Unethical Appraisal Processes During the Real Estate Boom

During the heyday of the new millennium real estate market, 2000–2006, unethical and sometimes illegal actions became common in the housing appraisal industry.  Inflating values became the name of the game.  Since most everyone believed there was no top to the market, this rounding off upward was supported by all of the players. Appraisers who answered to banks, realtors and mortgage companies tended to value properties higher than their worth often under pressure from their vested employers.
 

Inflated Appraisals Contribute to Bursting of Real Estate Bubble

These unsupportable high appraisals eventually helped drive the real estate bubble to burst in late 2006.  These unwise practices finally led to legal action by the Attorney General of New York in late 2007.

Trying to keep everybody honest, New York attorney general Andrew Cuomo sued the appraisal subsidiary of First American for conspiring with Washington Mutual to inflate appraisals.  The problem later spread to the mortgage giants Fannie Mae and Freddie Mac with national disastrous results for everyone.

An Attempted Fix of the Appraisal Process – HVCC

The public embarrassment surrounding this law suit forced all major lending agencies into creating the “Home Valuation Code of Conduct” (HVCC). The HVCC established a stringent set of rules addressing who can conduct appraisals and how they should be done.  Under these new rules, the appraiser may not be affiliated with or have any contact with any parties involved in the transaction.

HVCC’s Intention to Protect the Consumer Backfires

The new HVCC rules took effect in May of 2009 and, ironically, are now working against our now slowly recovering housing market.  Appraisers, who are unaffiliated with anyone connected to the sale, are under no pressure to meet deadlines and often submit low appraisals based on a lack of substantiating information regarding the properties they are working on.  This downward bias will slow recovery and further push against the market when we need everything going our way.

A Example of HVCC Pressures at Work in Cardiff, CA

Here’s a personal example of what happened to me as a North San Diego Real Estate Agent, helping a client try to purchase a Cardiff CA condo.  My buyers were renting a unit in Park Place Bluffs, a lovely Cardiff CA condo complex.  They very much wanted to buy a property there.  When one came on the market, a short sale, of course, and asking $265k-305k, they submitted an offer the first day, smack in the middle: $285k.  Unfortunately, 18 others also wrote offers!  We were all asked to resubmit our highest offer, and did so at $310k.  The 5 top bidders (we were among them), with offers between $310 and $320k, were then instructed to rewrite our offer for $290k, BECAUSE THAT IS WHERE THE LISTING AGENT THOUGHT THE PROPERTY WOULD APPRAISE!!, and submit along with credit scores, recent bank statements, recent pay stubs, etc, and the best candidate would win!  We ended up not being selected, and my buyers actually found a much better home in a different neighborhood.  So, here’s a property that 19 people were clamoring all over to buy, 5 of whom were willing and able to fork up between $310k-$320k, and it’s on the books as $290k!!  This does not help home values stablizie and recover!

Bottom Line – HVCC is Bad for Real Estate Recovery

The new HVCC has merit and in a normal market could work well.  But now, when the market is just beginning to recover, is not the time to push prices down by undervaluation.  This new solution for a past problem should be suspended until the cure will not kill the patient.

Going Green in San Diego County

Our whole country is experiencing a trend of going green with alternative energy, conservation, aggressive recycling and the proper disposal of hazardous waste.  We are very lucky here in San Diego County to have hazardous waste disposal that is not only convenient, but often free! Once in awhile, there is even a chance to make some money on your throwaways!!

Information on How to Dispose of Hazardous Waste in San Diego County

Specifics on what is considered hazardous waste and how to get rid of it can be found through local government agencies and online.   Here are some tips:

• Since the beginning of 2009 even the San Diego County Libraries are doing their part by accepting batteries for recycling.  Drop them off there.
• Used motor oil can be dropped off at Kragen Auto Parts or any of several other automotive businesses. 
• Our Planet Recycling of Escondido provides a free pickup of electronic equipment for disposal–just call 1-800-280-0797

More about Our Planet Recycling

Courtesy of Georgehotelling

 In addition to the free pickup, Our Planet Recycling offers many services to residences and businesses in need of downsizing or deconstructing help.  There’s a small fee for picking up your junk.  Surplus liquidation for cash is one of the many services offered.    E-waste is their specialty – unwanted electronic items may also be dropped off at: 432 Venture St. Escondido

Other San Diego Hazardous Waste Recyclers:

Waste Management of San Diego is a San Diego business deeply involved with the collection and removal of Household Hazardous Waste, (HHW). The website gives specific instructions for disposing of cosmetics, paint, medications, cleaners, as well as “sharps” and other equipment meant for home medical use.

Let’s Do our Share!

Courtesy of Jeremy Brooks

Dumping this stuff in the landfills pollutes the water we drink and harms the environment.  Dumping it into storm drains contaminates the ocean and poisons the wildlife. 
         
Come on, San Diego!! We need to keep America’s Finest City beautiful and clean! It’s easy and it benefits us all!  If you have additional tips to share, please comment below.  Thanks for reading and doing your share!

Living in Del Mar California means living in beautiful Southern California coastal splendor.  A once neglected and unattractive stagnant slough in the middle of this little piece of paradise has just been restored to its natural condition, lost for decades.  I wrote about this in an earlier blog post Del Mar’s San Dieguito Lagoon Now Thriving!

The multi year project to reclaim this valuable wetland area of the San Dieguito Lagoon into a much needed bio refuge for indigenous wetland animals is nearly completed. Schools of fish have repopulated lagoon waters that they left over a century ago, and fiddler crabs, swallows and egrets have once again made the lagoon their home.

Observation points along hiking and biking trails invite local Del Mar residents and visitors alike to enjoy the natural beauty and tranquility of this newly restored wetland while respecting its sensitive and precarious habitat.  Rangers are on duty to ensure the rules are followed, and to teach visitors about this special reserve.  Biologists and students of wetland habitats have begun to watch and study the changes here.

The project is financed by an $86 million settlement from California Edison and San Diego Gas and Electric for environmental damages caused by the San Onofre Power Plant. 

Dredging and removing silt and debris from the shallow lagoon has been a necessary step for the tides to move naturally through this 460 acre park that extends from the ocean to the east side of Interstate 5. 

Located just south of the Del Mar Fairgrounds, the new revitalized San Dieguito Lagoon is quickly becoming one of Del Mar’s favorite attractions.  Enjoy quiet reflection while strolling along the River Walk or Boardwalk areas near Jimmy Durante Boulevard.  Hiking, bicycling and horseback riding along the Lagoon Trail will follow the lagoon to its end at El Camino Real.

Don’t miss this historic restoration—come visit the new gateway to the San Dieguito River Park, in beautiful Del Mar!!  If you’ve visited already and have enjoyed this newly flourishing preserve, please write and tell us about it.  We’d love to hear from you!