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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

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Right now negative equity exists in 15-18% of owned homes - that's a staggering number.

 

How much are those homes worth today compared to 1996?

It really doesn't matter because the people with the negative equity either didn't own their home in 1996 or have re-financed since. For them, what it was worth 12 years ago is moot.

 

 

Just on this one point: if what the property was worth 12 years ago is moot for those with current negative equity (which I agree it is, basically), then isn't the fact that they have negative equity also moot unless they're trying to sell now or cant afford the mortgage payments? They may not like the fact that they have to pay more than they think they should now that properties are devalued but that's the same as me not liking the fact that I bought a computer days before a new model was introduced that's better & the price on mine went way down. Bottom line is that, by your figures, only 15-18% of today's homeowners have current negative equity &, of them, it's possible that only a very small % cant afford to see this thru until their property values go back up.

Absolutely correct Steve. If the owner isn't selling and can afford to pay the mortgage negative equity is moot. However, the numbers I'm seeing indicate that a majority of those people are sub-prime borrowers who can't afford the payments and are in distress - and obviously that's the problem.

 

But that's just it.... the #s you're seeing, while made up of real people that I feel bad for, are not necessarily the same #s across that 15-18% board. And, if those that you're seeing represent only a small subgroup, isnt that "business as usual" in this country? There's always a 5% "you're screwed" group in any investment... the ones who can see it thru wind up with a nifty profit when the values go up again. You're closer to this one, since it's NYC real estate, but others got similar shaft in other downturns.

 

edited to add: I also wouldnt assume that all mortgage loan defaults are by folks who are now destitute. A % of this are folks just walking away from bad investments and taking the loss.

My bad Steve, I should have indicated where the numbers originated. Those are NAR Stats (National Association of Realtors), so it is a national number.

 

I agree those numbers do contain some people who bought homes as investments, but there's no way to tell the percentage. And yes some people just walked away from a bad investment, but I don't think it's business as usual. There is still an inordinate amount of people who have lost or are a verge of losing their home.

 

And again it's impossible to compare those stats to the 70's or 30's because home ownership was significantly less in those decades - especially the 30's. And that's why I feel this situation is worse in many ways.

 

But, as I have tried to persuade many in the industry, I think there is a viable solution. Freeze the sub-prime mortgages, roll the numbers back to the buy-in rate and allow consumers to pay their home off from there. A two percent increase cap can even be written into the contract.

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

Rose, I know of no NYC property that has dropped some 60-plus percent. If you want to challenge this have a licensed appraiser examine the apartment. Notify Chase of what you are doing.

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seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for The appraisal determined the value to now be $363,000.

 

:ph43r:

 

So sorry to see this, Rose. Stunning reversal. Imagine what the new buyers in your building are feeling, too. And it is all Monopoly without prices printed on the board. Skimmers and flippers will be riding the white water rapids. :blink:

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Guest Aaron T

Rebecca

 

I am certain that the value of Rose's apartment has not fallen to anywhere near that level. It is a screw-up by the bank. Very annoying, but not as annoying as losing 70% of the value of her apartment.

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

I absolutely dont agree that this is some kind of bank screw up; that's the new worth... too bad! However, after speaking with Ginny, since we love you and Mr. Rose, we are prepared to offer you $400,000 if you want to sell. That's 10% over the newly appraised value so think before you answer. One day offer only. Talk to me. :ph43r:

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

I absolutely dont agree that this is some kind of bank screw up; that's the new worth... too bad! However, after speaking with Ginny, since we love you and Mr. Rose, we are prepared to offer you $400,000 if you want to sell. That's 10% over the newly appraised value so think before you answer. One day offer only. Talk to me. :ph43r:

What makes you think you'll be able to get a mortgage?

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:lol:

I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

I absolutely dont agree that this is some kind of bank screw up; that's the new worth... too bad! However, after speaking with Ginny, since we love you and Mr. Rose, we are prepared to offer you $400,000 if you want to sell. That's 10% over the newly appraised value so think before you answer. One day offer only. Talk to me. :ph43r:

$410,000 :ph43r: :ph43r: :lol:

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

I absolutely dont agree that this is some kind of bank screw up; that's the new worth... too bad! However, after speaking with Ginny, since we love you and Mr. Rose, we are prepared to offer you $400,000 if you want to sell. That's 10% over the newly appraised value so think before you answer. One day offer only. Talk to me. :ph43r:

What makes you think you'll be able to get a mortgage?

Steve can write a check or just bring a bag of Hamiltons.

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

I absolutely dont agree that this is some kind of bank screw up; that's the new worth... too bad! However, after speaking with Ginny, since we love you and Mr. Rose, we are prepared to offer you $400,000 if you want to sell. That's 10% over the newly appraised value so think before you answer. One day offer only. Talk to me. :ph43r:

 

:lol: Okay, for $400,000 and a pound of flesh it's yours.

 

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

 

Bulk appraisals are proliferating the banking industry right now, and credit cars / home equity lines of credit (HELOC) are the first target. It sounds like you got bulked. Bulks take down the value of all units in a building, neighborhood, etc by a flat amount, often 20% or 25%. The sale that closed last week might have been executed in July, when prices were higher.

 

Until recently many banks allowed a first mortgage plus second mortgage plus a % of the HELOC to total up to 95% of the property's appraised value, which they adjusted periodically for a region or an area. The new protocol seems to be that the total won't be more than 75% of their newly reduced appraisal value.

 

So, if you have a unit with recent, comparable sales at $1.2mn, and you have a $500k first mortgage on the property, they might have allowed you $1,140,000 ($1.2mn x 95%) for your maximum loan to value for all loans. Under their new regime, they may decide that the $1.2mn comparable should be reduced to a million, and the combined amount then adjusted to 75%. That would give you $750,000 max for all loans. So, your first plus all additional loan facilities can't exceed $750,000.

 

If they are applying new income tests on loan service (I don't know that they are, but it wouldn't surprise me), they may decide that your maximum loan capacity is a lot lower than it was last week.

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

 

Bulk appraisals are proliferating the banking industry right now, and credit cars / home equity lines of credit (HELOC) are the first target. It sounds like you got bulked. Bulks take down the value of all units in a building, neighborhood, etc by a flat amount, often 20% or 25%. The sale that closed last week might have been executed in July, when prices were higher.

 

Until recently many banks allowed a first mortgage plus second mortgage plus a % of the HELOC to total up to 95% of the property's appraised value, which they adjusted periodically for a region or an area. The new protocol seems to be that the total won't be more than 75% of their newly reduced appraisal value.

 

So, if you have a unit with recent, comparable sales at $1.2mn, and you have a $500k first mortgage on the property, they might have allowed you $1,140,000 ($1.2mn x 95%) for your maximum loan to value for all loans. Under their new regime, they may decide that the $1.2mn comparable should be reduced to a million, and the combined amount then adjusted to 75%. That would give you $750,000 max for all loans. So, your first plus all additional loan facilities can't exceed $750,000.

 

If they are applying new income tests on loan service (I don't know that they are, but it wouldn't surprise me), they may decide that your maximum loan capacity is a lot lower than it was last week.

 

FYI: No first mortgage exists on my apartment; The other unit closed at $1.7M

 

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I received a letter from Chase yesterday. I have a line of credit on my apartment whose market value is, or was last month,

in the seven figures. The reason I know this for sure is that two weeks ago an apartment in my line on a lower floor closed a sale in that range.

 

The letter told me that they were closing the HELOC to further use. The reason they gave for this was that they had an appraisal company reappraise the property (without seeing it, of course) and the current appraisal was lower than the maximum amount for the line. The appraisal determined the value to now be $363,000.

 

:ph43r:

 

 

Bulk appraisals are proliferating the banking industry right now, and credit cars / home equity lines of credit (HELOC) are the first target. It sounds like you got bulked. Bulks take down the value of all units in a building, neighborhood, etc by a flat amount, often 20% or 25%. The sale that closed last week might have been executed in July, when prices were higher.

 

Until recently many banks allowed a first mortgage plus second mortgage plus a % of the HELOC to total up to 95% of the property's appraised value, which they adjusted periodically for a region or an area. The new protocol seems to be that the total won't be more than 75% of their newly reduced appraisal value.

 

So, if you have a unit with recent, comparable sales at $1.2mn, and you have a $500k first mortgage on the property, they might have allowed you $1,140,000 ($1.2mn x 95%) for your maximum loan to value for all loans. Under their new regime, they may decide that the $1.2mn comparable should be reduced to a million, and the combined amount then adjusted to 75%. That would give you $750,000 max for all loans. So, your first plus all additional loan facilities can't exceed $750,000.

 

If they are applying new income tests on loan service (I don't know that they are, but it wouldn't surprise me), they may decide that your maximum loan capacity is a lot lower than it was last week.

 

FYI: No first mortgage exists on my apartment; The other unit closed at $1.7M

There's the problem - your apartment has a larger net worth than Chase.

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Exactly one year ago today the market closed at 14,164 - its highest close ever. Today it closed at 8579 - that's a 39.4% decline in 366 days (leap year).

 

Everyone should draw their own conclusions.

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