As a sign of the pain bankers still see rolling in from the dark horizon of residential real estate, banks across the nation have been reducing or simply canceling outstanding home equity lines of credit. In many cases this has nothing to do with the borrower's credit standing. The banks simply see, or know something, that the mainstream media fails to perceive--that the housing market is far from the bottom news outlets are all to quick to call.
California based Contra Costa Times reported: "Last week, San Francisco-based Wells Fargo was named in a class-action lawsuit claiming it illegally reduced the size of customers' home equity lines of credit. The suit, which was filed in Illinois, claims Wells Fargo failed to accurately assess the value of customers' houses before deciding to pull their credit lines, according to the Associated Press. Wells Fargo is accused of using unreliable computer models that valued home prices too low, and then did not properly notify customers about the credit-line reductions."
Isn't that lovely? These are the same banks that also use their own internal computer models to drastically overvalue the worth of mortgage backed securities on their books, asserting in many cases that they have nominal values still equal to their worth at the apex of the housing bubble. So...for the bank your house is still worth its full boom time value so they can report phony "profits"--but for purposes of calculating your equity the bank uses a different metric to deliberately push the value lower. Equity? What equity? We don't see any equity around here.
The State of California also bit the bullet and lowered the overall assessed value of property statewide for the first time in 76 years. How much did they lower it? Values fell an average of 2.4% across the state, a number that seems ridiculously low considering the chart below showing property value losses in California counties. Look at the carnage:
So it looks like the banks have justification for lowering their estimate of a home's remaining equity. But by the same token they should also have to lower the value of securities resting on this property by an equal measure, and the state tax assessors need to ponder the enormous gap between their measly 2.4% drop in assessed values given the data above. And why can't the homeowner pull the same trick the bank does, and argue that since "mark to market" accounting rules have been suspended for banks, their home is still worth what it was when they bought it in 2005? Why is it that all these "decisions" and assessments always favor the big financial institutions and the taxman, and consistently slam the poor middle class "homeowner?" Equity remains on the bank's books, and on those of the tax assessor, yet vanishes for the homeowner, along with their last remaining access to substantial credit.
This is "the system" in a nutshell.
California based Contra Costa Times reported: "Last week, San Francisco-based Wells Fargo was named in a class-action lawsuit claiming it illegally reduced the size of customers' home equity lines of credit. The suit, which was filed in Illinois, claims Wells Fargo failed to accurately assess the value of customers' houses before deciding to pull their credit lines, according to the Associated Press. Wells Fargo is accused of using unreliable computer models that valued home prices too low, and then did not properly notify customers about the credit-line reductions."
Isn't that lovely? These are the same banks that also use their own internal computer models to drastically overvalue the worth of mortgage backed securities on their books, asserting in many cases that they have nominal values still equal to their worth at the apex of the housing bubble. So...for the bank your house is still worth its full boom time value so they can report phony "profits"--but for purposes of calculating your equity the bank uses a different metric to deliberately push the value lower. Equity? What equity? We don't see any equity around here.
The State of California also bit the bullet and lowered the overall assessed value of property statewide for the first time in 76 years. How much did they lower it? Values fell an average of 2.4% across the state, a number that seems ridiculously low considering the chart below showing property value losses in California counties. Look at the carnage:
So it looks like the banks have justification for lowering their estimate of a home's remaining equity. But by the same token they should also have to lower the value of securities resting on this property by an equal measure, and the state tax assessors need to ponder the enormous gap between their measly 2.4% drop in assessed values given the data above. And why can't the homeowner pull the same trick the bank does, and argue that since "mark to market" accounting rules have been suspended for banks, their home is still worth what it was when they bought it in 2005? Why is it that all these "decisions" and assessments always favor the big financial institutions and the taxman, and consistently slam the poor middle class "homeowner?" Equity remains on the bank's books, and on those of the tax assessor, yet vanishes for the homeowner, along with their last remaining access to substantial credit.
This is "the system" in a nutshell.
