Was it excessive land-use regulations, perhaps? Greed and profit, maybe. Media and government propaganda blaring ‘record gains’ all over the damn country – could be. Appraisal regulation (or lack thereof) – you’re getting warmer!
Why wasn’t anyone warning American homebuyers about the potential for an overheated real estate market until it was way too late? Where was the media’s objective eye? Why weren’t government officials ringing the alarm bell, they are the authority on lending and appriasal regs aren’t they?
Typically an investor loan requires a minimum of 10% down – the little white lie in all of this was someone telling the lender they would be an ‘owner occupant’, turning on a utility bill or two in their name and slipping under the radar to achieve 100%+LTV without coming out of pocket for the typical investor down payment. This was the profile for many subprime borrowers who flipped and sold before the crash. Subprime mortgages served many investors and made ‘flipping’ easier. A majority of the sub-prime borrowers were not low-income borrowers.
Many people I’ve talked to who purchased a new home within the last several years never even received an appraisal. Buyers who financed through builder owned mortgage companies assumed the real estate appraisal (that they paid for) was done with their best interest in mind – WRONG! THERE IS NO CONSUMER PROTECTION REGARDING REAL ESTATE APPRAISALS WHATSOEVER!
Lenders had carte blanche for doling out ‘overvalued’ loans during the big run up in housing costs while simultaneously avoiding or blackballing/blacklisting the honest real estate appraisers… or wasn’t anyone in the banking world aware that comps were being jacked up by speculators, AMC’s and AVM’s. Valuation and data portals are owned/rigged by political/corporate pirranah – how much ownership of the data portals lies in the hands of our country’s politicians?
AVM’s don’t know market dynamics – they are computer generated algorithms and do not think like a human appraiser would. Bottom line is that numbers can be skewed to suit the need of the appraisal client BUT A REAL LIVE APPRAISER knows the market and the market dynamics. What we need is legislation that protects the citizens of the United States of America from sh**ty wasteful legislation(s) endorsed by FNMA & FHLMC, Treasury Dept., etc. that is laden with ‘accounting irregularities’ and is nowhere near the best interest of taxpayers.
Think about it, if I screw up on ‘my’ job to the tune of billions of dollars – I GET FIRED! Look at what happens to guys like Angelo Mozillo, Richard Fuld, Frank Raines, James Cayne, etc. etc. etc.