I’ve been blogging about the need to consider income approach for appraisals because borrowers who are behind and those who are not, cannot refinance or restructure their home loans because ‘comparable sales value appraisals’ are simply flawed in this market. Distressed sales and foreclosures drive down the comparable values and create a situation where the minority is setting value for the majority. It is a downward spiral without some fundamental common sense and changes.
Income approach to appraisal value, which has been standard for commercial and rental property, is an acceptable form of valuation that has been long over looked. Too long over looked.
The new Home 4 Homeowners FHA loan program www.H4Hnow.com is a solution, but it still relies on an appraisal, presumably a comparable market value version appraisal. This is a flaw. The H4H FHA program uses an appraisal to offer a new FHA fixed rate loan at 90% LTV, then gives subordinate lenders and the Government 50-100% of the future appreciation of the borrower’s home values.
Check out www.H4Hnow.com for more program info.
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