Belize Real Estate  Links  
Real Estate Information

Home Equity Loans - Beware of Appraisal Fraud


A new report by the independent Demos group has revealed what may not be a surprise to many people - corruption is rampant in the home appraisal industry. The bust in the dot-com market of some five years ago has left would-be lenders with a surplus of cash to lend. This has led to a huge boom in both mortgage and home equity loan lending. That's not a bad thing; a record 69% of Americans now own their own homes. Owning a home is easier than ever; in 2004 the average down payment was a record low of only three percent.

So if everyone is buying a home, and loans are easier to obtain than ever, what is the problem? The problem is that nearly 55% of the appraisers polled in the survey said that they had been pressured by lenders to deliver appraisals that met a "target" value. The appraisers said that failure to meet the "target" value resulted in either their not being paid, or not being hired again. Since most appraisers want to keep working, they have had a tendency to meet the target value, even if it means that they have overestimated the value of the property. This drives prices artificially higher and leaves many homeowners with mortgages that may be worth more than the homes they were meant to finance. This problem becomes acute should the owner need to sell the home, only to discover that it isn't worth as much as he or she owes on it.

The worst-case scenario to result from this would be a burst in the current real estate "bubble" and a nationwide collapse in home values, leading to massive foreclosures. This probably will not happen, but there are several things prospective borrowers can do to avoid being caught in the appraisal trap:

  • *Become educated about the appraisal and lending process. The more informed you are, the less likely you are to be caught in a scam.
  • *Be aware that refinancing your home isn't a cure to all problems. It may seem appealing to use the equity in your home for such uses as debt consolidation but if the result of that is that you owe more on your home than it is worth, you probably haven't gained anything.
  • *Be active in the appraisal process. Talk to the appraiser, and ask to see the finished appraisal, along with the data used to create it. Appraisals are based in part on the sales of similar properties in your area. Check them out yourself and compare the home you saw with the stated appraisal value.
  • *Be bold. Ask your lender if they pressure their appraisers to provide inflated values. You might not get an honest answer, but pay attention to how they respond. You might be able to determine if they are lying.
  • Ultimately, if you take out a home equity loan or a mortgage for more than your home is worth, you are the one that suffers. That can be easily avoided if you simply pay more attention to the process and educate yourself about the possible pitfalls. The last thing you want to lose is your home.

    ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com/ and http://www.HomeEquityHelp.net/


    MORE RESOURCES:

    Pennsylvania Real Estate Investment Trust Closes $670 Million Secured Credit ...
    MarketWatch (press release)
    Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the first equity REITs in the US, has a primary investment focus on retail shopping ...

    and more »


    USAA Real Estate won Energy Star award
    San Antonio Express
    San Antonio's USAA Real Estate Co. has been honored for its commitment to energy efficiency by the Environmental Protection ...
    EPA Recognizes USAA Real Estate Company With 2010 ENERGY STAR(R) Sustained ...PR Newswire (press release)
    GE Appliances Receives Fifth Energy Star Sustained Excellence AwardAppliance Magazine
    USAA Real Estate wins EPA awardSan Antonio Business Journal
    Alibaba News Channel
    all 35 news articles »


    COMMERCIAL REAL ESTATE TRANSACTIONS
    Dallas Morning News
    Component Capital Group, a Dallas commercial real estate investment firm, bought a 49340-square-foot former Carnival grocery building in Carrier Crossing, ...

    and more »


    Real-estate law: Use foreclosure time as your rebuilding season
    Orlando Sentinel
    You may also find that in some real estate markets, renting a home costs far less than owning it. So use that time to save your money to buy another home a ...
    Real Estate NewsGay and Lesbian Times
    Home Foreclosure Rates Slackened in February, But Misery RemainsDailyFinance
    Obama plan creates short sale incentives next monthNewsday (subscription) (press release)
    Reynolds Center
    all 41 news articles »


    The Money Times

    America's Real Estate Burden Ensures Inflation
    Gold Seek
    It isn't what the US government outright purchased (stock, debt, and real estate paper), but it's what the US government is guaranteeing that will make all ...
    Morgan Keegan to Offer Farmer Mac Programs to Commercial Banking ClientsPR Newswire (press release)

    all 278 news articles »


    Priest pleads guilty to $2.7M real estate scheme
    Louisville Courier-Journal
    SOUTH BEND, Ind. — A northern Indiana man pleaded guilty Wednesday in federal court to a scheme defrauding real estate developers and churches of more than ...
    Fake priest guilty of $2.9 million real estate schemeThe Republic.com (subscription)

    all 9 news articles »


    Fairfax, Falls Church propose real estate tax rate hikes
    Washington Post (blog)
    The cities of Fairfax and Falls Church are proposing to raise their real estate tax rates to offset still-declining residential and commercial property ...



    More real estate woes for CalPERS
    San Francisco Chronicle
    Add it to CalPERS' $600 million worth of recent losses in real estate investments, ranging from Manhattan's Stuyvesant Town and Peter Cooper Village to a ...



    Sex Offender Recieved Real Estate License
    WISN Milwaukee
    He was fired from his job as a real estate agent after his arrest in this case. State regulators knew about Hoffman's sex conviction before they licensed ...

    and more »


    Real Estate News | BiggerPockets.com (blog)

    Real Estate Investing in a Self Directed IRA: Tapping Your Expertise for ...
    MarketWatch (press release)
    OAK BROOK, IL, Mar 11, 2010 (MARKETWIRE via COMTEX) -- Sandra Reese, Millennium Trust Company's Senior Vice President of Real Estate and Alternative ...
    Stocks vs. Real Estate: Which is Better?Real Estate News | BiggerPockets.com (blog)

    all 9 news articles »

    Google News

    home | site map | Colorado Log Homes | Homes for Sale in Denver Metro
    © 2006