Comments on: Cramdowns and refis won’t need appraisals http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: poolview http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html#comment-3047 poolview Fri, 30 Jan 2009 15:36:37 +0000 http://www.creditwritedowns.com/?p=5291#comment-3047 RELAX! Goofs- this is for servicers so they can more easily modify loans, just like the ill-fate FHASecure. Otherwise, if you go to your local banker / broker, you need to originate a complete loan file. RELAX!
Goofs- this is for servicers so they can more easily modify loans, just like the ill-fate FHASecure. Otherwise, if you go to your local banker / broker, you need to originate a complete loan file.

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html#comment-3032 Edward Harrison Thu, 29 Jan 2009 18:29:16 +0000 http://www.creditwritedowns.com/?p=5291#comment-3032 Joe, I'm with you on this one. In the DC area, where I am, house prices are still s high that the mortgage is much more than the rent for the equivalent house. If you are sane person, why would you pay more to buy a declining asset? Homebuyers, especially first time buyers need an incentive. And the only incentive worth anything is low prices. This is exactly what is being resisted. Even Bill Gross is telling the Feds to stop the fall of asset prices, though (see this story <a href="http://www.creditwritedowns.com/2009/01/bill-gross-stop-the-decline-in-asset-prices.html" rel="nofollow">here</a>). So we may be fighting a losing battle. Joe, I’m with you on this one. In the DC area, where I am, house prices are still s high that the mortgage is much more than the rent for the equivalent house. If you are sane person, why would you pay more to buy a declining asset? Homebuyers, especially first time buyers need an incentive. And the only incentive worth anything is low prices. This is exactly what is being resisted.

Even Bill Gross is telling the Feds to stop the fall of asset prices, though (see this story here). So we may be fighting a losing battle.

]]> By: Joe Shwingding http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html#comment-3031 Joe Shwingding Thu, 29 Jan 2009 18:09:31 +0000 http://www.creditwritedowns.com/?p=5291#comment-3031 The issue is the U$Gov't thinks the problem is deteriorating home prices. They are wrong. Falling home prices are the solution to an overpriced real estate market. Housing costs reached unprecedented levels far beyond the buyers ability to pay. The idea of open transparency with this proposal does the exact opposite. This idea seeks to obfuscate real market value for these homes. Should they be successful in stemming falling home prices it will kill the RE market. For one simple fact that elevated home prices will lock out any new buyers which in turn stop the all-important move up buyer. The issue is the U$Gov’t thinks the problem is deteriorating home prices. They are wrong. Falling home prices are the solution to an overpriced real estate market. Housing costs reached unprecedented levels far beyond the buyers ability to pay.

The idea of open transparency with this proposal does the exact opposite. This idea seeks to obfuscate real market value for these homes.

Should they be successful in stemming falling home prices it will kill the RE market. For one simple fact that elevated home prices will lock out any new buyers which in turn stop the all-important move up buyer.

]]> By: SteveP http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html#comment-3030 SteveP Thu, 29 Jan 2009 18:03:01 +0000 http://www.creditwritedowns.com/?p=5291#comment-3030 READ THE FINE PRINT. All this is saying is that a new appraisal is not required when the loan amount is not being increased or decreased. In otherwords, if a lender wants to reduce the interest rate or extend the term without increasing or decreasing the lien amount, no new appraisal is required. Why on God's green earth would the ASA have an issue with this? The ASA should be more careful when selecting their society's leadership! READ THE FINE PRINT. All this is saying is that a new appraisal is not required when the loan amount is not being increased or decreased. In otherwords, if a lender wants to reduce the interest rate or extend the term without increasing or decreasing the lien amount, no new appraisal is required. Why on God’s green earth would the ASA have an issue with this? The ASA should be more careful when selecting their society’s leadership!

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html#comment-2990 Edward Harrison Thu, 29 Jan 2009 02:18:26 +0000 http://www.creditwritedowns.com/?p=5291#comment-2990 Tom, I have a more cynical take on this. I believe the Federal agencies are preparing for more direct control over the mortgage market either using TARP, the Fed's infinite balance sheet and desire to buy up mortgages or Fannie and Freddie as vehicles. In my view, cramdowns, refis and GSE-related activity are areas where there will be a significant increase in activity. The policymakers know this and are preparing the way by greasing the skids. It is not a coincidence tht Bernanke is talking about buying mortgages or that cramdown legislation was recently passed into the stimulus bill. I know you are not in favor of cramdowns while I am. Nevertheless, I find it dubious that these types of guidelines are being used to make the government's machinations easier. Ultimately, the downturn is temporary but the rules governing appraisals are not. Ed Tom,

I have a more cynical take on this. I believe the Federal agencies are preparing for more direct control over the mortgage market either using TARP, the Fed’s infinite balance sheet and desire to buy up mortgages or Fannie and Freddie as vehicles. In my view, cramdowns, refis and GSE-related activity are areas where there will be a significant increase in activity. The policymakers know this and are preparing the way by greasing the skids.

It is not a coincidence tht Bernanke is talking about buying mortgages or that cramdown legislation was recently passed into the stimulus bill. I know you are not in favor of cramdowns while I am. Nevertheless, I find it dubious that these types of guidelines are being used to make the government’s machinations easier. Ultimately, the downturn is temporary but the rules governing appraisals are not.

Ed

]]> By: Tom Lindmark http://www.creditwritedowns.com/2009/01/cramdowns-and-refis-wont-need-need-appraisals.html#comment-2989 Tom Lindmark Thu, 29 Jan 2009 01:50:15 +0000 http://www.creditwritedowns.com/?p=5291#comment-2989 Ed, This is one of those things that, in my opinion, looks worse on its face than it is. I believe that most of this relates to a plan to allow rate and term refinances of Fannie and Freddie mortgages without an appraisal. FHA has been doing this for decades and actually pretty successfully. They call it their Streamline Mortgage product. When you stop to think about it, at this point in time and given the apparent commitment of the government to save as many homeowners as possible, what value is their in an appraisal if no new funds are advanced? You might as well let the guy that's under water get a lower rate, it's only going to give F&F a fighting chance to get the loan repaid. If he's on the edge and can't refi because the value isn't there, you just end pushing him over the cliff. I have a lot of respect for appraisers and think most of them are quite good. In many respects they're getting a bad rap for the current problems. But, they do have an economic incentive to resist this initiative. Ed,

This is one of those things that, in my opinion, looks worse on its face than it is. I believe that most of this relates to a plan to allow rate and term refinances of Fannie and Freddie mortgages without an appraisal. FHA has been doing this for decades and actually pretty successfully. They call it their Streamline Mortgage product.

When you stop to think about it, at this point in time and given the apparent commitment of the government to save as many homeowners as possible, what value is their in an appraisal if no new funds are advanced? You might as well let the guy that’s under water get a lower rate, it’s only going to give F&F a fighting chance to get the loan repaid. If he’s on the edge and can’t refi because the value isn’t there, you just end pushing him over the cliff.

I have a lot of respect for appraisers and think most of them are quite good. In many respects they’re getting a bad rap for the current problems. But, they do have an economic incentive to resist this initiative.

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