topic Re: Low appraisal in Mortgage Loans

Low appraisal

Anonymous — Tue, 27 Oct 2009 22:16:15 GMT

I have been trying to sell my house in Kentucky and move back to Texas. We bought for 136,000.00 in July 2008, and we have done more than 40,000.00 worth of improvements.

After 60 days on the market we have (had?) a buyer and we negotiated from asking 158,000.00 to 148,000.00. Everything was good until the apprasial. It was appraised for 121,000.00 Even my realtor ws shocked that it came in so low..

We realised going in that we were going to take a beating and settled on the original price.

We were going to challenge the apprasial but my realtor says that based on the comps there is nothing to challenge. So we went back to the negotiationg table, I can no or will not go below 138,000 and the buyer says he can't go higher than 130,000. Evidently the mortgage company will not loan more. It's funny we were good at 148,000 and now nothing..

Any ideas on how to get this place sold without losing any more?

How long do you suppose before the market may pick up enough to get out of here?

Really hate living here and want out.

Thanks for any advice or opinions.

Dave

Re: Low appraisal

Anonymous — Wed, 28 Oct 2009 01:33:13 GMT

Unfortunately, it appears you purchased your home at pretty much the peak of the market. And, it is, after all, a market. If current sales comps confirm the valuation, you basically have only two choices: stay put, or accept a lower offer. Or, I guess, wait for a richer buyer to come along. I hope somebody out there has a better idea for you, but I can only advise that, as a buyer, I wouldn't/couldn't pay substantially more than the appraisal, either.

Message Edited by oldhack62 on 10-27-2009 06:33 PM

Re: Low appraisal

Anonymous — Wed, 28 Oct 2009 01:56:35 GMT

Unfortunately you are right..I sold my house in texas in July 08 and then bought this place at the same time. Sold and bought at peak..

Well we solved the problem tonight at any rate.. The buyer met me halfway at the lower price I lost my butt but at least we will be in Texas this winter.

We are going to live in the lounge of my racecar trailer for a few months and make up what we lost by saving our house payment. Then try to get in on a foreclosure or something we can pay cash for..

Appreciate you coming on to pretty much confirm what I was thinking.

Dave

Re: Low appraisal

Paxx — Wed, 28 Oct 2009 15:28:32 GMT

This happened to us as we went through the housing buying process. Seller was asking $130k, we offered $110k due to comps in the area, they met us in the middle at $120k. The seller had done some upgrades to the house and a lot of landscaping so we were hoping for a $120k appraisal. It came back at $115 even with the work done to the house. I sure wasn't going to buy a house for more than it''s worth in this market in my area and the seller would not budge. Not only that but we went FHA so we couldn't even if we wanted to buy a house for more than it's worth.

So we walked...and 2 weeks later we found a brand new never lived in house with more square footage for less than what the other house. Also, they were asking $6k less than what the house apparised for!

I know people have a lot of their money invested into homes but when push comes to shove you have to face the music. If your trying to sell in this market your house is probably worth much less than what you paid and even more so if you upgraded a bunch of stuff. I think it's silly to spend more on a house then the apprised value right now...at least in the Houston TX area anyway. There are a ton of houses out there for sale.

Message Edited by Paxx on 10-28-2009 08:28 AM

Re: Low appraisal

Anonymous — Wed, 28 Oct 2009 16:15:49 GMT

Yes you are right..I agree it is crazy spend more for a house than it appraised for..Problem is I have a lot of cash in this place and I am taking a big loss to get out of it..

When you are the buyer you can grin and say tuff luck ole man...It only effects me and mine, just hope those who laugh now can take it when the shoe is on the other foot..

I can sit here and hold what I have, until I leave it is only a paper loss. I just don't agree that what was worth 200,000 yesterday is only worth 50,000 today.. Especially when I didn't get to vote on the rules change..

This is what happens when politicians can buy votes..

Dave

Re: Low appraisal

Anonymous — Wed, 28 Oct 2009 16:29:30 GMT

To be fair, the housing crisis and the up and downs of the real estate market are just as much, if not more, the fault of consumers as politicians. If everybody as a whole lived within their means, this would never had happened. But credit cards, equity lines, etc were mistaken as income so when things got bad, people were overburdened by debt, not just a large house payment, but alot of debt. On top of this, TV had everyone convinced that putting 50K into a new kitchen was a great investment even though it is almost always not equal to the amount you actually spend. When people ran into issues, there was no room for anyone to maneuver to get out of it. Equity was gone, credit cards were getting slashed, and people never expected to have to actually live by the contracts that they signed on the actual income they had. Hence comes foreclosure. Lets face it, skip the serious debt load this society built up on it's own accord, and the whole bubble and burst would never have happened.

Re: Low appraisal

lucky70 — Thu, 29 Oct 2009 05:19:22 GMT

AMEN. I agree with every word you just said. Summed it up quite nicely my exact thoughts.

Re: Low appraisal

Anonymous — Thu, 29 Oct 2009 14:18:24 GMT

LOL, well since I accepted the lower offer and will be closing Friday. I can turn this into a political discussion..

I am with you on this being partially the fault of the consumer. But I think you are failing to go back to the root of the issue.. If it wasn't for politician trying to make everyone equal (in terms of spending) this would not have turned into a financial mess.. Think Community Reinvestment Act, that was the beginning of this bubble, it was just piled on by each politician who came in contact with it since. Same can be said of the credit card industry, started out you had to show proof you could pay, but with high interest, then politician got involved and made getting credit easy, so those who want it now jumped all over that deal. Used to be when you bought a house or any major purchase you had to show you could afford it with down payment money, a stable job, good credit history, etc. Then suddenly a politician decided that even those who couldn't afford a house should be afforded the opportunity to buy one, even with no job..Sounds good until it comes time to pay for it. So just like not leaving the keys in your car to prevent a good kid from going bad, our politicians should never have allowed a law to make it so easy to buy anything on credit.. People will take advantage of a good thing if given the opportunity, for some it’s not having any restraint..

Again, I'm with you on the fact that consumers went to far and were irresponsible on their own. But let’s not forget that if the politicians didn't see a way to get votes the rules wouldn't have changed to allow it. I don’t care who you vote for, but there is a lot of video proof of people who only vote because they think the government is going to take care of them. Have you noticed 99% of political speeches are always about what they are going to do to make your life better? They talk about people taking responsibility but rarely come through with anything that would force it. It’s not the governments job to make your life better, It’s a personal thing..

Lesson learned now I'm licking my wounds and going back to work.

Dave

Re: Low appraisal

fishbjc — Thu, 29 Oct 2009 15:17:29 GMT

I totally feel your pain. We paid $299,700 unfinished. We sank another $15,000 into it. I bet I couldn't get less than $270 right now...grrrrrr

Re: Low appraisal

XAVIERSMAMA — Thu, 29 Oct 2009 15:45:54 GMT

@Anonymous wrote:
LOL, well since I accepted the lower offer and will be closing Friday. I can turn this into a political discussion..

I am with you on this being partially the fault of the consumer. But I think you are failing to go back to the root of the issue.. If it wasn't for politician trying to make everyone equal (in terms of spending) this would not have turned into a financial mess.. Think Community Reinvestment Act, that was the beginning of this bubble, it was just piled on by each politician who came in contact with it since. Same can be said of the credit card industry, started out you had to show proof you could pay, but with high interest, then politician got involved and made getting credit easy, so those who want it now jumped all over that deal. Used to be when you bought a house or any major purchase you had to show you could afford it with down payment money, a stable job, good credit history, etc. Then suddenly a politician decided that even those who couldn't afford a house should be afforded the opportunity to buy one, even with no job..Sounds good until it comes time to pay for it. So just like not leaving the keys in your car to prevent a good kid from going bad, our politicians should never have allowed a law to make it so easy to buy anything on credit.. People will take advantage of a good thing if given the opportunity, for some it’s not having any restraint..
Again, I'm with you on the fact that consumers went to far and were irresponsible on their own. But let’s not forget that if the politicians didn't see a way to get votes the rules wouldn't have changed to allow it. I don’t care who you vote for, but there is a lot of video proof of people who only vote because they think the government is going to take care of them. Have you noticed 99% of political speeches are always about what they are going to do to make your life better? They talk about people taking responsibility but rarely come through with anything that would force it. It’s not the governments job to make your life better, It’s a personal thing..

Lesson learned now I'm licking my wounds and going back to work.

Dave

While I am no fan of politicians and I recognize that we as consumers played a major part in this mess, the community reinvestment act was meant to encourge financial institutions to invest in the communities that they do business in. No one made these banks offer ARM, no doc and interest only loans. They could have offered 40 year mortgages for low income borrowers to make them more affordable or teamed up with local housing authorities to offer a small percentage of their loan business to help meet the acts requirements. Unfortunately these options were not as profitable as the products they used instead. The CRA had good intentions but when you let big business and big banks implement it, good intentions don't stand a chance against profits and shareholders. My two cents

Re: Low appraisal

Anonymous — Thu, 29 Oct 2009 17:23:50 GMT

@XAVIERSMAMA wrote:
@Anonymous wrote:
LOL, well since I accepted the lower offer and will be closing Friday. I can turn this into a political discussion..

I am with you on this being partially the fault of the consumer. But I think you are failing to go back to the root of the issue.. If it wasn't for politician trying to make everyone equal (in terms of spending) this would not have turned into a financial mess.. Think Community Reinvestment Act, that was the beginning of this bubble, it was just piled on by each politician who came in contact with it since. Same can be said of the credit card industry, started out you had to show proof you could pay, but with high interest, then politician got involved and made getting credit easy, so those who want it now jumped all over that deal. Used to be when you bought a house or any major purchase you had to show you could afford it with down payment money, a stable job, good credit history, etc. Then suddenly a politician decided that even those who couldn't afford a house should be afforded the opportunity to buy one, even with no job..Sounds good until it comes time to pay for it. So just like not leaving the keys in your car to prevent a good kid from going bad, our politicians should never have allowed a law to make it so easy to buy anything on credit.. People will take advantage of a good thing if given the opportunity, for some it’s not having any restraint..
Again, I'm with you on the fact that consumers went to far and were irresponsible on their own. But let’s not forget that if the politicians didn't see a way to get votes the rules wouldn't have changed to allow it. I don’t care who you vote for, but there is a lot of video proof of people who only vote because they think the government is going to take care of them. Have you noticed 99% of political speeches are always about what they are going to do to make your life better? They talk about people taking responsibility but rarely come through with anything that would force it. It’s not the governments job to make your life better, It’s a personal thing..

Lesson learned now I'm licking my wounds and going back to work.

Dave

While I am no fan of politicians and I recognize that we as consumers played a major part in this mess, the community reinvestment act was meant to encourge financial institutions to invest in the communities that they do business in. No one made these banks offer ARM, no doc and interest only loans. They could have offered 40 year mortgages for low income borrowers to make them more affordable or teamed up with local housing authorities to offer a small percentage of their loan business to help meet the acts requirements. Unfortunately these options were not as profitable as the products they used instead. The CRA had good intentions but when you let big business and big banks implement it, good intentions don't stand a chance against profits and shareholders. My two cents

LOL,

Only problem with CRA and the banks is the banks are not in business to lose money, but the CRA was in business to give it away..

The politicians are the ones who wrote the bill, the banks were working within the framework of the bill, not to mention everyone was making money off each other through 401's and other investment vehicles. Banks were not the "Mr. Potter" of It's a Wonderful Life" people are attempting to make of them. Seems they were influenced by politicians to change their loan practices if they wanted to stay in business or expand..Shoot the CRA provided an almost risk free environment to make money, look how the money was passed out recently as they are to big to fail. While the politicians that stood and said the Freddy and Fanny were not in any trouble, are still in charge of the commitee's overwatching them.. Yep, I believe it was all the banks fault.

Here is a little something to consider (taken from an article in Invester Business Daily)

"Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.

These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans. [...]

Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was. [...]

In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.

Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

That's how the contagion began."

As much as I wish every human has a roof over their head, It is not governments job to provide for it. That is what being a good neighbor and community organizations are for..

As to the last sentence in your reply.... "quote" The road to hell is paved with good intentions.

We are currently traveling down that road, just hope there is a detour someplace soon.

Dave

Re: Low appraisal

XAVIERSMAMA — Thu, 29 Oct 2009 17:47:30 GMT

Here is an excerpt from the CRA from the Federal Reserve website

Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.

Again, consumers are not innocent in this, but no where does it say in the CRA that banks have to make risky loans based off of race. They could have made the required number of loans based off of less risky mortgages, in fact a lot of regional banks and small credit unions did just that and have for the most part completely avoided the sub prime debacle. They didn't make record breaking profits 5-8 years ago, but they aren't in need of a bailout now either. It's not about the government "providing a roof over everyone's head". There are millions of low income families in this country who will never be able to save 20% for a down payment because their current housing costs are 50% or more of their net income. If someone can afford to pay $900 in rent every month and never be late, then they can most likely afford a $500-600 house payment. Homeownership can be a major cornerstone to wealth building and retirement planning. Low income families should not be left out just because they are low income. The CRA never said give to non creditworthy borrowers but take individual circumstances into consideration and come up with loan product that would address those needs. I don't see anything wrong with requiring institutions that rely heavily on tax incentives to invest in underserved areas. The problem is the "what's in it for me" syndrome that too many in this country have adopted. My two cents

Re: Low appraisal

fused — Thu, 29 Oct 2009 20:41:41 GMT

Chief3 wrote:

@XAVIERSMAMA wrote:
@Anonymous wrote:
LOL, well since I accepted the lower offer and will be closing Friday. I can turn this into a political discussion..

I am with you on this being partially the fault of the consumer. But I think you are failing to go back to the root of the issue.. If it wasn't for politician trying to make everyone equal (in terms of spending) this would not have turned into a financial mess.. Think Community Reinvestment Act, that was the beginning of this bubble, it was just piled on by each politician who came in contact with it since. Same can be said of the credit card industry, started out you had to show proof you could pay, but with high interest, then politician got involved and made getting credit easy, so those who want it now jumped all over that deal. Used to be when you bought a house or any major purchase you had to show you could afford it with down payment money, a stable job, good credit history, etc. Then suddenly a politician decided that even those who couldn't afford a house should be afforded the opportunity to buy one, even with no job..Sounds good until it comes time to pay for it. So just like not leaving the keys in your car to prevent a good kid from going bad, our politicians should never have allowed a law to make it so easy to buy anything on credit.. People will take advantage of a good thing if given the opportunity, for some it’s not having any restraint..
Again, I'm with you on the fact that consumers went to far and were irresponsible on their own. But let’s not forget that if the politicians didn't see a way to get votes the rules wouldn't have changed to allow it. I don’t care who you vote for, but there is a lot of video proof of people who only vote because they think the government is going to take care of them. Have you noticed 99% of political speeches are always about what they are going to do to make your life better? They talk about people taking responsibility but rarely come through with anything that would force it. It’s not the governments job to make your life better, It’s a personal thing..

Lesson learned now I'm licking my wounds and going back to work.

Dave

While I am no fan of politicians and I recognize that we as consumers played a major part in this mess, the community reinvestment act was meant to encourge financial institutions to invest in the communities that they do business in. No one made these banks offer ARM, no doc and interest only loans. They could have offered 40 year mortgages for low income borrowers to make them more affordable or teamed up with local housing authorities to offer a small percentage of their loan business to help meet the acts requirements. Unfortunately these options were not as profitable as the products they used instead. The CRA had good intentions but when you let big business and big banks implement it, good intentions don't stand a chance against profits and shareholders. My two cents

LOL,
Only problem with CRA and the banks is the banks are not in business to lose money, but the CRA was in business to give it away..
The politicians are the ones who wrote the bill, the banks were working within the framework of the bill, not to mention everyone was making money off each other through 401's and other investment vehicles. Banks were not the "Mr. Potter" of It's a Wonderful Life" people are attempting to make of them. Seems they were influenced by politicians to change their loan practices if they wanted to stay in business or expand..Shoot the CRA provided an almost risk free environment to make money, look how the money was passed out recently as they are to big to fail. While the politicians that stood and said the Freddy and Fanny were not in any trouble, are still in charge of the commitee's overwatching them.. Yep, I believe it was all the banks fault.

Here is a little something to consider (taken from an article in Invester Business Daily)

"Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.
These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans. [...]
Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was. [...]
In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.
Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

That's how the contagion began."

As much as I wish every human has a roof over their head, It is not governments job to provide for it. That is what being a good neighbor and community organizations are for..

As to the last sentence in your reply.... "quote" The road to hell is paved with good intentions.

We are currently traveling down that road, just hope there is a detour someplace soon.

Dave

Welcome to the forums!

Forum rules require you to post a link to support your quote, otherwise we have copyright issues. If you can, please post the link from Investor Business Daily. If you cannot, I will have to remove your quotes. Thank you for your understanding.

--fused, myfico moderator

Message Edited by fused on 10-29-2009 10:41 AM

Re: Low appraisal

fused — Thu, 29 Oct 2009 20:40:26 GMT

XAVIERSMAMA wrote:

Here is an excerpt from the CRA from the Federal Reserve website

Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.

Again, consumers are not innocent in this, but no where does it say in the CRA that banks have to make risky loans based off of race. They could have made the required number of loans based off of less risky mortgages, in fact a lot of regional banks and small credit unions did just that and have for the most part completely avoided the sub prime debacle. They didn't make record breaking profits 5-8 years ago, but they aren't in need of a bailout now either. It's not about the government "providing a roof over everyone's head". There are millions of low income families in this country who will never be able to save 20% for a down payment because their current housing costs are 50% or more of their net income. If someone can afford to pay $900 in rent every month and never be late, then they can most likely afford a $500-600 house payment. Homeownership can be a major cornerstone to wealth building and retirement planning. Low income families should not be left out just because they are low income. The CRA never said give to non creditworthy borrowers but take individual circumstances into consideration and come up with loan product that would address those needs. I don't see anything wrong with requiring institutions that rely heavily on tax incentives to invest in underserved areas. The problem is the "what's in it for me" syndrome that too many in this country have adopted. My two cents

Forum rules require you to post a link to support your quote, otherwise we have copyright issues. If you can, please post the link from the Federal Reserve Bank website. If you cannot, I will have to remove your quote. Thank you for your understanding.

--fused, myfico moderator

Re: Low appraisal

Anonymous — Thu, 29 Oct 2009 21:57:50 GMT

Here is the link.. http://newsbusters.org/blogs/noel-sheppard/2008/09/20/ibd-carter-more-blame-financial-crisis-bush-or-mccain

Now I know the rules!!!

The link to prove my point about what was said is http://www.federalreserve.gov/dcca/cra/

Dave

Re: Low appraisal

Jazzzy — Thu, 29 Oct 2009 23:27:52 GMT

@Anonymous wrote:

LOL,
Only problem with CRA and the banks is the banks are not in business to lose money, but the CRA was in business to give it away..
The politicians are the ones who wrote the bill, the banks were working within the framework of the bill, not to mention everyone was making money off each other through 401's and other investment vehicles. Banks were not the "Mr. Potter" of It's a Wonderful Life" people are attempting to make of them. Seems they were influenced by politicians to change their loan practices if they wanted to stay in business or expand..Shoot the CRA provided an almost risk free environment to make money, look how the money was passed out recently as they are to big to fail. While the politicians that stood and said the Freddy and Fanny were not in any trouble, are still in charge of the commitee's overwatching them.. Yep, I believe it was all the banks fault.

Here is a little something to consider (taken from an article in Invester Business Daily)

"Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.
These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans. [...]
Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was. [...]
In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.
Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

That's how the contagion began."

As much as I wish every human has a roof over their head, It is not governments job to provide for it. That is what being a good neighbor and community organizations are for..

As to the last sentence in your reply.... "quote" The road to hell is paved with good intentions.

We are currently traveling down that road, just hope there is a detour someplace soon.

Dave

I acknowledge that we are not supposed to talk politics here...but it is being allowed....so....

CLINTON???

Most of this money was loaned when Bush was "running" things. Lack of regulations was...and still is...an issue. Bush could have changed that any time he wanted....but his buddies wouldn't have liked that.

Re: Low appraisal

fused — Thu, 29 Oct 2009 23:47:01 GMT

I was hoping this thread would focus on the "economic" side of things. Maybe we still can. Please remember we are not allowed to discuss politics in the forums.

--fused, myfico moderator

Re: Low appraisal

Lel — Fri, 30 Oct 2009 00:39:34 GMT

LynetteM wrote:
Lack of regulations was...and still is...an issue.

There was an attempt at regulating Fannie and Freddie's lending practicings in 2003.

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

Here's another relevant article from 1999.

Fannie Mae Eases Credit To Aid Mortgage Lending

The bottom line is that there is plenty of blame to go around for the mortgage crisis. If you try to get into a political blame game, nobody will win. That's why discussion of politics is not permitted on these forums. It is hard to discuss mortgage policy without acknowledging the fact that our legislators are responsible for the implementation and oversight of many fiscal issues, and sometimes there are unintended consequences of the decisions that are made, regardless of who makes those decisions.

Message Edited by Lel on 10-29-2009 05:35 PM

Message Edited by Lel on 10-29-2009 05:39 PM

Re: Low appraisal

Anonymous — Fri, 30 Oct 2009 00:28:43 GMT

My apologies fused ..

I thought it was relevent considering this was the primary reason for the housing/financial market to take a dump and people finding their homes were not worth the initial investment.

No more politics...

Dave