Effects of Mortgage Problems in Todays Economy on the Business of Real Essay

Effects of Mortgage Problems in Todays Economy on the Business of Real Estate Appraisal and Sales - Essay ExampleWhen considering the historical data, the prevailing order for a 30-year fixed loan, is extremely dismantle and the owe lenders are facing problems to setoff their losses from tangible estate business. Location factor is the basis of owe business and it is now assuming greater meaning in todays housing market. Thus there exist differential rates of exploitation in the mortgage industry.Mortgage lenders face serious financial problems such as default from borrowers on repaying loan installments in time and such instances of nonpayment had severe implications in the housing market and concrete estate industry. Mortgage business is based on lending of mortgage loans to the clients. Thus, falling house prices in the US economy will result in immense losses on the mortgages the companies own as security for loan issued, and thus the loan given out on the basis of such se curities too suffer higher risk. This higher risk in security investment will influence individuals and institutions want pension funds, hedge funds, insurance companies and banks negatively. Therefore these institutions compelled to stop buying the residential mortgages from mortgage lenders. Thus the mortgage industry will suffer from lack of financial resources and the home buyers are also restricted from acquiring loans. Investment is the basis of the real estate market. The report on real estate business shows that the determine for homes across the country are showing a declining trend and the real estate appraisers are pitiful increased pressure from real estate agents and mortgage brokers to show the asset values at a higher rate in order to increase sales. Control measures for followed by the real estate agents and mortgage brokers by compelling the appraisers to artificially increase the property values, which also affect the mortgage business badly. due(p) to the inc reased pressure from mortgage brokers, appraisers give over value report on the asset on mortgage. The authenticity of their valuation seems to lack reliability and the customers hardly trust it. This affects their further business growth badly. The mortgage lenders are facing problems with default in repayment of loan installments and they are not in a position to retain the loan from the securities which are overvalued through the influence of brokers. (Kerr). As per the new regulations in the US mortgage industry, banks and mortgage brokers are required to order all appraisals through an independent terzetto party. This third party is required to order the appraisal from a licensed appraiser, and he selects only those who agree to do it for the lowest rate without any quality constraints. This provides advantages and disadvantageous in the mortgage industry. The new regulations help the borrowers to pull the appraisal price at reduced level. Due to the elimination of upfront co mmunication between the lender and the appraiser, the problems arising from such communications in the mortgage industry can also be reduced. A return of this new regulation is that only lowest priced appraisers are accepted by borrowers while most of the fitted appraisers are avoided. Thus in the real estate market, there may only be the lower priced appraisers. Thus local appraisers, charging a little higher price has to do their quality work in a very specialized market. This new system also creates other problems for the mortgage busi