New Year, Old Concerns

Well, I started off the new year with an update to my web page, to make it look more professional. It seems that with all the loss of confidence in the financials markets, it would be a better idea to have a "serious" web page rather than one which indicated a greater sense of humor. Nothing much humorous about loans going south in large flocks. We shall see if springtime sees the migration turn around. With all the financial climate change, though, a meltdown could be in the cards.

Which leads to the old business. It seems that borrowers are not the only entities going into default. Lenders who have ordered appraisals also appear to be defaulting on payment for the reports. If the the borrower has tapped out all his equity and the appraised value is so low that the lender can't make the loan at an appropriate loan-to-value ratio, the lenders are simply ignoring the appraisal invoices.

I've sent off a request for the Ohio Attorney General's office to look into this phenomenon. The O.R.C. provides for criminal penalties for appraiser coercion, and the AG's office issued a clarification (109:4-3-24) which states in part,

"Division (B)(10) of section 1345.031 of the Revised Code states that in connection with a consumer transaction, a supplier is prohibited from knowingly compensating, instructing, inducing, coercing, or intimidating, or attempting to compensate, instruct, induce, coerce, or intimidate, a person licensed or certified under Chapter 4763. of the Revised Code for the purpose of corrupting or improperly influencing the independent judgment of the person with respect to the value of the dwelling offered as security for repayment of a mortgage loan."

My question to the AG's office is whether they consider withholding payment for the report because the loan couldn't be closed an attempt to influence the judgment of the appraiser. I think it is.

Business is so slow right now that to start requiring payment in advance might cause any clients to look for suckers elsewhere. That may, however, be the only way to survive in this market.