Perhaps you recall the Great Recession. It was triggered when liberals decided that mortgage companies should hand out homes to people who were less trustworthy than foreign ministers from Nigeria who want to park $42 million in your bank account. The Big Banks bought these mortgages like a fat kids buys donuts. Then, incredibly things went wrong. I personally think it all went wrong when Congress re-classified stock options to basically make all those stock options handed out by silicon valley worthless, but that's neither here nor there. Things went wrong, let's put it that way.
Soon, home values collapsed and everyone in California defaulted. One giant Bank (Lehman Brothers) was sacrificed to the Gods of Expediency, and everyone else got bailed out out of my f*cking pocket. Yours too, sunshine.
Suddenly, everyone knew the words Too Big To Fail. This meant that these banks had gotten too large and had become a danger because if they failed, the economy would tank. Hence, the banks needed to get smaller.
Enter the Democrats with a super-majority. Sen. Chris Dodd, who was a whore, and Sen. Barney Frank, who was a different kind of whore, came to the rescue with Dodd-Frank. The Democrats even bragged about it at the time. Did it work? Of course not because Democratic solutions never do.
Over the next few years, the Big Bangs kept growing. They ate up smaller banks who couldn't navigate the insider briar-patch created by Dodd-Frank and went from Too Big To Fail to WAY TOO BIG TO FAIL to HOLY SH*T THEY'RE TOO BIG TO FAIL! Democratic solutions at work, my friends. To protect us from the Big Banks, they passed regulations that wiped out large numbers of small banks and made them chum for a Big Bank feeding frenzy. Nice work, dumbasses.
Anyways, I have run into another way in which Dodd-Frank seeks to save the big banks. Get this...
I'm trying to refinance and roll some non-deductible debt into my mortgage. Doing so could save me a lot of money and make my finances much better. I am an ideal candidate as well. Both my wife and I pretty nearly have perfect credit. My report notes "26 years never late" in terms of payments. I can cover all the closing costs in cash. Our house has even shot up in value since we bought it.
So we applied. Everything was going well. Then they got an appraisal. The appraiser screwed us. For reasons that are unclear, the bastard low-balled us and then some. Two houses on our street sold last month for the amount we claimed as the value of our house. He ignored those and went with three homes clustered in another part of the development a mile away where homes sell for $60,000 less than this part. Wow. (BTW, a mile in the other direction, homes are $60,000 more than ours.)
No problem though, right? We just get another appraisal, right? Nope.
Dodd-Frank has changed the rules. The mortgage company is limited by law to giving us no more than 80% of the value of the house. They did not get to choose the appraiser. They are not allowed to challenge the appraisal. They can't even ask the appraiser to change his mind. They can only... by law... ask the appraiser questions and "hope that he reads between the lines." If he does nothing, then he does nothing. We are done. They can't even order a second appraisal. Actually, they can (at $500 a pop), but federal law requires them to go with the lowest appraisal, so what's the point?
So to save Goldman Sachs from buying the mortgages of Nigerians scammers, I am unable to refinance a home I already own because one *sshole appraiser decided to low-ball me in a way that is obviously false. I will probably file a complaint against the guy with his licensing agency, but how does that help me? Thank you Dodd-Frank... thank you Democrats. Your solutions suck.
13 comments:
That sucks. Well, Dodd Frank is one of the few things Trump has been consistent on (he opposes it) so if he wins presumably that problem will be solved.
End of the fifth paragraph, I believe you have a misplaced comma, which alters the meaning.
Thanks tryanmax! It's fixed.
Anthony, It's very annoying. But it's very typical of Democratic "solutions." It ends up creating petty tyrannies and stopping people from doing things they really want people to do. But this is what they've always done...
- 5% of cars cause 95% of pollution... regulate the other 95%!
- 15% of Americans don't have insurance... make draconian changes to the other 85%!
- global warming/cooling is caused by carbon... regulate the 1% that man puts into the air!
- there are 12,000 gun deaths a year... ban the other 250,000,000 million guns!
- 10% of kids aren't learning... slow the other 90%!
- there's one rapist on campus... go to war with males!
It's no surprise to me that carpet bombing was invented by liberals fighting socialists.
Andrew: I feel your pain my friend. I got Dodd-Franked myself. I refinanced last year. For tax purposes, the county I live in says my house is worth $132,000.00 so that's what I pay property taxes on. When I went to refinance, the appraiser said my house is worth - wait for it - $98,000.00! Motherf___ers!
Sucks.
GypsyTyger
Although it has been several years, we had a similar experience trying to re-finance. When I bought my current home in about 2006, I got a 5-1 ARM. After the crash, when interest rates went even lower, I thought it would be a good time to convert to a fixed 15-30 year depending on rates, etc. I also felt I got low balled. The same bank we were applying through, USAA, also has our home insurance. They estimated the cost to rebuild our home was about 30% more than the cost to sell it. Fine, the numbers are off and the value of property drops, yadda yadda. We had also put a lot of money into the house after buying it, such as finishing the basement and yard, but for some reason they kept not counting that. The appraiser barely looked inside the house and, like you, compared it to much smaller, track homes nearby. At the time, I had about 20% equity into the home even at the low ball cost. They came back wanting another 10% equity down along with other closing costs. Doing quick back of the envelope math meant it would take me nearly the life of the loan to see a benefit. So I have sat and enjoyed my 1.5-3% interest.
I don't know how much of this had to do with Frank-Dodd but they basically required a couple, both with good jobs and income. who didn't over-reach on initial mortgage and excellent credit, to have the equivalent of 30% + fees so some looser can get a loan for a piece of crap home with next to nothing down and no source of income.
Wow GypsyTyger, that's insane! How in the world can it appraise less than a county assessment, which are always low-balled to begin with!
There really needs to be a way to challenge these things and maybe get these guys sanctioned for malpractice.
I actually think this guy did this to us intentionally, but I can't prove it.
Koshcat, That's the annoying part. While they are making people with great credit and good mortgages and excellent payment histories jump through these impossible hoops which can get hung up anywhere along the way for ridiculous reasons, they are again handing out mortgages to people with no income history for almost nothing down.
A relative of my wife with a three month job history and a prior bankruptcy just got a home she will never be able to afford for 3% down. INSANE
P.S. To tell you how bad the appraiser was, one of the homes he said was comparable to our was bought the same month we bought our home a couple years back. It was bought for $65,000 less than we paid at the time. Yet, he claims that now they must be comparable.
What's more, the Feds say that Colorado values have grown on average 10% per year since we bought. Every comparable he used has grown at 6.9% per year since their prior sales.
He gave us 1.9% growth and didn't even credit us with about $20,000 in improvements we put in.
He also appraised us at $35,000 less than the two homes that sold on our street in July. These homes are 4 and 6 houses away.
Nonsense.
Andrew, regarding the tax assessment, do you remember the controversy after the crash in Colorado? The state decided to not lower the value of homes for several years in essence raising taxes. This went to court under TABOR and I believe the state won because the state supreme court is psycho-liberal.
Koshcat, I do remember that. And I think you are right that the state won. The state is always trying to find ways around TABOR. Our city government excels at that too.
At the time, they actually stopped mowing just to annoy people. Then they shut off street lights and offered to let people to pay for specific ones to turn them back on.
Gene Wilder died. Sad. RIP
We had a GS-4 secretary with 5 kids, on food stamps and other assistance that got a loan for a $180,000.00 home in Memphis in I believe about 1997, she had lost it by 2005. I got my Series 7 license and Chicago Board of Trade license in December of 1979. By 1983 we were buying CDs for our clients at Shearson-Loeb-Rhodes. It was Loeb Rhodes Hornblower when I started. Anyway, by 1986 you could hardly tell the difference between a banker and a broker...I almost got my ass fired from Dean Witter in October of 1987 when the market crashed for showing up to work in a flak jacket and a helmet with the stencil URBAN BROKER on the front. Regarding Gene Wilder, what a great talent. Funny, funny, funny and I think him and Richard Pryor's 5 minutes when Gene became black in Silver Streak was one of the few times I have ever heard an entire theatre laughing out loud....well, that and Porky's.
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