NAR speaks on LTV vs CLTV

[powayseller]

The borrower would pay it down when properties depreciate? Do banks reassess their properties during a market decline?

[privatebanker]

With regards to Option ARMs, if the borrower only pays the minimum due and the loan balance grows and exceeds a certain percentage, the borrower will receive a scary letter asking for a loan balance pay down. The bank usually just goes off of originating LTVs. I don’t think they reassess properties’ LTVs unless there was delinquencies or something to that tune.

[privatebanker]

Here’s probably the most interesting and sensible article that I’ve seen on the Realty Times:

http://realtytimes.com/rtapages/20051229_topmistakes.htm

http://www.theprivatebanker.blogspot.com/

[barnaby33]

That guy actually sounded like a solid knowledgeable agent. I thought they were extinct.

Josh

[zk]

Well, I got a response from NAR:

____________________________________

Mr. (Steele), You raise an interesting point about the data that is collected by the FHFB. As you point out, one can’t calculate the exact LTV when a piggyback is used. However, FHFB’s data is the best that we have on this issue, so that is why we choose to use it. Nor does this argument diminish from the rest of the report. Thanks for your comments and good luck with your choice.

_______________________________________

My response was admittedly over the top. I was angry:

_______________________________________

Sir or Madam,

Below is an exchange of emails between me and [email protected] The
emails read chronologically from the bottom up. In your last email, you say
that I “raise an interesting point about the data that is collected.” You go
on to say that “FHFB’s data is the best that we have on this issue, so that
is why we choose to use it.” The problem is not with the data. The problem
is with your interpretation of the data and the conclusions that you draw
from the data. If one’s data does not allow one to reach a valid conclusion
about the how much prices would have to decline in order to “have a
measurable impact on foreclosure rates,” then one shouldn’t draw such a
conclusion. And one certainly shouldn’t draw such a conclusion and then use
that conclusion to “refute many of the erroneous theories that have been
circulating in the media by pundits and economists.” It seems to me that, if
the logic you’ve used in your “anti-bubble reports” is any indication, it’s
more likely that your theories are “erroneous” than it is that many of
theirs are.

If you have any credibility whatsoever, you’ll amend your “anti-bubble”
reports so that they do not draw conclusions that cannot be drawn with the
data that you have. If you don’t amend your reports, then it will be obvious
to me that you’re more concerned with misleading the public into believing
that the real estate market is better than it really is than you are with
being honest and forthright.

Obviously this matter is a bit complicated for your average newspaper
reader, but I will be submitting all of these emails to a few newspapers to
see if there’s any interest in publishing an article that deals with your
attempts to mislead the public. Unless, of course, you amend your
“anti-bubble reports.” I must admit I’m not holding my breath waiting for
any such amendment.

Also, I want to tell you that I am extremely angry that, when the financial
security of my family is on the line, I’m being mislead by you. Shame on
you.

(Mr. Steele)

[powayseller]

Yes! You sure let ’em have it!

[Author]

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