Start by reading the selection below (in quotes) from the following article: HVCC appraisal rules effective May 1

"Lenders may use "in house" staff appraisers to conduct appraisals. However, the loan production staff cannot select, retain, recommend or influence the selection of an appraiser for an assignment or appraisal roster. Staff also cannot have any substantive conversation with an appraiser or appraisal company regarding valuation."

Now help me to understand why a lender could use In-House appraisers, but can't be responsible for selecting or conversing with a third party appraiser!

  

Here's a BEFORE AND AFTER photo of the Tower Oaks townhouse. Notice the boards on the wall (the two squares). The boards used to cover holes made from dog's teeth. The trim was extremely chewed up, as well. I wish I didn't accidently delete the photos that showed a collection of dog hair matted to the wall behind the trim. Fortunately, there was tile throughout - so we literally hosed the place with bleach.

Pay attention to the bottom right corner of this photo. What you see is the corner of another toilet and sink. This is one of the most creative home make-overs I've run across! The previous owner has obviously knocked down a wall to access the tub from their bedroom! Take note - that is not a mirror by the tub. The tub actually divides the bathroom in half and there are two toilets!

 

Since I haven't purchased a bank owned property before, I'm not used to seeing water damage with a label!

I made this cartoon for a newsletter that I send to my private investors. The title should be "Subject To Underlying Mortgage." Sub-title: "Disclosure: This mortgage has a Due On Sale Clause and the lender has the right to call it due at any time." It speaks of the peaceful transfer of power... and debt responsibility!

I'm continually AMAZED when I hear people predicting that the housing market is bottoming out and there should be a turn around in the next 6-12 months!!!!!!!

The market decline has slowed down (prices are still down, but sales are up) because some people are taking advantage of the extremely low rates for a mortgage - but it is temporary! Who cares if rates are low if next month they've lost equity?

I'm in the business of buying distressed properties and at the beginning of this decade I had to attract sellers to me. I had to pay for advertising. Lately, I've been making offers to banks using a friendly Realtor. Fresh bank-owned properties cross my desk almost daily. It's a blooming infestation!

As a result of an influx of distressed sales and the tight lending environment - prices are plummeting. What's scary is there is a back-log of foreclosures on their way to market in 09'. (check out these articles posted on Inman.com: 1. Obstacles delay REO sales  2.Banks to unleash flood of REOs).

Another HUGE point that I don't hear too many people talking about is regarding all the people who are current on their mortgage, but who owe considerably more than their property is worth. Maybe they bought at the peak of the market or maybe they refinanced or took out a home equity loan. What happens when these folks need to move, but can't sell? If prices have dropped 30%, then they have to go up almost 50% to be back. Are you expecting prices to go up 50% any time soon?

What about the fact that lenders were giving adjustable rate loans with five year balloons? IF 2007 was the last year they were pushintg these loans, that means we still have future balloons coming up for YEARS.

How long can the FED keep interest rates low without inflation raging out of control? What happens when rates go up and ARM loans become more unaffordable and even fewer people can get new loans?

Call me Chicken Little, but if you're planning to buy now - buy LOW!!

 

I was encouraged today when I read about provisions being added to the bill passed this Wednesday by the U.S. House that will require states to deny a license (to sell home loans) for applicants who have committed a felony within the last seven years. This is especially reassuring after a Miami Herald investigation shed startling insight into Florida's lax application screening:(The quotes below are from The Miami Herald, Matthew Haggman and Jack Dolan, as seen on The Florida Association of Realtors news website)"The Miami Herald investigation also found that 5,306 people with criminal histories became loan originators between 2000 and 2007...

"...after allowing thousands of criminals to sell home loans in Florida...

"... including the agency's licensing of Anthony Hollis, of Orlando. Despite convictions for car theft and passing bad checks, Hollis was granted a license to own a brokerage in 2003...

"...the case of Donald Smith, who was sentenced to 17 years in prison for strangling his wife and dumping her body in Tampa Bay. Saxon said staff did not "timely review" information submitted by Smith and had to issue the license because an administrative deadline expired."

"In the case of Richard Crowder, who went on to commit $37 million in mortgage fraud, Saxon pointed out that Crowder's grand theft and burglary charges dated back to 1984..."Among the ex-convicts given access to the mortgage industry was Scott Almeida... Florida regulators asked for a character reference. He gave them a note from his mom... They said he needed a reputable supervisor for his practice: He chose a guy he met in the prisoner visitor room... Almeida spent the next three years arranging nearly $3 million in fraudulent loans for which he was put back behind bars."

Some of the government's new regulations seem bogus to me; just a band-aides to make themselves look good. For example, regulation against prepayment penalties. In the short term that might help some people sell a house in foreclosure. In the long term it forces lenders to use higher interest rates, making it harder for people to buy. HOWEVER - I am definately in favor of adding regulations that encourages trancparency within any transaction that allows borrowers to understand what they are paying for. I remember how shocked I was years ago, when I learned that mortgage brokers were being rewarded by offering me a higher interest rate. I thought they were shopping for ME - trying to get me the lowest rate! I am encouraged to see that this issue has, at least, been recognized by legislators. This should be disclosed to people. Borrowers need to know who is on their side, what choices they have, and where the money is flowing!!! Here is an accompanying article on CNNMoney.com titled, New Fed rules miss one key lending abuse (http://money.cnn.com/2008/07/21/real_estate/mo_ban_on_lending_abuse/index.htm?postversion=2008072309)

Before Zillow.com, I paid nearly $100.00 for access to The First American Corporation's data base of recently sold properties so that I could get an idea of what a property's value was. Of course, I am not a Realtor, so this information was not as readily available to me.

Then came Zillow. This site is awesome for people who are not real estate agents and want to check for recently sold homes in their neighborhood. Some counties have organized their own database, but not here in Gainesville (Alachua County).

I would warn against putting too much faith in the "Zestimate" that Zillow offers for specific properties. Primarily because it cannot consider the condition of the properties or their value based on their exact location. In other words, Zillow will consider the all of the values surrounding your property, even when the neighborhood directly across the street might not be very comparable.

I primarily use Zillow by entering a specific adress and then pulling up 'recently sold' properties surrounding the property. I write down general info such as address, bedrooms, selling price, and square footage. I always drive-by the properties so that I can see which ones are in similar condition and neighborhoods to the property I am comparing. Then I put together my 'Buttstimate". I know, that sounds bad ( just consider my last name).

Here's a recent article about Zillow reported by RISMEDIA.

FORECLOSURE DISCOUNTS: Even with the Feds trying to help homeowners 'keep their homes' (in other words, help banks 'save their shirts'), only a small percentage of people are qualifying for loan modifications. Then, after qualifying, only a small percentage are maintaining their new loan. As a result, many homes sell at discounted prices before auction, at auction, or they sit vacant which increases the supply. Home values decline.

LENDING STANDARDS: When it was easier to borrow money, more people baught homes, which decreased the supply. As we speak, lenders and federal regulators are making it tougher to borrow money, so fewer homes are selling. The federal regulations that were just instituted (such as restricting when a lender can institute a prepayment penalty) will force lenders to raise interest rates to cover their increased risk. Higher interest rates means that homebuyers can't afford higher prices. Home values decline.

MORE BUILDING: Obviously building has decreased and future building will decrease even more. However, there are still some developments that began before the big crash, so more units are still being added to the market. Home values decline.

INFLATION: The dollar is losing value. As the Fed continues to bail out banks, send out stimulous checks, and fund 'defense', then it will inevitably borrow from other countries and print it's own money. As the value of a dollar deceases over time, then it will take more dollars to buy a home of tomorrow then it will to buy a home of today. Home values increase.

So what influences will win out? Will prices increase or decrease? Only time will tell.

I have been distracted by other business, but I have started updating my news site again!

Check it out: CLICK HERE

This site focuses on real estate headlines from almost a dozen different sources. It is a one-stop place on the web for you to stay up-to-date with the news that matters to our industry. I do not just add links about national issues, but also Florida and Gainesville.

My goal is to stay informed and share with you.