Appraisal Scope

As I mentioned in my previous blog, Andi had recently told a borrower that he should not speak of things he clearly did not understand. And I thought, that’s exactly what I need to do…

I do not understand what the 800 billion dollar bail out really funds.

• Do people who knowingly took out loans they could not afford get a free pass on decreasing values, while other Americans whose values have also fallen, but were fiscally responsible from the start do not?
• Do the banks get blank checks to do as the see fit with the money?

In fact I do not actually understand why we “needed” this bail out.

• Weren’t sales beginning to increase, and couldn’t they have done so even sooner with just a little bit more liquidity? Tighter underwriting yes, but why not return to historical underwriting practices rather than knee jerking to impossible criteria?
• Will banks that had ridiculously loose underwriting (no docs 105%+ financing) really learn their lesson if Uncle Sam is so generous?

Why aren’t we outraged that AIG’s bail out (to date the company has "borrowed" $23 billion) was followed by a $400,000+ party?  Where is the oversight?

Why aren’t we outraged to the point of recalling politicians who added over $100 billion dollars of pork to this unbelievable price tag?

• Is it true it funded pineapple plantations related to the husband of a senior Congresswoman?
• Is it true that we bought wooden arrows as part of this package?
• Can we find out line by line who added the pork? And why aren’t we doing so?

Is “life jacket economics” here to stay? What is a more responsible level of regulation of our financial institutions, clearly we were not there a month ago, but now have we now gone too far?

And speaking of policy…What part of this financial mess is poorly thought out policy with unintended consequences versus corrupt individuals or institutions? It sure feels like policy makers are looking to individual groups to place blame rather than to develop more well-thought out policies in the future, we need look no father than a couple of recent bail-outs to confirm that.

• Yes there were some brokers who knowingly put homeowners in houses they could never afford once the teaser rates ran out.
• Yes there were some realtors and developers who bought property just to increase values in the area.
• Yes there were some appraisers who pushed values.

But would any of that have created this mess if there had been sound underwriting and less money in the marketplace for loans and if the secondary market hadn’t been so voracious in its appetite for these loans?

And I have more questions, and no answers but blogs are supposed to be short so I’ll stop for now. Perhaps some of you can enlighten…