Star Tribune Sat, 12 Jan 2008 12:39:41 GMT
Eroding home appraisals latest blow to buyers, sellers
While equity evaporates, new values keep some out of the market. Rosita Fields hit a dead end when she tried to refinance the mortgage on her south Minneapolis house: The appraisal came in at less than what she owed. Aaron Smith was equally stymied when he tried to buy a $180,000 house in St. Paul. The appraisal was $10,000 less than the asking price. The sellers refused to budge, sinking Smith's chances of getting financing. Just a year ago, situations like theirs were less common. But with house prices falling and the mortgage markets in disarray, more consumers are feeling the effects of a crackdown on appraisals by lenders and regulators. It's a major turnaround for an industry that critics said was plagued by inflated appraisals which didn't garner much attention as long as prices were rising. Now many lenders are trying to curb their losses by scrutinizing not only the borrower, but the value of the property, as well. The bottom line? The value of a house is only what a buyer will pay. And in this bear market, lenders aren't taking any chances. "Values might have retreated more than the consumer might be willing to admit," said Tom Musil, director of the Shenehon Center for Real Estate at the University of St. Thomas. ... "Too many brokers and lenders unfortunately view the appraisal process as something to be manipulated," he told lawmakers.
[[keywords: Housing;PropertyTax;Metro;]]
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