T Nation

Are Banks Supressing Realestate Market?


#1

I recently applied for refinancing on my house , the banks used three derelict houses for comps. I also heard a segment on NPR that a large percent of homes are denied financing because of appraisals .

What the appraisal did would be like comping out a mint 1968 mustang out of a junk yard.


#2

no, it is called returning to baseline, appraiser's aren't giving the over inflated values any more. Credit was too easy, prices were too high.


#3

Lenders are using the lowest values they can find. Lenders are afraid to lend $$.

Fannie & freddie are holding over 1 million houses in grey market inventory that they are refusing to release to market (that they will admit to, analysis suggests much more). That's nice that they are actively trying to manipulate the supply and demand of the national real estate market.


#4

Their mission is affordable housing, right?


#5

my plan.... in forclusure = burn & bury

kind of kidding... kind of not


#6

Why would it not work like it does in cars . 4 flat tires ,the engine wont run ,needs new paint and it is worth as much as a well maintained car . It could be that if they were to refinance and save the customer thousands of dollars then they in turn would lose thousands of dollars . As far as not lending money to buy houses it could be because of deregulation of the banking industry allows Banks to invest the money and make more money than they could to lend it


#7

While there are many objections to be made regarding lenders, lenders can have no contact whatsoever with the appraiser and have to select the appraiser from a pool.

The issue is many, many appraisers were investigated by the FBI, arrested, and many other sued in civil court for over-inflated appraisals.

This has made all the appraisers gun-shy, so they lean heavily on lower values.


#8

Not really. But there is a well-developed private market for cars. It works effeciently because subsidies and other things that cause market inefficiency in housing are not present.

If there was one lender, this might be true. But there are many lenders ready to compete against one another.

That's not "deregulation" that causes that. It's "regulation" and market subsidies in the form of cheap money from the Fed (i.e., the taxpayer).


#9

If you were a lender and someone defaults on the loan you granted would you prefer to have to liquidate more or less expensive assets?


#10

[quote]Jewbacca wrote:

If there was one lender, this might be true. But there are many lenders ready to compete against one another.

the problem is as I see it is the banks are not competing with each other to make loans because it is more profitable to play the stock market


#11

[quote]Jewbacca wrote:

lenders can have no contact whatsoever with the appraiser and have to select the appraiser from a pool.

then why does the bank chose the appraiser, most of what the appraisers do could be done from any computer with internet access . All the did was take the bottom three sales from the neighbor hood did not consider size of house did not consider size of property, did not consider condition,did not consider landscaping or livable outdoor amenities .


#12

they did not even take regulars sales , they took two foreclousers and a short sale


#13

The bank doesn't choose the appraiser. There is a list from the city and they draw the next one in the queue. In fact, it is illegal for the bank to talk to the appraiser.


#14

Sounds like the appraiser sucks. Or your neighborhood sucks.

Of course, you, the homeowner, can directly work with the appraiser, and should.

Me, when I want something appraised, I give the apraiser detailed information regarding comp sales, detailed property descrition, and generally make his or her job easier, and thus get get the result I intend, be it a high or low appraisal.

But then I am not a liberal loser who blames others for my lot in life.


#15

On this, I partially agree. There is little incentive for banks to lend to anyone but the very lowest risk customers.

Of course, the blame here is Obama, who is monetizing the federal debt. (The Fed is now the largest buyer of t-bills --- effectively the same as printing money.) The result will be massive inflation shortly, akin to Germany in the 1930s, or any bananna republic where they've tried this.

With impending massive inflation, it's silly to lend money on a fixed rate, as it will be a money loser as inflation outstrips the interest rate.


#16

The neighbor hood is Scottsdale AZ, The location is great the curb appeal of the neighbor hood as a whole is very high , They are selling properties in Anthem AZ for twice the appraised values for houses smaller and lots a 1/4 of the size with no pool and out in Bumb Fuck AZ


#17

Nope, with the artifically depressed borrowing costs currently in place it is in a banks best interest to borrow as much money as it can find good loans to make as the spread between the borrowing cost and the interest they can earn is at a high point.

I'd bet the problem is the appraisser.

Never attribute to malice what can be explained by stupidity.


#18

What if it is neither malice nor stupidity but rather what is in the best interest of the bank?


#19

I have a friend in Gilbert AZ with a very similar to mine . I contend that Del Web has much more clout than I do . So he can force the lenders to lend a fair market value


#20

I agree with you , I do how ever feel that allowing Banks to invest in the Stock market and also be Insurance companies is not in the best interest of the American Public