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Originally Posted by Wagner
Possible solution in:
Make lenders responsible for the value. If they appraise and loan money based on a 'value' they must honor that same value, regardless of market, for any refinancing or other adjustment measures as long as the paper stays with the originating bank.  |
Wags,
I've heard you say some interesting things over the years, some I have agreed with, some I have disagreed with... But after reading what you have written I have to stop and ask....
What are you smoking this morning and where can I get some?
There is no reason why a lender should be responsible for the value of a home. They are not your business partner, they are your LENDER.
Imagine if they were responsible for the value of your home, then it would also have to be true, that they would be responsible for the value in times of growth as well.
Imagine if you sold your house after 10 years and it doubled in value. Then the lender should be able to enjoy that growth, not the homeowner.
It's not the lenders fault if homes appreciate or depreciate.. Well, it's not the lenders fault - exclusively.
AND,
At least where I live, lenders are not loaning based on the value of the house, they are loaning based on the value of the LAND.
AND,
What if you don't take care of your home? What if you defer maintenance? Is it also the lenders responsibility to absorb those losses?
I think the entire point of an appraisal is to have a small check and balance for the bank. After all, the bank is loaning YOU money based on your history, credit, employment, etc. not the value of the land. But they appraise the land to try to cover their own ass...
If you are stupid enough to sign a document and overpay for a piece of property, it's not the banks fault because they lent you money, based on false information. The appraisal is not a courtesy to the buyer, it's the due diligence of the institution.. AND, it's clearly very SUBJECTIVE as well.
It's not the banks fault that people lie, that people take stupid mortgages, that everyone and their mother wanted to buy a house, flip a house, and pocket a couple hundred grand for a months worth of work.
Yes, the banks might have made it too easy, but this can't be blamed on them, because people have DECIDED it was less expensive to default on their mortgage then it was for them to pay it.
I live in LA where people who were making $60k a year were buying million dollar properties with the intention of flipping and making a quick buck. Or buying a place they could not afford and hoping rates would stay low. Or buying a place and then taking money out of it like it was an ATM machine so they could buy Mercedes and buy second places...
Yes, the bank is at fault for not investigating better, for not saying "NO" to borrowers. But it's not their fault that many people wanted to make a quick buck. The PIGS GOT FAT but the HOGS GOT SLAUGHTERED...