I couldn’t find any language about the 85% of market value, but there is some language about insuring up to 90% of the appraised value on page 378.
I seem to remember that new insured mortgages would be up to 90% of FMV, but some of that money goes elsewhere and not to the lender so the maximum _payout_ that the lender can expect is 85%.
This bill makes absolutely no sense. Why would a bank sell a mortgage for 85% of the appraised value of the asociated property when, if the appraisal is accurate, the bank could just foreclose and sell the property for 100% of the appraised value? The only reason I can see to do this is if the appraisal is wildly overvalued.
The choice is:
– 85% of the appraised value NOW
or
– 100% of FMV 9 months from now, less attorney fees and other costs of doing the foreclosure, less realtor fees (probably 6% of FMV), less 9 months worth of interest payments
