Housing: 2006 thread, use the 2007 thread instead.

[Vic]

Vic, you have to understand two things: 1) Legally a Realtor (Edit: the buyers Realtor not the listing Realtor) has a fiduciary duty to work in the best interest of his/her buyer, 2) In reality most Realtors only care about their deal closing and getting paid, screw the buyer.

Whoa whoa, hold on. Legally, there is no such thing as a "buyers realtor." There is the listing agent and the selling agent, and legally, they both represent the seller. How do you not know this?


Dullard is incorrect on my position here. I am not taking blame away from the bad professionals. Far from it. I despise dishonest realtors, incompetent mortgage brokers, and (worst of all) appraisers who pretend to hide behind the law while breaking it. I am simply pointing out that the majority of the blame (if blame is truly necessary) belongs with the buyers and sellers, who are the ones who brought the irrational exhuberence to the party in the first place. I've never had to sell anyone on buying more house than they could afford. They came to me demanding that I be able to do that for them.

 

[dullard]

Originally posted by: Vic
Dullard is incorrect on my position here. I am not taking blame away from the bad professionals. Far from it. I despise dishonest realtors, incompetent mortgage brokers, and (worst of all) appraisers who pretend to hide behind the law while breaking it. I am simply pointing out that the majority of the blame (if blame is truly necessary) belongs with the buyers and sellers, who are the ones who brought the irrational exhuberence to the party in the first place. I've never had to sell anyone on buying more house than they could afford. They came to me demanding that I be able to do that for them.

It is nice that either (1) you have now changed your opinion or (2) you are now expressing your opinion in ways that others can understand it. So I appologize for being misinformed of your current opinion.

Basis for my misinformed post:

I remember that on July 27th we had this same debate where I claimed there were bad appraisers and that sometimes the appraisers were part of the fraud. And on that day you vehemently defended them. And July 27th wasn't the only time we've discussed this. Each time you gave the impression that it is solely the buyer's responsibility and that the bad apples will be blacklisted into obscurity.

 

[Slew Foot]

Bay Area getting smacked around as the median price falls 50K in 2 months.
?I wouldn?t be surprised if we saw a drop in prices of 10 or 15 percent by the end of the year, from the peak,? said Edwin Resuello, president of the Santa Clara County Association of Realtors, referring to home prices countywide.?

?According to San Jose broker Richard Calhoun, the median price of single-family houses sold in August was $770,000, a drop of about $50,000 in two months. Given market conditions the downward trend may persist.?

--------------

?This isn?t a soft landing, it?s harder than a soft landing,? says Robert Toll.

FYI: Robert Toll sold his shares of Toll Brothers last year, early this year I bought a whole bunch of put options on them

---------------

An anecdote from another thread:

I have two investment properties I bought 100% financing owner occupied that are both now about 6 weeks from foreclosure auction. I?m about 5 months over due and my credit is now badly damaged. I never refi?d the properties, but I?m probably 100 grand upside down in each one, plus the cost of taxes, liens, etc, which brings the total I?m upside down to about 250k between the two properties (some of the conditions of the properties were not disclosed to me when I purchased- a situation which I have a pending lawsuit over). Anyways that all aside, I?m just wondering if I would be better off giving up and letting the properties go to auction. My realtor has not been able to get any negotiation on a short sale from any of the lenders (2 on each property), and I have another professional trying to get the lenders to negotiate, but already doesn?t think we?ll get anywhere. Are there any advantages to foreclosure? Will I see a 10-99 either way?

First of all, how he got two investment properties with loans owner occupied tells me that there's a bunch of shenanigans going on in the mortgage industry. Second of all, HAHA.

When prices were jumping wildly realtors, banks, appraisers, mortgage people knew that they were signing up people for a lifetime of servitude, but they didnt care. They got their $$$ and they just winked at each other long enough to keep their scam going. Now that the crap is hitting the fan, they're all trying to point the finger at each other and deflect blame from themselves.

 

[Vic]

Originally posted by: dullard
It is nice that either (1) you have now changed your opinion or (2) you are now expressing your opinion in ways that others can understand it. So I appologize for being misinformed of your current opinion.

Basis for my misinformed post:

I remember that on July 27th we had this same debate where I claimed there were bad appraisers and that sometimes the appraisers were part of the fraud. And on that day you vehemently defended them. And July 27th wasn't the only time we've discussed this. Each time you gave the impression that it is solely the buyer's responsibility and that the bad apples will be blacklisted into obscurity.

That's because ultimately the buyer is responsible. You own a house. How many documents did you sign at closing? Probably more than 100, right? And each one carefully and in great detail disclosed everything, right? And no one held a gun to your head at closing, did they?

I'm not saying that there aren't bad apples among the RE professionals, just that it's ridiculous to blame them all for the sins of the losers amongst them (whose average lifespan in the industry is less than 6 months BTW), or to blame a risky and highly competitive industry for going along with the market's demands.
Don't you realize what a severe market downturn would mean to RE professionals? It means murdering the goose that laid the golden eggs! Yeah, right, we really wanted that.... :roll:

 

[Vic]

I have two investment properties I bought 100% financing owner occupied that are both now about 6 weeks from foreclosure auction. I?m about 5 months over due and my credit is now badly damaged. I never refi?d the properties, but I?m probably 100 grand upside down in each one, plus the cost of taxes, liens, etc, which brings the total I?m upside down to about 250k between the two properties (some of the conditions of the properties were not disclosed to me when I purchased- a situation which I have a pending lawsuit over). Anyways that all aside, I?m just wondering if I would be better off giving up and letting the properties go to auction. My realtor has not been able to get any negotiation on a short sale from any of the lenders (2 on each property), and I have another professional trying to get the lenders to negotiate, but already doesn?t think we?ll get anywhere. Are there any advantages to foreclosure? Will I see a 10-99 either way?

That's fraud on the borrower's part, not the lenders. Possibly his loan officer was involved in the fraud, but that just means that the loan officer defrauded his own lender. If the same loan officer did both transactions within a limited period of time, he can and should face legal action. If this happened in the state of CA, he will likely lose his RE license (which will effectively put him out of his career, for those of you who pretend to care when people lose their jobs).
In order to acquire owner-occupied financing, the borrower signed a Statement of Owner Occupancy at closing for each transaction. These documents are extremely clear in their verbage. He knew exactly what he was doing. I feel no sympathy. Sadly IMO, he will likley not be punished as much as he should, beyond wrecked credit. He put nothing down and he'll get nothing out.

 

[LegendKiller]

I am an equal opportunity blamer.

1. It's the lender's fault for not placing strict controls on loan approval and governance if they are originators. If they are whole-loan purchasers, it is their fault for not ensuring high standards of borrowing and documentation along with due dilligence.

2. It is the appraisers fault for not being truthful and only trying to drive business.

3. It is the consumer's fault for not fully analyzing their financial situation and realizing that the good times will not keep rolling.

If I were to place a % blame, it would probably be about 20/10/70.

 

[dullard]

Originally posted by: Vic
That's because ultimately the buyer is responsible. You own a house. How many documents did you sign at closing? Probably more than 100, right? And each one carefully and in great detail disclosed everything, right? And no one held a gun to your head at closing, did they?

I'm not saying that there aren't bad apples among the RE professionals, just that it's ridiculous to blame them all for the sins of the losers amongst them (whose average lifespan in the industry is less than 6 months BTW), or to blame a risky and highly competitive industry for going along with the market's demands.
Don't you realize what a severe market downturn would mean to RE professionals? It means murdering the goose that laid the golden eggs! Yeah, right, we really wanted that.... :roll:

Yes, the buyer is ultimately responsible.

Analogy: Someone is ultimately responsible for every criminal act. But sometimes there are accomplices. I say both the criminal and the accomplices deserve blame for the criminal act.

Note: I'm not saying the housing market is necessarilly criminal, it is just an analogy. I feel both the buyer and the professionals that mislead the buyer deserve blame. I would never blame ALL the professionals for ALL the sins.

I never said the industry wants a downturn, that was said by other nameless posters on these forums. I just say that as a whole the industry deserves some of the blame. Yes, the buyer also deserves the blame. The buyer is like the criminal and the bad professionals who gave bad advice are like the accomplices (in case of fraud they may be the criminals though).

 

[HomeAppraiser]

Originally posted by: Vic
Whoa whoa, hold on. Legally, there is no such thing as a "buyers realtor." There is the listing agent and the selling agent, and legally, they both represent the seller. How do you not know this?

I was talking about Buyers Agents.

Although most buyers find their Realtor by "Accident"

Originally posted by: Vic
That's because ultimately the buyer is responsible. You own a house. How many documents did you sign at closing? Probably more than 100, right? And each one carefully and in great detail disclosed everything, right? And no one held a gun to your head at closing, did they?

I'm not saying that there aren't bad apples among the RE professionals, just that it's ridiculous to blame them all for the sins of the losers amongst them (whose average lifespan in the industry is less than 6 months BTW), or to blame a risky and highly competitive industry for going along with the market's demands.
Don't you realize what a severe market downturn would mean to RE professionals? It means murdering the goose that laid the golden eggs! Yeah, right, we really wanted that.... :roll:

Like the closing agent really gives you time to READ all those papers in the 15 minutes you have the room. Well I DID for 40 minutes and found three errors including a statement to the IRS that I was buying my house as an investment and not owner occupied. They also added an extra point to the closing cost which I had them change. Unfortunately the average buyer trusts the professionals in suits sitting around the closing table with him and signs everything.

I am all for coming down on bad appraisers, however most frauds are instigated by the Realtor or mortgage broker. link (After reading the story, keep clicking the links at the bottom of the page for more) The commissioned folks have the most to loose (Thousands of dollars per deal) and drive the fraud, the appraiser who is promised steady work or threatened to be blackballed only gets a lousy couple of hundred dollars. Not worth risking your license IMHO, but many do it.

The top producing Realtors or mortgage brokers don?t care about the downturn or who falls out of the industry. It is like the Tragedy of the Commons with the pasture now being overgrazed the fat cows will survive while the rest starve.

Well lunch is over and that?s enough of my ranting for now. I?ll discuss who is to blame in the banking industry during my next rant.

Originally posted by: dullard
You'll likely get nowhere with Vic.

Agreed. Is he a Mortgage Broker or something?

Edit: work links work damnit

 

[dullard]

Originally posted by: HomeAppraiser

Originally posted by: dullard
You'll likely get nowhere with Vic.

Agreed. Is he a Mortgage Broker or something?

Vic works in that field. He may have a specific title that he uses, so I will let him answer that question. Vic is a brilliant man with great ideas. I have a lot of respect for him. However, arguing against him is like arguing with a brick wall. It doesn't matter who is correct in the debate, I've never seen Vic waver.

 

[Vic]

Originally posted by: HomeAppraiser
I was talking about Buyers Agents.

Although most buyers find their Realtor by "Accident"

And like I said, legally a "buyer's agent" doesn't exist. In the eyes of the law, there is a listing agent and a selling agent (aka "buyer's agent), and legally, both represent the seller.
Don't make the mistake of saying "buyer's agent" around a government underwriter. That'll piss 'em off.

My customers don't find their realtors by accident (if I can help it). The 80-20 rule dictates that 80% of all realtors are worthless and incompetent, and a bad experience for my customers makes a bad experience for me.
I have long believed that this is the issue that most consumers have with salespeople. They fail to realize that 80% of all salespeople are incompetent (and transient), while 20% are the competent long-termers who do 80% of the business. So if you leave it to chance or "accident" who you do business with, then you have an 80% (or better) chance of getting a loser. In the meantime, the top 20% who do 80% of the business get all their business by word-of-mouth, not by "accident." Seriously, if you're looking for someone to do business with, don't shop around and leave it to chance. You'll get screwed. Ask friends and relatives who they used.

Like the closing agent really gives you time to READ all those papers in the 15 minutes you have the room. Well I DID for 40 minutes and found three errors including a statement to the IRS that I was buying my house as an investment and not owner occupied. They also added an extra point to the closing cost which I had them change. Unfortunately the average buyer trusts the professionals in suits sitting around the closing table with him and signs everything.

With a purchase, you have the legal right to review the documents for 24 hours prior to closing.
With an owner-occupied refinance, you have the legal right to cancel for 3 days after signing the documents.
Don't give me this "trust" bullsh!t. I was involved in the prepartion of my own mortgages and I still read the documents to check for accuracy before signing them.

I am all for coming down on bad appraisers, however most frauds are instigated by the Realtor or mortgage broker. link (After reading the story, keep clicking the links at the bottom of the page for more) The commissioned folks have the most to loose (Thousands of dollars per deal) and drive the fraud, the appraiser who is promised steady work or threatened to be blackballed only gets a lousy couple of hundred dollars. Not worth risking your license IMHO, but many do it.

Bad appraisers are always investigated by the lender, unfortunately usually long after the loan has defaulted and the lender has been stuck with the overvalued property.
Commissioned folks don't decide who gets approved. You try to make it sound like lenders don't have underwriters or anything like that, and every deal just gets rubber-stamped. Makes it hard for me to believe that you are really an RE appraiser. Are you're saying you've never had an appraisal you've done rejected? Never lost one to review? Never field-reviewed another appraiser's work?

The top producing Realtors or mortgage brokers don?t care about the downturn or who falls out of the industry. It is like the Tragedy of the Commons with the pasture now being overgrazed the fat cows will survive while the rest starve.

Bullsh!t. It's the bottom-feeders that drive the problem. Desperate for deals, and knowing that failure to close anything means a zero paycheck and losing their job, they'll do whatever they can. The top-producers think long-term, and make almost all their business through word-of-mouth referrals.

Well lunch is over and that?s enough of my ranting for now. I?ll discuss who is to blame in the banking industry during my next rant.

Originally posted by: dullard
You'll likely get nowhere with Vic.

Agreed. Is he a Mortgage Broker or something?

Yes, I am. 11 years. I started in a downcycle and have been through 2 ups already. So far, the 1999-2000 downcycle was much worse than this current one. I know it's a popular thing to do these day, but try not to hold my professional experience against me, eh?

 

[Vic]

Originally posted by: dullard

Originally posted by: HomeAppraiser

Originally posted by: dullard
You'll likely get nowhere with Vic.

Agreed. Is he a Mortgage Broker or something?

Vic works in that field. He may have a specific title that he uses, so I will let him answer that question. Vic is a brilliant man with great ideas. I have a lot of respect for him. However, arguing against him is like arguing with a brick wall. It doesn't matter who is correct in the debate, I've never seen Vic waver.

Okay, so I'm stubborn.

Thanks for the respect. Believe it or not, I hold you in much the same respect.

My current title is "Mortgage Banker." I currently work for the mortgage division of a locally-owned mid-cap bank with an FDIC national charter. I do NOT speak for them (or anyone else besides myself) on this message board, nor have I or do I ever solicit business from this (or any other) message board. Sorry, the disclaimer was required.
I joined the bank a few months ago, after working for 5 years at a regional mortgage lender, with a gap for a few months in-between where I just did some independent contract work as it came in (but was mostly just a really nice sabbatical). Personally, I've never felt better about my career as I do now. Sounds strange, I am sure, given the topic of this thread.

 

[Red]

I'm a sales consultant for a large national production builder. I work in Ocala, FL... north of Orlando, south of Gainesville. We lowered prices about 10-15% a few months ago and we're beginning to sell homes again. I just started mid-July and I've sold four homes since then.

BTW, our prices in this area:

1,650 living SF will run about $160k

1,940 living SF will run about $185k

3,922 living SF will run about $315k

Prices include .25 to .35 acrea of land

 

[HomeAppraiser]

Originally posted by: Vic
And like I said, legally a "buyer's agent" doesn't exist. In the eyes of the law, there is a listing agent and a selling agent (aka "buyer's agent), and legally, both represent the seller.

[/i]

Please read the links and educate yourself A buyer agency agreement is a legal contract between you and the agent. Buyer's agent duties and loyalties

Originally posted by: Vic
The 80-20 rule....

[/i]

I agree with that.

Originally posted by: Vic
Ask friends and relatives who they used.

[/i]

Hard for someone moving in to a new area to do.

Originally posted by: HomeAppraiser

Unfortunately the average buyer trusts the professionals in suits sitting around the closing table with him and signs everything.

[/i]

Originally posted by: Vic
With a purchase, you have the legal right to review the documents for 24 hours prior to closing.
With an owner-occupied refinance, you have the legal right to cancel for 3 days after signing the documents.
Don't give me this "trust" bullsh!t.

[/i]

Tell that to these poor bastards ameriquest

Originally posted by: Vic
Bad appraisers are almost never disciplined.

[/i]

Fixed. How do I know? They are still around that's how. And they seem to do a lot of business.

Originally posted by: Vic
Commissioned folks don't decide who gets approved. You try to make it sound like lenders don't have underwriters or anything like that, and every deal just gets rubber-stamped. Makes it hard for me to believe that you are really an RE appraiser.

[/i]

Yea, I just chose this nickname because we are so popular.

Originally posted by: Vic
Are you're saying you've never had an appraisal you've done rejected?

[/i]

Happens ever so often, mostly because I do an honest appraisal on a property that requires adjustments above the secondary market guidelines. The underwriters never seem to read the report which explains "Due to the eclectic nature of the rural neighborhood and the limited number of recent sales in this small town market, comparables with adjustments within FNMA guidelines could not be found." No they just look at the percentages above 15% and 25% then write back "Appraiser to provide an additional comparable with adjustments in line." If there was one it would be on the report in the first place, augh!

Now the DISHONEST appraisers get around this by selecting three sales near the target price of the subject and apply little or no adjustments to them. The use of sales from superior neighborhoods is also popular with "fuzzy" distances to the subject given on the report; "one mile" becomes "eight blocks" to stay within guidelines.

Originally posted by: Vic
Never lost one to review?

[/i]

I don't work on commission so I can't say that I "lost one". Although I did have three bad review experiences for subject's with no true comparable available. First a reviewer threw out the best comparable without reason and substituted a foreclosure. Not a sale of a bank owned property, but he used the actual foreclosure deed from the borrower to the bank for the loan balance as the sale price and used it as a comp! WTF! The other two were Hanson reviews (low cost, low quality POS that I have no respect for). One just complained that my adjustments were too high. For the other I got a grid back that had all inferior "comparables" without positive Construction Quality adjustments and the grid lumped the unfinished basements of the comps into the total Above Grade Living Area for unjustified negative adjustments. Garbage in, garbage out and you get what you pay for.

Originally posted by: Vic
Never field-reviewed another appraiser's work?

[/i]

Just had a doozy where the appraiser failed to disclose the fact that the home is in a commercial zone and adjacent to a gas station! Some extreme zoom action on the subject photos in that report too.

Originally posted by: Vic
Bullsh!t. It's the bottom-feeders that drive the problem. Desperate for deals, and knowing that failure to close anything means a zero paycheck and losing their job, they'll do whatever they can. The top-producers think long-term, and make almost all their business through word-of-mouth referrals.

[/i]

A lot of the top-producers I know don't know the business, but they could sell ANYTHING. It must be an inborn thing.

Originally posted by: Vic
Yes, I am. 11 years. I started in a downcycle and have been through 2 ups already. So far, the 1999-2000 downcycle was much worse than this current one. I know it's a popular thing to do these day, but try not to hold my professional experience against me, eh?

[/i]

I have only known a handful of Realtors, Mortgage Brokers AND appraisers who were truly honest. Most started off honest but turned to the dark side in order to survive. I won't hold it against you as it sounds like you are in the 20% long haul group.

Dullard I think we are getting Vic to come around and realize that buyers are not 100% to blame.

 

[Slew Foot]

http://photos1.blogger.com/blogger/113/2109/1600/shillergraph.gif

I found the graph I was looking for earlier. It charts in constant dollars US housing prices over the last 110 years or so, youll see that after EVERY run up, there's a decline back to where the runup began, and that the current boom, absolutely dwarfs every other boom. Thus will this crash dwarf every other one? Note that recent cycles resemble isosceles triangles where the bust cycle is roughly the same length and severity as the boom cycle.

 

[Vic]

Originally posted by: HomeAppraiser
Dullard I think we are getting Vic to come around and realize that buyers are not 100% to blame.

Ah, but I never said 100% to blame... I said ultimately to blame. There's a difference.

 

[LegendKiller]

Originally posted by: Slew Foot
http://photos1.blogger.com/blogger/113/2109/1600/shillergraph.gif

I found the graph I was looking for earlier. It charts in constant dollars US housing prices over the last 110 years or so, youll see that after EVERY run up, there's a decline back to where the runup began, and that the current boom, absolutely dwarfs every other boom. Thus will this crash dwarf every other one? Note that recent cycles resemble isosceles triangles where the bust cycle is roughly the same length and severity as the boom cycle.

Welcome to about 200 posts ago, where I posted this and nobody responded.

 

[Slew Foot]

Bernake is supposed to talk to Congress tomorrow about the Housing bubble and its impact on the economy. Might be interesting to see if he remains an inflation fighter or caves in to pressure to drop interest rates to prop up consumer spending.

 

[HomeAppraiser]

Do you mean the lending bubble?

Bernake < old but still good.

Edit: To answer your question he is not going to change anything for a while. He already raised rates too far and too fast. Since he is too much of a ***** to admit that he was wrong, there will be no drop in any Fed rates this year.

 

[Slew Foot]

http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=236

Nope, the official title is :"The Housing Bubble and Its Implications for the Economy"

Edit: I do think a lending/credit bubble is responsible for the the rampant inflation/economic "growth" of the last few years, the title of the hearing is specifically the Housing bubble though.

 

[HomeAppraiser]

Yea, I know the title, I just hope he realizes that to paraphrase from Lon Witter's article: we don't have a Housing bubble, what the U.S. has is a lending bubble. His evidence is how loose the lending standards have become, and why not? The banks ultimately just flip the loans to the Fannie Mae (Federal National Mortgage Association, on the NYSE: FNM), where foreclosures and defaults become the headache of buyers looking for greater risk and return.

 

[Slew Foot]

On a side note I got another $20 in Starbucks GCs offer from KB home to tour their new homes this weekend. Last year their new development of 1700 sqft $430K homes sold out in 2 weeks, this years development of 1900 sqft $360K homes hasnt sold out in 5 months.

 

[HomeAppraiser]

As I said before, take away the purchasing power and demand slumps. Anyone like the Bernake video?

 

[LegendKiller]

Originally posted by: HomeAppraiser
Yea, I know the title, I just hope he realizes that to paraphrase from Lon Witter's article: we don't have a Housing bubble, what the U.S. has is a lending bubble. His evidence is how loose the lending standards have become, and why not? The banks ultimately just flip the loans to the Fannie Mae (Federal National Mortgage Association, on the NYSE: FNM), where foreclosures and defaults become the headache of buyers looking for greater risk and return.

That isn't quite correct. FNM only takes conforming loans, those that adhere to specific documentation and collateral quality. Most of the stuff that is sketchy, the B/C loans (not even Alt-A) gets originated by WAMU or other sub-prime lenders. Even more gets originated by other bulk mortgage brokers, or they buy it whole-loan from smaller shops.

Traditionally, most shops had to hold them on-balance sheet, carrying the risk. However, with securitization (MBS) they can sell the loans off-balance sheet, effectively selling the risk to other, distributed, investors. The main advantage is that the market is what is supporting the borrowing/lending. The main downside is that it kinda hides the risk.

While securitization has enabled cheaper and more prolific borrowing and has opened up a lot of new products to borrowers, the onus still belongs to the purchaser of the house. I personally believe this bubble would have happened whether rates were at 6% or 8%.

 

[HomeAppraiser]

You would be surprised at the crap that FNMA gets stuck with. When I have time to write a proper rant I'll go into how Fannie Mae and Freddie Mac have drastically lowered quality standards ultimately putting the housing industry at risk. All they seem to care about is your FICO and last few W-2?s. 50% Loan to Value, sure who needs an appraisal. If you want to save the economy yet stop fraudulent lending, stop raising rates and fix Fannie Mae.

 

[dullard]

Foreclosures are really pickup up now. Up 24% in one month, up 53% in one year.

This is nothing surprising as the exotic ARMs that first started becoming widly popular a few years ago are now reaching the variable interest period. And people are suffering. As I and others stated, these houses will be sold. The increase in house selling will have a downward pressure on house prices.

Sure, they could avoid foreclosure if they had massive raises in the last few years, but that hasn't happened for most people. Sure they could avoid foreclosure if they just sell the house and buy a cheaper house. However, even that will have downward pressure on house prices. The last option is foreclosure, in which I bet most just leave the housing market entirely (Vic, am I right in assuming banks won't give a mortgage to someone who is in foreclosure?), again with a downward pressure on prices.