Recipe for Mortgage Mess

As appraisers, we sometimes get caught up in the minutiae of our profession without taking some time to step back and look at the big picture. What I mean by this is simple. Without the supporting documentation provided within our appraisal reports, a mortgage will not be consummated. No loans would be processed.

However, when the mortgagor does acquire a property, based upon our valuations, it is their responsibility to pay according to their agreement. During the sub-prime heyday, many people did just that. However, when their balloon burst, and they couldn't pay, the result was a serious hit to the financial markets (as perceived by the media).

The attached article written by Helen Huntley of the St. Pete Times http://www.sptimes.com/2007/09/06/Business/Recipe_for_a_mortgage.shtml does a great job of reducing this whole process into bite size chunks, so we can understand what happens when these faulty loans form the base of many asset backed securities. It is a sober reminder of the importance of the service (or in some cases disservice) we provide our clients.

John Huston
Florida St. Cert. REA RD-6006

Mortgage Fraud and Preditory Lending

As the Congress prepares to return from "Summer Vacation", the scuttlebutt from the Hill is centered around the the financial market's unrest due to the current sub-prime meltdown. The Senate has yet to act on any of the House measures which had been forwarded to them prior to their departure. Hence, any legislative action focused on helping those borrowers whose decisions were not quite financially responsible, is many months off.

As appraisers, we are responsible for unbiased valuation opinions for many of these transactions. It is interesting to read the Appraisal Institute's talking points for the 2007 legislative session. You can peruse them @: http://www.appraisalinstitute.org/govtaffairs/downloads/tlkng_pnts_fnl.pdf

The "Actions Requested" section is especially informative.

John Huston
Florida St. Cert. REA RD-6006

FHA Lending on the Rise

Recently, I've noticed an uptick in FHA appraisal business. It seemed that with the sub-prime market churning along, FHA lending was backburnered by many loan reps. I've recently come across a great article by Peter Miller, which supports my intuition. Here's the link: http://www.fhaloanpros.com/2007/08/fha-activity-soars-in-first-half-of-august/



I trust this will be of interest to you as well.