Should I let my lender foreclose on my home?

Why should I get an appraisal before I default on my mortgage loan?

What is a modification?

How can they do this?

• Lower the interest rate

• Write down the amount of the loan to be consistent with the current market value

• Lengthen the loan term

What is the lender’s incentive to do this?

• Foreclosure is an expensive and timely process

• When they take back a property they lose money while trying to find a buyer

• The price they eventually get is lower than the loan balance

• The strength of the lender’s loan portfolio depends on the value of the collateral

What did the typical lender want to see in the original appraisal?

During the good times when properties were increasing in value hand over fist, lenders were really just interested in the bottom line. The current market value of the property.

They made money based upon lending the most dollars possible. Loan Officers and Mortgage Brokers received great financial rewards based upon how much money they lent. The more money they lent, the more money in their pockets, the bigger the profits on the books, the better the stock prices, etc. It was a win-win situation.

The government wanted people to own their own homes, the lenders wanted people to own their own homes, the people themselves wanted to own their own homes. For those who already owned a home, the increase in home equity was like getting a windfall inheritance. People thought it was "found" money and did not think they had to be conservative in how they spent it. Everyone was happy!

What will the lender want to see in the appraisal now?

Questions should be answered:

• How active is this market?

• How long is a typical property on the market before it sells?

• What is the typical spread between the asking price and the selling price?

• How does this information compare to six months ago, a year, two years ago?

• When did this market change from appreciation to depreciation?

• What are the telltale signs of a change and are they evident in this market today?

• What are the specific external factors in this neighborhood that support our analysis?

• What are the local economic conditions that affect purchasing and selling decisions?

What appraisers are best qualified to make these kind of judgements?

• Appraisers with long term experience, ones who have worked through two or three market cycles

• Appraisers with years of education , experienced in all property types and how they relate to each other

• Appraisers who have an understanding of past and present economic conditions and the ability to forecast future conditions

• Appraisers accustomed to the in-depth analyses typical of narrative reports on complicated properties

• Appraisers who put professionalism and ethics above all else

• Appraisers who understand that even though they receive work assignments from a particular person, the lender is their client, and besides having a moral and professional obligation to protect the lending institution, they are also indirectly protecting the borrower.

Do I have the education and experience to produce the type of appraisal that will give the lender an accurate and professional perspective of the current market value of your property?

Absolutely, with over 20 years of appraisal experience in all property types, producing narrative and form appraisals, working inside lending institutions as well as in the trenches, an extensive educational background (including teaching appraisal courses for New York State appraisal certification), I’m your man. Well- except that I’m a woman.