Selling a house they didn’t own

August 10, 2005 | 9:17 am | |

2 sentenced for real estate scheme

In this case, its sounds like the appraiser was duped, but it is a scary thought. It makes for a good argument to get the sales contract on your transactions (besides other obvious reasons, like understanding the terms of the sale). We match up the seller with public record.

I am amazed how many real estate brokers have said to us that we are the first firm to actually ask for a copy of the contract.

Its a USPAP standard as part of the appraisal licensing requirement [i-2e(iv)]

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Housing appraisals – bloated appraisals cause borrowers to over leverage

August 9, 2005 | 10:54 pm | |

The article in Consumer Reports describes appraisal inflation as a potential…

Watch out for the bloat!

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Indicted for $400 appraisals

August 9, 2005 | 5:10 pm | |

Appraiser gets $350 to $450 per report, his clients get $3M: yet all 3 indicted

Here’s another typical story, this time on Long Island…Appraiser does report, client steals $3.1M

Yet another…Appraiser does report, client steals $800K

Over and over we see appraisers being indicted and their appraisal fees are nominal, yet they are indicated alongside those who stole millions from lending institutions.

Q: What does it say about appraisers who get into trouble selling their soul for a few hundred dollars and their clients reaped millions [albeit all parties are indicted]?

A1: They do it with such frequency, they can’t keep track of ethical and unethical appraisals.

A2: They don’t see anything wrong with what they are doing since they aren’t charging a premium for these reports.

A3: They don’t see the value of the service they are providing to the criminals [sorry, thats a stretch] 😉

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Picture Perfect

August 9, 2005 | 2:02 pm | |

As seen in Valuation Review When are comps picture perfect? [Note: Subscription]

Call me old fashioned but we always take photos of the interior unless we are forbidden by the occupant…then we inform the client and note it in the report.

I am amazed how many times a real estate broker has mentioned to one of my staff, “You take photos? I have never seen an appraiser take photos before (as well as “You actually take measurements? I have never…”)” You get the idea 😉

The photos are more for our use – to review the property if a question comes up, to prove we were there, to protect us, etc.

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10’s the Charm?: The Fed raises the rate by 25 basis points to 3.5%

August 9, 2005 | 1:50 pm |

FRB: Press Release–FOMC statement and Board discount rate action–August 9, 2005

The Fed does it again. It was surprising to me that they still used the phrase “with robust underlying growth in productivity” since productivity cooled off in the second quarter [Note: Subscription]. However, jobs data improving, it seems more likely that the Fed will continue to raise rates.

However, this doesn’t seem to mean much higher mortgage rates are imminent. The demand for bonds has kept bond prices high and yields low [Note: Subscription] (which most mortgage rates are tied to).

All this ties to real estate through mortgage rates. More on the yield curve to come…



Housing Boom Squeezes Low-Income Workers: Study

August 9, 2005 | 1:22 pm | |

According to a study released Tuesday by the Center for Housing Policy

Surging housing prices are putting the dream of a home beyond the reach of middle and low-income workers in many cities around the country

The center is an advocate for affordable housing.

Home ownership has seen significant expansion over the past 10 years with Fannie Mae now claiming that 69% of Americans own their homes.

Wages have held flat for community workers and aren’t likely to rise in the near future. The median home price is consistent with that of the National Association of Realtors [Note: PDF].


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Economically Speaking, Its Beige

August 9, 2005 | 1:01 pm | |

What is the Beige Book and why is it Beige? Prior to 1970 it was red and not intended for public reporting. Perhaps the color was not considered neutral enough for economic reporting – beige seems to be about as neutral as you can get. In 1983, the Beige Book became a public report.

More digging to do on the latter, but here’s the latest…well, not exactly hot off the presses¦Federal Reserve: Beige Book–New York–July 27, 2005

Basically, economic expansion is now more moderate than earlier this year, including retail sales and labor costs and productivity. It is interesting that one of the items that has kept mortgage rates (long term rates) in check for so long has been the fact that productivity has outpaced economic growth. As a result, large corporations have been more likely to refrain from hiring new employees. The limited growth in employment has kept long term rates in check as investors are less concerned about the threat of inflation.

Construction and real estate were robust across the region, but the rate of price increases has slowed. This doesn’t mean prices are falling, it means that the rate of appreciation is slowing.


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Media Coverage Of The Words “Real Estate Bubble”

August 8, 2005 | 12:09 pm | |

Media coverage of the words “real estate bubble” was analyzed by our public relations firm, Publitas. The results were very interesting.

Admit it. Many of us now groan when we read another story of the housing bubble or crash (whether its true or not). The story cycle has run its course.

This is a very similar methodology employed by Robert Shiller of Yale as covered in the New York Times.

However, the Shiller analysis uses a multi-year Lexis-Nexis news search seems biased toward the later years. Major news organizations have a much greater presence on the web now than they did, say 8 or 9 years ago. The absolute number of hits should be far less in earlier years. His analysis should have been done as a percentage of total news stories.

Here’s the problem…

People are now using the logic that since information on the housing bubble has been pumped out into the mainstream ad nauseam, the odds of a market correction is now somehow less since more people are informed. Matrix thinks this is very misguided and relies on “mob mentality” too much. Safety in numbers is more of a distraction. Now that the market has made it through the hailstorm of coverage, we can start really looking at what is going on in real estate.


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eBay: Bid On Your Real Estate Appraiser Apprenticeship Anywhere in USA

August 8, 2005 | 11:30 am | |

The following eBay post for an appraiser apprentice position [Note: PDF] was found on Ann O’Rourke’s Appraisal Today‘s email blast.

Can the standards of the appraisal profession drop any lower? The inference here is that you become a form-filler with minimal effort. Amazing!

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Mortgage fraud huge in Florida, FBI report says

August 8, 2005 | 10:41 am | |

Florida’s red-hot real estate market may have a serious downside.

“Research shows that one-third to one-half of appraisals are overpriced, and the problem is endemic in Florida,” says John Taylor, president and chief executive of the Washington, D.C. based National Community Reinvestment Coalition.

“It’s like a time bomb,” says Alan Hummel, government relations chairman for the Appraisal Institute and an appraiser in Des Moines, Iowa. “There is so much out there, but we don’t find out about it until down the road when property owners start having problems.”

Lack of structure and accountability in the valuation process promotes fraud.

When you have a lending system where the appraisal process is not treated as a “sacred activity,” where the results are respected, believed and followed, then money talks and lenders find appraisers who will play the game.

It’s just that simple.

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Addition Of New Housing Units Described As Evidence Of Population Growth

August 8, 2005 | 10:26 am | |

According to Crain’s New York Business, the city is filing suit against the Census Bureau [Note: Subscription] arguing that the addition of housing units was evidence that the population expanded since 2000, rather than contracted.

Its an interesting argument since the demand for housing has been particularly robust which can not solely be driven by low mortgage rates and changing demographics.

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Yuan Inflation?

August 8, 2005 | 10:06 am |

Inflation seen as key to Fed policy.

Tomorrow marks the likely 10th 1/4 point increase in the Federal Funds rate since June 2004 and with the jobs report showing growth, an increase seems almost certain.

The Chinese currency [Yuan] was recently strengthened by 2%, which could reek havoc with the housing market if allowed to float as much as 40% to which would be needed to benefit the manufacturing sector. The US would see a competitive advantage in manufacturing, allowing prices to increase, placing upward pressure on rates, tempering activity in the housing sector.

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