| Appraiser sues largest thrift
Veteran real estate appraisers have complained bitterly for years about loan officers' demands that they fudge and inflate numbers to allow mortgage deals to close. But now a California appraiser has filed suit against the country's largest thrift institution, Washington Mutual Bank, charging that she was blacklisted for refusing to provide favorable appraised values despite declining market conditions. The suit by Jennifer Wertz comes just two months after the state of New York sued an appraisal management company, First American eAppraiseIT, for allegedly giving in to pressure from Washington Mutual to inflate property values for loan applications -- thereby contributing to mortgage market losses. EAppraiseIT and LSI, a unit of Fidelity National Information Services, were also cited in Wertz's suit as contractors to WaMu.
Economic stimulus a big break for home buyers
You could get a big break on your mortgage from the economic stimulus package announced Thursday. Besides its core purpose of providing tax refunds, the tentative package - which still has several hurdles to clear - essentially rewrites the definition of "jumbo" loan, raising the cap from its current $417,000 to as high as $729,750 in high-cost areas for one year. That would mean home buyers who need the high-ticket mortgages this area requires could qualify for the benefits now limited to non-jumbo, or conforming, loans: an interest rate that's roughly a full percentage point lower. On a $650,000, 30-year fixed-rate mortgage, the savings could be $417 a month, according to California Sen. Barbara Boxer's office. "This is exactly what we need for California," said David Crane, Gov.
Real estate appraiser sues WaMu
Washington Mutual Inc. has been sued by a real estate appraiser who claimed her contract with the biggest U.S. savings and loan was terminated because she prepared appraisals that indicated market conditions were declining. California appraiser Jeniffer Wertz earned more than $100,000 a year doing two or three appraisals a day for Washington Mutual until May, when she refused to revise reports to falsely indicate market conditions were stable, according to a complaint filed Jan. 10 in California state court in Sacramento. A bank sales manager "insisted" Wertz "change her appraisal to indicate 'stable' market conditions so the loan could be approved," she said in the complaint. If Wertz didn't, she claimed, the sales manager said she would be "prevented from doing any WaMu appraisal work." The independence of appraisers has been raised as a potential factor in the subprime mortgage crisis.
Jumbo gamble for county home sales part of stimulus plan
That was the debate Friday in the Sonoma County real estate community over a key provision in the federal economic stimulus package that would make it easier and cheaper to take out big home loans.
The plan would temporarily raise a key lending limit, freeing many buyers from the necessity of using high-interest "jumbo" loans to buy homes in Sonoma County.
Many agents and mortgage brokers seemed optimistic that the measure could be just the incentive some buyers need to re-enter the housing market, firm up home prices and bring the long-predicted bottom into sight.
"I think it's great and important and it's really going to get some people off the fence and into the market," said Timothy Hedges, manager of the Prudential California office in Sebastopol.
Defaults moving beyond sub-prime
Thought the mortgage meltdown was just a sub-prime affair? Think again. There's another time bomb waiting to explode, experts say: risky loans made to people with good credit.
So-called pay-option adjustable-rate mortgages, or option ARMs, were the easiest and most profitable home loans for lenders and brokers to make for much of this decade. Last year, they accounted for about 9% of the volume of all mortgages made in the U.S. and were especially popular in California, Florida and Nevada -- states where home prices rose the most during the housing boom and are now falling most sharply.
An option ARM loan gives a borrower the option of paying less than the interest due, causing the loan balance to rise. If it rises too much -- say, by 10% or 15% -- the opportunity to make a low payment vanishes and the required payment skyrockets.
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