced people forced to try to do two or more a day just to survive!

[6] HVCC destroyed professional working relationships. Appraiser Independence regulations  need to be reconsidered. I never had trouble telling a client “no” to a value or pressure, BUT I also LISTENED to what they were trying to tell me before reaching a conclusion of “yes” or “no” as to whether it favorably affected an appraisal. When a judge appoints an attorney to act as trustee; it is done so with full expectation that they will act honorably and honestly. When they do not, they are punished. Appraisers should be no different. Stop the micro management; hold me accountable to basic standards of competency and integrity but then get the hell out of the way! I am a General Certified Appraiser with 29 years appraisal experience and 6 years real estate sales experience before that dating back to 1971. I don’t need self serving poiticos like Barney Frank or Chris Dodd to tell me how real estate markets work or SHOULD be made to work!

[7] NAHB is ‘right’ in urging correction to problems. The pitfall and danger lies in what specific solutions are imposed. I submit the ONLY new regulations needed are: (a) field review 10% of all appraisals, (b) Require WRITTEN, legibly signed requests for value reconsideration BEFORE ANY complaint may be sent to a state agency. Too often the reasons for referrals are changed AFTER the appraisers says “no” and then they are punished for some relatively benign technical “offense”. (c) REMOVE the requirement from Dodd Frank for lenders to turn in “bad appraisals”. They SHOP for a value; when they don’t get it, they do an in house “review” finding ’cause’ to order a new appraisal and then to cover up their appraisal shopping, they turn in the original appraiser to hide or ‘justify’ their shopping around, under the guise that ‘they had to’. I am speaking DIRECTLY to RELS and WELLS FARGO here, and could / would happily cite specific instances that we had to address in the Appraisers Guild, if asked. Try me.

[8] NAHB is 100% RIGHT in their concerns over energy efficiency items. Again, it is a cost and competency issue. I’ve taken Sandy Adomatis’ (Appraisal Institute Green Courses). Don’t expect me to do any appraisals involving significant green features if you wont pay me for the extra time it takes to do them right! That means when I accept a $450 sfr fee for a non complex, FNMA loan limit and THEN find out it has owned solar panels  I go back for a fee increase to $750+ MINIMUM. Don’t expect my level of specialty appraising expertise for $450! The item MIGHT add $20,000 to $30,000 to market value!

Add 50% to 100% of what I SHOULD ALREADY BE GETTING as a minimum energy audit fee.

Your alternative? Keep using unqualified people to do them! When I took the courses in August 2014, there were only 42 people in my entire state (California) that had passed the courses and been included in the AI Green Registry. Sandy was right. The rest were simply stating “No market data found to demonstrate a premium for solar energy power was found-therefore no adjustment was made.” Appraisers were, and still are side stepping the issue in a non USPAP compliant manner.

Appraisers definitely need to either start standing up for themselves; or ACCEPT OTHERS DICTATING how we do our jobs, and stop whining about it! If you want to (finally) stand on your feet like the professional men and women we all are then join me at the American Guild of Appraisers (AGA). http://WWW.AppraisersGuild.Org

We are already working on several of these issues. I stand behind my comments and am willing to discuss them with any informed opposition. (714) 366 9404, Mike Ford AG002512.

Thanks for the information. Looks like we’re going back on that roller coaster…bottom out ….bubble…bust…bottom out…bubble…bust.. History of this market is always repeating, if just in differing ways.

Koma