THIS POST IS NOT ABOUT CHRIS TUCKER!!
It is a perfect opportunity to reverse some talking points that are constantly fed to people on the radio which cause them to be spun around and start their "Occupations".
If you allow "Occupying Economists" when a house is appraised less than what the bank note on the property is worth - THE BANK is guilty of "stealing" the money from the home owner.
Before You Move Into A New House Here Are The Elements That Make Up The Price That You Will Pay
The variables that fluctuate are:
- The Price Per Acre of land is dependent upon the location and the willingness for someone else to pay to possess this parcel
- The quality of the building materials and expert labor between one house and the next class of houses
- The local taxes and fees
- The amount of professional service fees that the broker/agent builds into their service agreement
- The Bank Financing - based on the personal credit worthiness of the client as translated into the mortgage rate
A Selling Price For A Resale
The resale of a house (or refinancing) is where the MARKET VALUE of the property creates wealth.
Home values tend to appreciate as:
- The owners makes custom improvements to the house interior/exterior and landscaping
- The reputation of the community grows
- Good Schools
- Safe Community
- Access to Entertainment or Retail
- Local Government is fiscally sound and good managers of the peace
- Homeowners Association enforces compliance with covenance standards
The sales of homes in the area help define the "market price" of the property in question.
As other homes in the area are sold at a premium above the original construction price this defines the price point at which someone else would purchase that particular house if it was put on the market.
The span between the market sales price and the balance on the home owner's current mortgage is the "Home Equity" that is recognized.
If you as a home owner don't touch this "home equity" your present mortgage will not change.
The annual property taxes that you pay do fluctuate based on the assessment value from the county.
How Did The Bank "Steal The Money"?
Much of the present debate about 'Banksters' is that they are accused of playing a part in the artificial hiking of home values. A mortgage brokers strongly intent at the independent appraisers as to the appraisal values that they needed in order to "make the numbers work" for approval - the bank which was underwriting the loans failed to perform "due diligence" on the numbers - rejecting the paper and defining a market price of their own choosing.
Since there was a consumer standing by willing to accept responsibility for the loan the bank felt compelled to accept the loan and the property appraisal as each of these deals meant more than $200,000 or more over a 30 year term.
Further the "collateralization of risk" on the secondary market helped "spread the risk" off of their books. They would package the loans that they originated and sell them to other investors - the inflated property used as collateral.
This is how we got our housing bubble.
Ironically in the quest to increase home ownership rates for all Americans the schemes to "spread the risk" also allowed the loan originators to extend more credit in support of home ownership while increasingly ingesting "risky loans".
The real question of "how did the banks steal the money" should be focused on PROPERTY VALUES.
As I said before - upon doing nothing - as your home's value appreciates the only thing that you'll notice is a higher property tax bill.
Those who are transacting using financial instruments - "Cash Out Refinancing" (to pay off credit cards) or "New Home Owner Loans" - to move into a house - the market price of the home that the contracts are indexed to above "real sales price" is the extent to which the "theft" could transpire.
The foreclosed home of Chris Tucker fell from a sales price of $6.0 million back in 2007 to the present appraised price of $1.6 million. Tucker was left holding a $4.4 million spread in the mortgage balance.
In the economic theories of the "Occupiers" - the BANK was at fault because it capitalized a property that had been inflated by spend thrift multimillionaires up to $6 million when it was actually worth something a lot less than this price. Thus the bankroll that a Black man named Chris Tucker was "stolen" because THE BANK cut a check for $6M to the seller of the home and now has the audacity to expect Chris Tucker to continue his $25, 812.50 per month mortgage payments on a home that is 73% drop in value.
In this case one would have to argue that the bank should have refused to lend Chris Tucker the money because they didn't believe that the price that TUCKER agreed to pay was legitimate for the property.
Imagine as the news of this refusal that a Black, mega-star, multi-millionaire was refused a loan?
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| White Couple Refuses To Sell Home To Comedian George Wilborn |
This other Black comedian did experience racism.
Of course the high stakes game of financing for millionaires is not the same as the "House Flipping" craze that took place in "da hood".
The situation with the inflation in urban areas was a case where those who merely wanted a home to live in had their properties collateralized because they hit the ideal attributes that one can hear on various real estate investment radio shows:
- Low initial investment costs
- The upfront investment of needed repairs to an otherwise undercapitalized property would be recognized in instant returns when resold
- Other real estate investors active in the market to bid the price up
In the case of urban real estate - the price of the property got too abstracted from the fact that SOMEONE ACTUALLY HAD TO LIVE IN THE PLACE and be able to afford to pay the RENT that was applied to the mortgage.
If you drive around your city and check out these places that have suffered high foreclosure rates - you'll notice that most of the homes look newly remodeled.
The neighborhood was finally able to attract the capital it lacked in order to refurbish dilapidated housing stock. Unfortunately the same reasons why the properties were allowed to fall into a state of disrepair ended in the ultimate fate of the community - the residents could not afford to pay. THIS IS NOT THE FAULT OF THE RESIDENTS. The fault resides with those who took undue risks in applying capital to these properties for short term gains as the market value rose and left an exploded mess once the dust settled and there were not enough people to pay the rents/mortgages of the newly inflated market price.
THIS IS HOW "THE THEFT" HAPPENED.
All of the players involved are guilty of recognizing a bogus market value - just as Chris Tucker did.
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