Equity in your home? Once again we get slammed by Bank and Gov rules

Most of us have counted our home equity as part of our worth and retirement funds. Sadly, the rules used by banks to provide mortgages are so onerous and corrupt, our equity no longer can be counted on.

The real issue which, regretfully, all the talking heads and experts seem to leave out of any discussion of the housing market is APPRAISALS. Lets say you own a home that appraised for $300,000. last year and you owe $235,000. on your mortgage at an interest rate of 7%. The current lie is with interest rates now around 4.7% it would be an ideal time to refinance and get lower payments.

Lets also say that you have improved your property by adding additional square footage or a new bathroom, etc. You would think that the appraisal you got last year of $300,000. would be at least that much or a bit more, right? WRONG.

First, property values have gone down and your appraiser will adjust your property's value downward accordingly. WHY? It is the same house in the same place and even improved. How did its value decrease? I do know the patent answers, supply and demand, neighborhood issues, distance to job availability, shopping, schools, etc. and I accept them as a necessary evil.

Here's where we get screwed royally. Lets now say that on your street or block there is a home very similar to yours which goes into foreclosure. You and all your neighbors just lost a big chunk of your equity. Bingo! No change in anything but now the appraisal will list that foreclosure as a comp and ding and adjust your appraisal downward because of it. That is criminal. Now your home will probably appraise for under $200,000. and you are upside down. Kiss any chance at a refinance goodbye.

This Banking policy and appraisal method is archaic and wrong. Just because one or two people in a community have a problem, every home owner should not suffer loss of equity for it. So, there we have the fallacy of the current housing market you are not being told about. Sure you can refinance but only if your appraisal holds up. No homes today can appraise at what the value was when the original home was purchased and if there was a foreclosure in the local vicinity it is worse. So the appraisal is low balled and the bank will not refinance at the lower rate because the loan to value is to high!

I say when a home is appraised, that is the value for the loan. If the banks want to have the loan to value in good times so they can safely dispose of foreclosed property without a loss ( make no mistake, that's what it is all about) plus have government insurance as well (that we pay for), than they should honor the original appraisal for lending purposes in bad times as well. remember they still have government back up.

It seems everyplace I look, there is a Regulation designed to protect everything but the hard working citizen who works and pays the taxes that allow these crooks to continually stick it to us.