Southern Nevada - with communities of Henderson, Anthem, Summerlin, Green Valley, Silverado Ranch and Mountains Edge - is in the very eye of the tornado when it comes to real estate markets sucked into its furious spin. Home loan foreclosures here are now as commonly talked about as the weather. Many homeowners have given up on trying to hang on to their properties while some are tenaciously seeking solutions to stay on. The latter have several avenues to explore, either directly through their mortgage lenders or then with assistance from a legal counsel.
Now they have a new weapon to deploy. It's called the retro appraisal.
It simply is an appraisal that is based on a past date. It could be three years ago, or five years ago. Normally appraisals are done for the present to be part of a mortgage application, vouching for the collateral's value.
Lawyers representing Las Vegas homeowners in mortgage foreclosure cases, foreclosure mediations and home loan modifications can now rely on these retro appraisals. The basic argument is that lenders were approving loans back in the day using inflated appraisals, largely ignoring any risk management protocols they may have had in place. As the infamous bubble was gathering steam the goal generally was to close mortgage loans as soon as possible for maximum profit and then sell them off to investors. The housing market was piping hot and everybody wanted to make the most of it.
A rather high number, put at 70%, of appraisals for mortgages were plenty overstated between 2005 and 2007, says Retro Appraisals, a firm that has created the back-looking valuation method. "The historical revised real estate appraisal is extremely helpful to a borrower or his or her counsel when seeking to modify a mortgage, defend against a foreclosure or take part in a court-ordered mediation," explains the company's co-founder.
This instrument can be truly effective in the more severely affected housing markets like Las Vegas and much of Arizona, California and Florida. The bubble really galloped out of control in them, artificially pushing up prices that then in many cases became the official appraisals for mortgages. If employed properly, it can be a useful bargaining tool.