December 2010

MERRY CHRISTMAS FROM
ELLIOTT® & COMPANY APPRAISERS

All of us at ELLIOTT® & Company Appraisers wish you a Merry Christmas and a Happy New Year. During this holiday season, we would like to take a step back and express our appreciation for the business we have received from our long-time clients, as well as the ones who have started doing business with us this year.

Our office will be closed on Friday, December 24, and Monday, January 3, for the holidays. We will be open all other weekdays during the holiday season, including Thursday, December 23, Monday, December 28 and Friday, December 31, offering appraisal service in all 50 states.


STUDY CONCLUDES THAT HOUSING IS UNDERVALUED

One encouraging sign that housing prices will eventually rebound comes from a study by Capital Economics. Using the S&P Case-Shuller index, analysts at the macroeconomic research consulting firm concluded that home prices are currently undervalued by 17%. Using data from the Federal Housing Finance Agency, Capital Economics determined that home prices were 14% undervalued.

The National Association of Realtors housing affordability index is near its all-time high, meaning that a median-income household can, with a 20% down payment, afford mortgage payments on a median-priced home more easily than any other time in the last 30 years. For now, high unemployment, tight credit and negative equity are preventing a rebound in home sales.

“The housing market appears to have stalled,” read the Capital Economics report, “before it even began.”


DISTRESSED PROPERTIES ACCOUNTED FOR
ONE FOURTH OF THIRD QUARTER HOME SALES

A report issued by RealtyTrac, which deals with and researches information about foreclosed real-estate properties, showed that about one of four U.S. homes sold in the third quarter were distressed properties. These distressed properties, which included homes in default, foreclosed homes up for auction and REOs, sold on the average at 32% below the sales prices of similar properties that were not distressed.

“The expiration of the homebuyer tax credit created a substantial dip in buyer demand in the third quarter,” said James J. Saccacio, CEO of RealtyTrac. “The foreclosure-processing controversy, which was brought to light at the very end of the third quarter, could chill demand even further.”


SOMETIMES IT’S NOT THE HOMEOWNER WHO WALKS AWAY

In the mortgage servicing industry, the term, “walkaway,” usually refers to a borrower who has decided it is no longer practical to keep up his mortgage payments and voluntarily leaves the property before it is foreclosed upon. But there are also cases of walkaways that take place after foreclosure. Bank walkaways occur when servicers abandon a property that has been foreclosed upon or fail to take possession of property that has been vacated. This is usually done because the servicer does not expect to recover its costs from the sale of the property. These walkaways are also referred to as charge-offs.

Such property abandonment usually occurs in economically distressed neighborhoods with high crime rates. Such walkaways tend to result in more problems for already troubled communities.

“Based on our reviews of bank regulatory guidance and discussions of federal and state officials, no laws or regulations exist that require servicers to complete foreclosure once the process has been initiated,” a recent report by the Government Accountability Office read. “Therefore, servicers can abandon the foreclosure at any point.”


FREDDIE MAC ANALYSTS MAKE PREDICTIONS FOR 2011

Analysts at Freddie have come up with five predictions that they believe will occur in the U.S. housing market in 2011. They are:

  1. Mortgage rates will remain low throughout the year.

  2. Housing prices will begin a gradual increase in the second half of 2011.

  3. There will be more home sales next year than in 2010 as many first-time homebuyers take advantage of affordable pricing.

  4. There will be a decline in refinance activity.

  5. The percentage of home loans in foreclosure or over 90 days delinquent will decline.


ASK MARTITIA

QUESTION:  A lender questions an appraiser about an appraisal report he had prepared for a different lender. The lender calling with the questions had not been named as an intended user for the appraisal. Would the appraiser be in violation with USPAP if he answered those questions?

MARTITIA:  Yes, the Uniform Standards of Professional Appraisal Practice do not allow an appraiser to discuss assignment results or confidential information, regarding an appraisal he has performed, with anyone but the client, someone authorized by the client or someone authorized by due process of law.

Martitia Mortimer, Elliott’s executive vice president, answers appraisal questions on a regular basis in Elliott Real Estate News.


QUOTES  

“He who has not Christmas in his heart will never find it under a tree.” – Roy Smith

“Whenever an individual or a business decides that success has been attained, progress stops.”
                                                                                                                                   – Thomas Watson

“When you do the common things in life in an uncommon way, you will command the attention of the world.” – George Washington Carver

“It’s the most unhappy people who most fear change.” – Mignon McLaughin

“Until you value yourself, you won’t value your time. Until you value your time, you will not do anything with it.” – Scott Peck



 

 
Newsletter Editor: kevin@elliottco.com   
   
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Greensboro, NC 27410
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