Computerized House Appraisals Prevent Refinancing | Georgia Bankruptcy

Computerized House Appraisals Prevent Some from Refinancing

The Wall Street Journal reports that computerized house appraisals are preventing debtors from refinancing their loans (Click here to see the full article).  In the past, home appraisals were blamed for being too generous.  In fact, some people claim that generous home appraisals caused the housing bubble that has come crashing down over the past two years.  Now, the pendulum appears to be swinging in the other direction.

Computerized real estate appraisals are coming under fire.  The Journal reports that computerized real estate appraisals depend largely on home sales and other data to determine the value of a house.  The Journal reports that lenders are using these computer generated appraisals for “home equity loans, preapprovals for mortgage refinancing loan modifications, and mortgage originations of less than $250,000.00.”  Automated appraisals “run as little as $20, whereas appraisals done by people can cost hundreds of dollars.”

In my opinion, a computerized real estate appraisal cannot even come close to the accuracy of a real human being doing it.  There are so many factors that go into estimating the value of a home.  When a computer driven appraisal puts the value of your house too low, the lender will not approve the loan.

The Journal reports that one borrower got so frustrated with the process that he filed a lawsuit against Citibank for suspending his home-equity line of credit because of a drop in his home’s value.  In my opinion, I don’t think he is going to get very far with this lawsuit.  A bank has no legal duty to lend you money.  Almost every single home equity loan contract will give the bank authority to cut off the credit line for any reason.

The good news is that debtors in Georgia have another option to borrowing against your house to pay for debt.  Chapter 13 and Chapter 7 can wipe out credit card debt, medical debt, and many other unsecured debts.  Many home equity loans can take as long as 15 years pay off.  In contrast, Chapter 13 plans are limited to five years maximum.  Even in cases where the debtor has to pay back all of the credit card debt, the interest rate on unsecured debt in Chapter 13 bankruptcy cases is zero percent.

Anyone struggling with debt should take advantage of a free consultation with me.  We will sit down and go over all of your income, budget and your debts.  It never hurts to explore all of your options.  Call me today at (706) 295-0030 to schedule your free consultation.

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2. What is Chapter 7?

3. How much does it cost to file?

4.  Why do I have to pay all of my chapter 7 fees upfront before I file?