Home Prices Rise For 5th Straight Month
U.S. home prices rose for the fifth month in a row in October,
but the recovery continues to be uneven with only 11 of the 20
metro areas tracked showing gains.
The Standard & Poor’s/Case-Shiller home price index released
Tuesday edged up 0.4 percent to a seasonally adjusted reading
of 145.36 in October from September. Without adjusting for
seasonal factors the index was flat from September.
The index was off 7.3 percent from October last year, nearly
matching expectations of economists surveyed by Thomson
Reuters. Many economists, however, are predicting a double
dip in prices this winter as foreclosures increase and
government support wanes.
“I’d be very surprised if we don’t go below the lows we hit this
year,” Dean Baker, co-director of the Center for Economic and
Policy Research, a left-leaning Washington think tank. “We still
have a very glutted housing market.”
The index is now up 3.4 percent from its bottom in May, but still
almost 30 percent below its peak in April 2006.
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Is It Time To Change Home Appraisal Practices?
Question: Devaluing an already devalued market by including
short sales and foreclosures when appraising property has not
helped the already volatile real-estate market. Do services like
Zillow’s take the sales price of short sales and foreclosures into
account when they assess a neighborhood? Do you foresee the
appraisal standard changing in the near future to give less
weight to the short sales and foreclosures that continue to hurt
the value of other homes for sale? M.S.
Answer: Sellers, especially builders, are screaming bloody murder
about using distress sales as comparables when determining
valuations, especially when appraisers do not gain access to
those properties.
Often, foreclosures are sold “as is,” which has become a
euphemism for destroyed. The pipes are ripped out, the
cabinets are removed, sometimes even the doors, hinges
and switch plates are nowhere to be found. Houses in such
condition are hardly comparable to the often pristine places
put on the market by people who are current on their house
payments, yet that’s what appraisers are using because they
can’t or won’t go inside.
Short-sale properties that are sold for less than what is owed
aren’t usually in such bad shape, often because they’re still
occupied. But people tend to defer maintenance and forego
repairs before they allow their house payments to fall into
arrears. Not saying that all short-sales are dogs, but they’ve
probably seen better days.
Unfortunately, I don’t see this changing anytime soon.
Consequently, if I was a seller, I’d want to make sure the
appraiser assigned by the buyer’s lender was using real live,
lived-in properties as his comps.
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Two Indicted In Straw Buyer Scam
Dema Daiga, 28, College Park, Maryland, and Oluseun
Oshosanya, 29, Laurel, Maryland, have been indicted for
wire fraud and aggravated identity theft arising from a
scheme to defraud a mortgage lending company of
approximately $664,493.
According to the 12 count indictment, Daiga worked at
times as a mortgage loan broker and had assisted with
property appraisals. Oshosanya also worked in the mortgage
lending field. From August to December 16, 2008, the
defendants allegedly recruited straw purchasers to apply for
mortgages. These straw purchasers lacked the income and
assets to qualify as borrowers or make the monthly mortgage
payments. The defendants allegedly: filled out mortgage loan
applications on behalf of the straw purchasers with false
information about the straw purchasers’ employment histories,
earnings and assets; provided telephone numbers that were
under their control to any person calling to confirm the false
information regarding the straw purchaser’s employment and
earnings; generated fake monthly bank account statements to
make it appear that the straw purchasers had sufficient assets
to make the down payments, when instead, the defendants paid
the down payments; on at least two occasions, used stolen
information about another person’s identity to apply for mortgage
loans; caused appraisals to be performed that inflated the
property values; and instructed the title companies to send a
substantial part of the loan proceeds to the defendants, or to
businesses that they controlled.
Five of six Baltimore, Maryland properties purchased under this
scheme swiftly went into default, resulting in a loss to a Beltsville
mortgage lending company of approximately $664,493.
Both defendants face a maximum sentence of 20 years in prison
and a $250,000 fine for wire fraud; and a mandatory minimum
sentence of two years in prison for aggravated identity theft in
addition to any sentence imposed for the wire fraud. |
December 30th, 2009 | 
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