How much is your house worth? It seems these days that depends on who you ask, and what the purpose for asking is.
If it’s the area where you live, your house might be appraised at a higher value than what you were expecting. This is because the more your house is worth, the more property taxes your area can collect. These days, it seems that property taxes are always going up, and it’s not always because the town, city, or county you live in has jacked up its rates.
At the same time, many people across the country are seeing another phenomenon. Banks and lenders are sending out their own appraisers where it pertains to things such as refinancing a home or purchasing an existing home in a particular region and coming in with appraisals that are less than the assessed value of the neighborhood. Often, those offering the appraisals aren’t even visiting the neighborhoods. Instead, they’re working off formulas and the most recent sales of an area and coming up with a determination that way. This ends up not taking into account any maintenance or cosmetic work that’s been done on a house, and hurts the homeowner on the back end.
Although inherently unfair, there’s little that can be done about either one of these. In communities that have to deal with property tax issues, they can show up at a board meeting and complain as much as they want to, but in this economy cities and towns are looking for ways to get money that they’re losing from the state. For lenders, many have been saddled with property that’s lost its value, and they don’t want to take many new chances on people and property they don’t know, or don’t know well. Refinancing one’s home was supposed to be easier under the stimulus package, but instead has turned into nothing but a broken process of broken dreams.
As it pertains to lenders devaluing your property, most of the problem comes from a settlement in 2008 between New York Attorney General Andrew M. Cuomo and both Fannie Mae and Freddie Mac, which established what’s known as the Home Valuation Code of Conduct, which was supposed to enhance the independence and accuracy of the appraisal process, and provide added protections for home buyers, mortgage investors and the housing market. Instead, what’s happened is that the two agencies have ended up hiring appraisers or appraisal management companies who will work for less money, which may be appraisers unfamiliar with a particular area.
Both the National Association of Home Builders and two congressmen, Travis Childers, democrat from Mississippi, and Gary Miller, republican from California, are trying to get the system changed, including an 18-month moratorium, as this program just started on May 1st. As the housing market continues to suffer, they’ll probably succeed, which will bring some relief to homeowners, at least on one front.