Sep_UPDATES

							Appraiser News Online
Vol. 9, No. 17 & 18, September 2008

Government Update—Commercial/General
        Paulson and Bernanke Pitch TARP, a $700 Billion Mortgage Bailout [Posted September 24, 2008]
        FHFA: Business As Usual During Conservatorship of Fannie, Freddie [Posted September 17, 2008]
        Senators Calling on GSEs to Freeze Foreclosures; Bankers Concerned about Business [Posted
         September 17, 2008]
        FHFA/Treasury in Historic Takeover of Fannie and Freddie [Posted September 10, 2008]
        Inside the Beltway: What the Takeover Means for the HVCC [Posted September 10, 2008]
        U.S. Companies Could Switch to International Accounting Standards Soon [Posted September 3,
         2008]


Government Update—Residential
        Senator Bond Proposes Origination Commission [Posted September 24, 2008]
        HUD Proceeds with Proposed RESPA Rule [Posted September 10, 2008]
        HUD Clarifies Position on Puerto Rico Tax Incentive Program [Posted September 3, 2008]
        Inside the Beltway: Reconsideration of Value [Posted September 3, 2008]

In the States
        2008 State Legislative Wrap-up [Posted September 17, 2008]
        Ohio-Based Brokers Accused of Predatory Loan Practices [Posted September 17, 2008]
        Houston Chapter Cosponsors Legislative Forum [Posted September 10, 2008]
        Florida-based Orion Bancorp Enters Agreement to Clean Up Loan Book [Posted September 10, 2008]
        Utah Association of Appraisers: Real Estate Outlook Looks Grim [Posted September 10, 2008]
        Illinois Governor Appoints Four AI Members to State Board [Posted September 10, 2008]
        Maine Governor Appoints Mark L. Plourde, MAI, to State Board [Posted September 10, 2008]
        Virginia to Require Lenders to Disclose Appraisal Fees, Get Background Checks [Posted September
         3, 2008]


Around the Industry
        Appraisal Groups: Inadequate Valuation Consideration in TARP [Posted September 24, 2008]
        Financial Assistance Available for Hurricane Victims through AIRF [Posted September 24, 2008]
        Lower-than-Expected Property Appraisals Reduce Lehman Brothers Settlement [Posted September
         24, 2008]
        ―Appraising in Difficult Market Conditions‖ AppraiserCAST Available Now [Posted September 24, 2008]
        Success of Mexican Real Estate Market Will Depend on Developer Adaptability [Posted September
         24, 2008]
        Mall Growth Stunted by Economy, Overbuilding [Posted September 24, 2008]
        OSCRE Publishes Lease Abstract Standard [Posted September 24, 2008]
        New Construction, Coercion Addressed in ASB’s September Q&A [Posted September 24, 2008]
        New Yankee Stadium Financing Marred by Allegations of Overestimated Assessment [Posted September
         24, 2008]




550 W. Van Buren St., Suite 1000, Chicago, IL 60607 | T 312-335-4100 F 312-335-4400 | www.appraisalinstitute.org
        Expert Discusses Distressed Real Estate Valuation [Posted September 24, 2008]
        Bank of America Purchases Merrill, Feds Bailout AIG, Lehman Averts Bankruptcy [Posted September
         17, 2008]
        London’s LIBOR Rate Surge Hits U.S. Mortgages [Posted September 17, 2008]
        Tightening Credit Market Leads to Cash Real Estate Purchases [Posted September 17, 2008]
        Appraisal Institute to Present at Green Building Conference [Posted September 17, 2008]
        Basic Appraiser Education Online at a Package Discount [Posted September 17, 2008]
        2008 Fall Resources Catalog Available Online [Posted September 17, 2008]
        Second Quarter Investor/Lender Lawsuits Jump [Posted September 17, 2008]
        FDIC Stands Ready for More Expected Bank Failures [Posted September 10, 2008]
        WaMu Suit Settled out of Court [Posted September 10, 2008]
        Updated Real Estate Damages Textbook Now Available [Posted September 10, 2008]
        Forecasting Revenue Seminar Now Offered Online [Posted September 10, 2008]
        Slight Home Appreciation Seen in July [Posted September 10, 2008]
        HVCC Topic of Latest AppraiserCAST, Upcoming Webinar Series [Posted September 3, 2008]
        Valuing Historic Preservation Easements Course to Debut Soon [Posted September 3, 2008]
        Timely FHA Appraising Seminar to Debut September 12 [Posted September 3, 2008]
        AARO Responds to Attack on Appraiser Regulation [Posted September 3, 2008]
        Unreleased Appraisal at Heart of 9/11 Land Dispute [Posted September 3, 2008]
        Hanley Wood: Home Sales, Market Confidence Rises [Posted September 3, 2008]
        Real Estate Roundtable: Low Expectations for Commercial Real Estate In Coming Year [Posted
         September 3, 2008]
        CREW Joins FIABCI as a Principal Member [Posted September 3, 2008]

Inside the Institute
        Appraisal Institute Issues 45-Day Notice [Posted September 24, 2008]
        Y.T. and Louise Lee Lum Library Announces New Online Catalog [Posted September 24, 2008]
        FHA-Relevant Info Should Be Added to Designated Member Profiles [Posted September 17, 2008]
        2009 Comp Exam Schedule and Registration [Posted September 10, 2008]
        August Spotlight: Appraisal Regulatory Reform, Pressure to Hit Numbers [Posted September 10, 2008]

Economic Indicators – July 2008




2 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
Government Update – Commercial/General
Paulson and Bernanke Pitch TARP, a $700 Billion Mortgage Bailout
Treasury Secretary Henry Paulson, Jr., and Federal Board Chair Ben Bernanke urged Congress to pass
a $700 billion bailout Tuesday, warning that without it there would be dire consequences for the nation’s
economy. A main component of the plan is labeled the Troubled Asset Relief Program, in which the
government will relieve lenders of illiquid mortgage securities. The pair pitched TARP before the Senate
Banking Committee on Tuesday and met with the House Financial Services Committee Wednesday, the
results of which were not known at press time. The Appraisal Institute spearheaded an industry response
Wednesday, in a letter to the pair, as well as other key members of Congress and federal agency
officials.

"If financial conditions fail to improve for a protracted period, the implications for the broader economy
could be quite adverse," Bernanke said. Paulson stated that the proposal is the ―single most effective
thing we can do to help homeowners, the American people and stimulate our economy.‖ The proposal
would give the government broad power to buy up virtually any kind of illiquid asset, including credit card
debt or car loans, and financial institutions to stabilize the economy. By removing those debts off their
books, financial institutions would be more inclined to lend, they reasoned. The proposal also calls for
layers of oversight, including an emergency board consisting of two congressional appointees and an
inspector general appointed by the president.

Congress is expected to vote in the next several days on the proposal. In the meantime, both the House
and the Senate are in the process of working through changes to the proposal. One of the major sticking
points as of Wednesday, was a bipartisan disagreement over whether to empower bankruptcy judges to
readjust mortgage rates. House Republican and Democratic leadership sources say the bankruptcy court
proposal has emerged as the most difficult difference to resolve in negotiations with the administration,
with Republicans derisively calling it a cram-down provision.

For the work-in-progress from the House, visit
www.house.gov/apps/list/press/financialsvcs_dem/press092308.shtml, and for a summary of changes
from the Senate, by Sen. Christopher Dodd, D-Conn., visit
http://banking.senate.gov/public/_files/SummaryDoddproposal92208.pdf

FHFA: Business As Usual During Conservatorship of Fannie, Freddie
In a September 12 statement, the newly formed Federal Housing Finance Agency stated that business,
for both single-family and multifamily, will continue as usual at the government-sponsored enterprises
Fannie Mae and Freddie Mac during their conservatorship, which began September 7. The FHFA
recognized the importance of the LIHTC (low-income housing tax credit) and liquidity facilities for
remarketed mortgage revenue bonds for a healthy secondary market and housing affordability. As
conservator, FHFA said it expects each Enterprise to continue underwriting and financing sound
multifamily business. ―We also do not expect either company to liquidate its portfolio of LIHTC or
mortgage-revenue bonds,‖ the newly formed agency said.

Just a little over a week after its creation as an independent regulator, the FHFA finds itself in direct
control of mortgage finance giants Fannie Mae and Freddie Mac and the $5.4 trillion in home loans they



3 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
own or guarantee. The new agency and its approximately 400 employees already had a substantial
transition agenda that included combining the tasks of its predecessor, the Office of Housing Enterprise
Oversight, with other oversight duties that had been the responsibility of Department of Housing and
Urban Development and the Federal Housing Finance Board.

FHFA’s September 7 Statement Regarding Contracts of Enterprises in Conservatorship (available at
www.ofheo.gov) applies equally to the single-family and multifamily businesses. It states that the
conservatorship does not affect existing contracts, nor the authority of the Enterprises to enter into new
contracts, nor their enforceability. The FHFA said it will only intervene when there is a question of unsafe
and unsound business practice that would have a negative impact on an Enterprise's financial position
and is outside of the normal course of business. ―Under these unusual circumstances, both Enterprises
would first seek advice and guidance from FHFA before proceeding further‖ the agency said.

Added to the new mission were several tasks mandated by new housing laws such as writing new
portfolio standards and risked-based capital standards for the government-sponsored enterprises. Also
on the FHFA agenda are new capital requirements for the 12 Federal Home Loan Banks, previously
overseen by the finance board.

"I think they will simply have to prioritize during the coming year. Obviously, the agency's first task is to
make sure the crisis at Fannie Mae and Freddie Mac is stabilized, then to ensure that all the proper
changes take place at the two companies," said former OFHEO Director Armando Falcon.

The conservatorship announced September 7 gives the FHFA control over financial operations of the two
GSEs, which have approximately 10,000 employees. The agency has assumed the power of the board,
senior management and shareholders of the GSEs and halted dividend payments and all of the firms'
lobbying activities. FHFA spokesman Stephanie Mullen said at least 60 examiners are in place at Fannie
and Freddie and that the agency is receiving additional oversight assistance from the Treasury
Department. FHFA Director James Lockhart and Treasury Secretary Henry Paulson have visited Fannie's
headquarters in Washington and Freddie's headquarters in McLean, Va., to speak with employees.

Senators Calling on GSEs to Freeze Foreclosures; Bankers Concerned
about Business
The recent government seizure of Fannie Mae and Freddie Mac has many national and industry leaders
talking about the potential repercussions of the Washington takeover. Among those most concerned
about the federal oversight of the government-sponsored enterprises are Democratic Senators and
community bankers.

In a September 11 letter, a group of Democratic Senators led by Sen. Charles Schumer, D-N.Y, called on
Federal Housing Finance Agency Director James Lockhart to declare an immediate and temporary
foreclosure freeze on all loans owned by Fannie and Freddie.

The letter, which was signed by Schumer, Robert Menendez, D-N.J., Bob Casey, D-Pa., and Sherrod
Brown, D-Ohio, requested ―a temporary moratorium of at least 90 days on all impending foreclosure
proceedings on whole mortgages held within each firm's portfolio, and to conduct an immediate and
thorough review of those mortgages.‖ According to their letter, the senators believe a temporary




4 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
foreclosure moratorium would alleviate some of the financial pressures felt by homeowners with falling
property values.

The letter notes there has been a precedent for the new housing agency to undertake an aggressive loan
workout program. Under supervision of the Federal Deposit Insurance Corporation, an effort is underway
to modify mortgage loans that were owned or serviced by failed lender IndyMac.

In addition to the concerns of elected officials, several of the nation’s community bankers have been
speaking out over what they perceive to be a lack of detailed attention to the government takeover of the
GSEs. While regulators have been busy assuring lawmakers that few banks would be seriously harmed
by the takeover, community bankers expect to take a significant earnings hit that they believe will hurt
their communities.

In particular, community bankers are worried about the collateral damage to their banks and if it’s fair to
burden the nation’s community banks with the bailout that was mostly the result of the loose lending
policies of major banking institutions.

Though few community banks are expected to fail, the loss of income for these businesses is likely to
shrivel income and burden local lenders well into 2009.

FHFA, Treasury in Historic Takeover of Fannie and Freddie
On September 7, Congress decided to buy out the government-sponsored mortgage giants Fannie Mae
and Freddie Mac, placing the pair into separate conservatorships, with the federal government committing
$100 billion to each. The government also removed their CEOs, laying the groundwork for a radical and
historic restructuring of the entire U.S. mortgage market.

As part of the GSE restructuring plan, the Treasury Department is providing capital and funding support in
an effort to boost investor confidence in Fannie and Freddie's $5.2 trillion worth of debt and mortgage-
backed securities. Federal Housing Finance Agency director James Lockhart said as of Monday
September 8, the GSEs would operate as usual, ―only with stronger backing for the holders of MBS,
senior debt and subordinated debt.‖ The FHFA was formerly known as the Office of Federal Housing
Enterprise Oversight.

The Treasury has committed to purchase new Fannie and Freddie mortgage-backed securities, a move
that will add liquidity to the mortgage bond market. It will purchase $5 billion worth of agency MBS in
September alone. The FHFA dismissed Fannie CEO Daniel Mudd and Freddie chairman and CEO
Richard Syron. The two men will remain on in transition roles. Herb Allison, a former vice chairman at
Merrill Lynch, was named CEO of Fannie, and David Moffet, former vice chairman of U.S. Bancorp will
lead Freddie.

The new CEOs will be charged with examining Fannie and Freddie's "guarantee fee structure with an eye
toward mortgage affordability," Treasury secretary Henry Paulson said. "The primary mission of these
enterprises now will be to increase the availability of mortgage finance," he said. The FHFA director
placed the GSEs in conservatorships due to their ailing financial condition and their deteriorating ability to
support the mortgage market. In agreeing to a conservatorship, the GSEs each issued $1 billion in senior
preferred stock to Treasury. With each capital infusion, Treasury will accumulate more preferred stock.



5 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
For more details on the conservatorship, visit the Office of Federal Housing Enterprise Oversight FAQs at
www.ofheo.gov/newsroom.aspx?ID=457&q1=0&q2=0.

For a full statement from FHFA Director Lockhart, visit
www.ofheo.gov/newsroom.aspx?ID=456&q1=1&q2=None.

Inside the Beltway: What the Takeover Means for the HVCC
What does the takeover mean to the Home Valuation Code of Conduct? It’s too early to tell, according to
Bill Garber, Director of Government and External Relations of the Appraisal Institute. ―The takeover does
not necessarily mean the HVCC is dead,‖ said Garber, ―But the dynamics have changed.‖

Garber explains that Fannie Mae, Freddie Mac and the Federal Housing Finance Agency (formerly the
Office of Federal Housing Enterprise Oversight) have been seeking concurrence with the federal bank
regulatory agencies for several weeks, and that these discussions may intensify. While FHFA officials are
extremely busy with the takeover, the HVCC is still likely being discussed. In the end, the ball appears to
be in FHFA’s court as far as proceeding or backing away and taking a different course of action.

One of the biggest questions looming over the HVCC is whether federal bank regulatory agencies will
accept it in final form. The Office of the Comptroller of the Currency strongly protects the right to set policy
for national banks, and typically does not shy away from exempting national banks from certain policies.
Will they buy into a code of conduct that arguably establishes policy over national banks, or will they
move to exempt regulated institutions if a code of conduct is released that the agency disagrees with?

Ultimately, Congress may get involved before it is all said and done with. ―Congress is already looking at
reengineering Fannie Mae and Freddie Mac, perhaps consolidating their structure, or even privatizing
                                                             th
them. These discussions will certainly carry over to the 111 Congress,‖ said Garber. ―In addition, the
Treasury Department has released several recommendations on reforming mortgage professional
regulation, including that of real estate appraisers, among other industries. Legislation to make reforms
to Title XI of FIRREA is currently pending in the Senate after passing the House last year. It is possible
that all of these issues may coalesce and feed into a larger debate in the near future.‖

Ultimately, it’s likely too early to tell exactly how the issue will play out. Stay tuned to ANO for all of the
latest information. Thoughts? E-mail insidethebeltway@appraisalinstitute.org.

U.S. Companies Could Switch to International Accounting Standards Soon
U.S. securities regulators are contemplating a plan that could require U.S. companies to switch to
international accounting rules starting in 2014. It could permit others to make the switch even sooner.
The plan calls for early, voluntary use of international accounting standards by large U.S. multinational
firms in 2010. An SEC vote in 2011 would determine whether all U.S. companies would be required to
make the switch. Under the SEC’s timetable, the switch to international accounting would be staggered,
starting with large U.S. companies in 2014, followed by mid-sized companies in 2015 and small
companies in 2016.

"The proposed roadmap is cautious and careful," SEC Chairman Christopher Cox said. SEC
Commissioner Elisse Walter said the U.S. should vote in 2011 to approve the switch "if and only if" certain
conditions are met, including obtaining an independent, stable source of funding for the London-based



6 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
International Accounting Standards Board. The plan also calls for continued collaboration between the
IASB and the Connecticut-based U.S. Financial Accounting Standards Board to narrow differences
between U.S. and international accounting rules.

Under the latest proposal, at least 110 U.S. multinational companies in 34 different industries would be
eligible for early use of international financial reporting standards (IFRS) based on a company's market
capitalization and the extent to which the U.S. company competes with companies that already use
international accounting, according to SEC estimates.




7 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
Government Update – Residential
Senator Bond Proposes Origination Commission
Sen. Christopher Bond, R-Mo., has proposed a ―mortgage origination commission‖ that would promote
financial consumer literacy, provide homeowner counseling and promote transparency in the loan
process by reforming the Real Estate Settlement Procedures Act. Bond signaled his intentions in a recent
letter to Treasury Secretary Henry Paulson, Jr., Federal Board Chair Ben Bernanke and Securities and
Exchange Commission Chair Christopher Cox asking for their support.

In his letter, Bond stressed that while the media focuses on the struggles of Wall Street, his concern is for
American families that are anxious about their savings, retirement, assets and pensions. According to
Bond, the commission would be responsible for re-examining housing policy so that the benefits of
homeownership are in alignment with its risks and costs. Bond will introduce legislation in the near future
to establish the commission.

Bond’s proposal echoes one made by the Treasury Department in March proposing to consolidate
licensing functions for lenders, brokers, and appraisers under the proposed Mortgage Origination
Commission, which would operate under the Federal Reserve. For the full proposal visit,
www.treas.gov/press/releases/reports/Fact_Sheet_03.31.08.pdf.

HUD Proceeds with Proposed RESPA Rule
To the ire of several Congressional representatives, the U.S. Department of Housing and Urban
Development is opting to proceed with its proposed rule changes to the Real Estate Settlement and
Procedures Act, which opponents argue will hinder rather than help the recovery of the nation’s housing
market.

In an August letter to HUD, 244 House members requested that the proposed RESPA reform be
withdrawn, as the signatories contended that HUD’s proposal failed to achieve the goal of simplifying,
clarifying or reducing the cost of the mortgage and real estate settlement processes.

Yet, despite the stated concerns of both Democratic and Republican members of the House, HUD on
August 18 sent its RESPA proposal to the Office of Management and the Budget, the body now
responsible for accepting or rejecting HUD’s RESPA reforms. OMB has up to 90 days to render its
judgment, making it likely that the revised rule will be pushed through OMB, barring further pressure from
a bipartisan majority of the House.

Much like Congress, the Appraisal Institute has also had its concerns regarding the proposed RESPA
reforms, which the organization fears will hide appraisal fees from consumers while failing to address the
long-standing problems with existing RESPA enforcement issues relating to appraisal fees.

―Oftentimes, consumers aren’t informed of all of the costs and services associated with the appraisal,
including what portion of the actual appraisal fee was paid to the individual or company performing the
appraisal versus the appraisal management company,‖ said Bill Garber, director of government and
external relations for the Appraisal Institute. ―If the goal of the RESPA reforms is greater disclosure to
consumers, HUD’s proposal does little to actually inform consumers of settlement service charges.‖



8 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
If OMB accepts HUD’s RESPA reforms, Congress can still overturn the regulation by a majority vote. 218
votes would be required to constitute a majority.

―We’re playing the waiting game at the moment,‖ noted Garber. ―Hopefully Congress holds its ground and
continues to demand that the proposed RESPA reforms be further revised to benefit consumers.‖

HUD Clarifies Position on Puerto Rico Tax Incentive Program
In light of a recent letter from the Appraisal Institute, the Department of Housing and Urban Development
has reversed its opinion and now views Puerto Rico’s Law 197 as a sales incentive or inducement and
―expects FHA Roster appraisers to appraise such properties accordingly.‖ The revised opinion was
expressed in an August 26 letter from Margaret Burns, director, Office of Single Family Development
Programs, who based the new decision upon further review of Mortgagee Letter 2005-02 regarding seller
concessions ―and given FHA’s requirement that any appraisal performed for the purposes of FHA-insured
financing must be in compliance with the Uniform Standards of Professional Appraisal Practice.‖

In its initial April 25, 2008, opinion, HUD said that it considered the incentive a grant and was eligible to
be used in conjunction with FHA-insured financing. While it is still eligible to be used in conjunction with
such financing, appraisers are expected to take the incentive into account, HUD expressed in the letter,
which came in response to a July 8 letter from the Appraisal Institute, American Society of Appraisers,
American Society of Farm Managers and Rural Appraisers, and the National Association of Independent
Fee Appraisers.

―We are extremely pleased that HUD acknowledged the correct way to treat the tax credit,‖ said Rafael
Bonnin-Suris, MAI, who helped craft a letter from the Puerto Rico and Caribbean Chapter of the Appraisal
Institute to the Appraisal Institute’s Washington office explaining the problem and seeking assistance and
clarification. ―Thanks to this decision, from now on appraisals in Puerto Rico will reflect current market
conditions, and through this the public interest will be protected.‖

The letter also elicited a response from the Appraisal Institute Washington office.

―HUD is to be commended for taking appropriate action on an issue of extreme importance to the
appraisal community,‖ said Bill Garber, Director of Government and External Relations for the Appraisal
Institute. ―They hit this one out of the park for a home run.‖

Inside the Beltway: Reconsideration of Value
Periodically, Appraiser News Online will be running an insider’s view of a hot topic in Washington, D.C.,
penned by Appraisal Institute Director of External Relations Bill Garber. This issue’s topic is the potential
use by other agencies of the Department of Veterans Affairs’ ―reconsideration of value‖ procedure.

Rumors are floating around Washington that several national real estate industry organizations are
encouraging the Federal Housing Administration, Fannie Mae and Freddie Mac to adopt a
―reconsideration of value‖ procedure adopted by the Veterans Administration several years ago. The VA
procedure allows program participants to provide relevant market data to VA fee and staff appraisers
during the appraisal process. In other words, it provides an opportunity for lenders/agents/builders to
rebut appraisals that come in below the sales price. If this occurs, the VA appraiser is to notify a point of



9 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
contact, who in turn contacts the agent/builder/seller to give them an opportunity to submit additional data
before the VA appraiser finalizes the value.

The Appraisal Institute’s Washington office has heard that the VA procedure generally works pretty well,
given that most appraisers are more than happy to consider additional information if that request is done
professionally. It might be painful to admit, but appraisers sometimes miss things when preparing their
reports, and we have been told that the system has been helpful to VA appraisers who may have missed
sales, particularly from builders who may have information not included in public records.

On the negative side, we have heard that some parties, particularly realty agents, oftentimes submit
comps that are not truly comparable. If the appraiser disagrees with the agent, World War Three breaks
loose. Also, it seems odd, or even backwards, to require the appraiser to explain why he/she did not use
a comparable provided by the agent/builder/seller, but not do the same when the comparable is used by
the appraiser.

Generally speaking, the VA has taken a responsible approach on appraisal issues for many decades.
However, it is a very unique system, and the mechanics of the VA program are different than
conventional or FHA appraisals. Could a system like this work elsewhere; if so, under what systems or
controls? Or, are there alternatives, including utilizing current resources and procedures that could be
used by clients to communicate effectively with appraisers?

What say you?

We’d like to hear your feedback on this issue, specifically, how the VA reconsideration of value procedure
works and your thoughts on it being applied to the conventional or FHA appraisal procedures. Please
submit your e-mails to insidethebeltway@appraisalinstitute.org.




10 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
In the States
2008 State Legislative Wrap-up
During the 2008 sessions of state legislatures, a number of new laws were enacted that impact the
appraisal industry. There were numerous proposals to modify state licensing and certification criteria to
bring them in line with the Financial Institutions Reform, Recovery, and Enforcement Act and the
standards of the Appraiser Qualifications Board of the Appraisal Foundation. In addition, four states –
Connecticut, Kentucky, Missouri, and New York – enacted new appraiser independence laws.

―The new independence laws are consistent with Appraisal Institute policy that calls for all parties
involved in appraisal ordering and management to be subject to independence requirements,‖ said
Appraisal Institute Director of Government and External Relations Bill Garber. ―We have sought greater
oversight and enforcement in this regard at both the federal and state levels.‖

The issue of broker price opinions was also considered in several states, with two states – Kansas and
Washington – enacting new laws that permit real estate professionals to perform BPO services. Other
laws of significance to the appraisal industry were enacted in Alabama and Colorado.

When the state legislatures reconvene in early 2009, it is probable that these issues will be considered in
other states, and action will be required on the part of the appraisal industry, according to Scott DiBiasio,
Manager of State and Industry Affairs for the Appraisal Institute.

―The AI stands ready to assist chapters when legislation dealing with these, and any other subjects of
importance to the appraisal profession, are considered,‖ DiBiaso said.

For more information on each of the major pieces of legislation that were enacted in 2008 go to
www.appraisalinstitute.org/newsadvocacy/downloads/2008StateLegislativeWrapup.pdf.

Ohio-Based Brokers Accused of Predatory Loan Practices
The Ohio Attorney General’s Office and the Ohio Department of Commerce filed a complaint against two
Ohio-based financial companies – Magellan Mortgage Corp. and Highland Banc, Inc. – a loan officer and
an appraiser alleging unfair, deceptive and unconscionable acts and practices. The suit against the two
financial companies site several violations of the Ohio Homebuyers Protection Act, the Ohio Mortgage
Brokers Act and the Real Estate Settlement Procedures Act. A second suit alleges that Magellen violated
the Truth in Lending Act.

The suits allege that a mortgage broker arranged loans with undisclosed fees as well as loans to
homeowners who lacked reasonable ability to repay them. According to Consumer Protection Chief
Nadine Ballard, ―Our investigation of these two businesses reveal rampant disregard for the Homebuyers
Protection Act, which was passed in Ohio to eliminate these types of predatory loan practices.‖

The Attorney General is asking the court to prohibit the defendants from practicing until the dispute is
resolved and penalties have been paid. The lawsuits also stipulate that the defendants reimburse
consumers and pay penalties of $25,000 for each violation. In addition, the Department of Commerce is




11 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
seeking an injunction to prohibit the brokers form violating the Mortgage Broker Act and to have all
business records accessible for review.

Houston Chapter Cosponsors Legislative Forum
On Thursday, August 21, the Houston Chapter of the Appraisal Institute, cosponsored a forum focused on
issues affecting Houston’s real estate market. The forum, Real Issues for Houston Real Estate: A
Legislative Forum, moderated by Patricia Osenbaugh, MAI, attracted over 200 attendees. Panelists
included state Congressmen Kevin Brady, John Culberson and Gene Green.

Joining the Appraisal Institute were the Building Owners and Managers Association, the Certified
Commercial Investment Member Institute, the Texas Society of Certified Public Accountants, the Houston
Association of Realtors, the Institute of Real Estate Management and the Mortgage National Bankers
Association.

One hot topic discussed at the event was transportation. Participants felt that Texas was not receiving its
fair share of federal funding. Green reported that security permits for the Port of Houston exceeded
projections by 500 percent. The impact of the port on Houston’s economy is significant, with growth
projected to continue to increase. In addition, Brady addressed alternative means of transportation of
goods, including railroad and barges. According to Brady, the ―carpooling‖ of goods to distribution areas
via rail and barges helps remove traffic from the region’s congested highways. Culberson addressed the
success of the widening of the Katy Freeway, which will be completed by the end of this year through
public and private partnerships. Similar projects are being explored in other areas in the Houston region,
including light passenger rail.

Also discussed was the current credit crunch. Green indicated that his goal was home ownership for all
through responsible lending practices. Brady and Green acknowledged that the lack of available credit for
business expansion is problematic and may hamper future job growth. When asked to address the
upcoming 2010 capital gains tax changes, Brady and Culberson supported the renewal of the current
reduced tax rates. Brady stated that he supports a position of no capital gains tax as a means to reward
those that create value and jobs. Culberson went on to support the Fair Tax movement, where a
consumption tax would replace the current income tax system. Green advocated that companies should
pay their fair share of the tax burden.

All of the attending Congressmen recently signed a letter to the secretary of the U.S. Department of
Housing and Urban Development asking him to withdraw the recently proposed Real Estate Settlement
Procedures Act. The letter asked that HUD work to produce a RESPA rule that takes into consideration
its impact on small businesses and especially consumers. All of the sponsoring organizations of the event
commended the Congressmen for their action in signing the letter.

Florida-based Orion Bancorp Enters Agreement to Clean Up Loan Book
On August 20, Florida-based Orion Bancorp Inc. entered a written agreement with the Federal Reserve
Bank of Atlanta and the Florida Office of Financial Regulation to clear troubled loans off its books,
improve its workout procedures, and reduce its concentration of loans to real estate developers. The
agreement illustrates how badly real estate conditions have deteriorated in Florida, particularly in the
Naples area where the July median home price declined about 30 percent from the previous year.




12 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
According to the Federal Deposit Insurance Corp., as of June 30, 5.25 percent of Orion’s loans were
noncurrent, compared with an average of 3.34 percent for commercial banks in Florida and 1.87 percent
nationwide. Moreover, FDIC data shows that Orion, which for years did not charge off a single loan,
reported $7.3 million of charge offs for the first six months of 2008. Orion’s past due and nonaccrual loans
totaled $10.6 million of which 82 percent represented construction and development loans.

The agreement stipulates that Orion must charge off or collect all assets classified as a loss within 10
days and prohibits the company from extending or renewing credit without board approval for borrowers
whose loans have been charged off or classified as substandard. Subsequently, over the next 60 to 90
days, Orion must focus its attention on revising its loan operations—from underwriting to appraisals—to
strengthen its board's oversight. Moreover, Orion’s loan review procedure must be revised within 90 days
and they are expected to increase the scope and frequency of examinations as well as reconsider its
grading descriptions. Additionally, all loans and assets greater than $1 million must be put on a plan to
improve repayment rates.

The agreement also requires Orion to present a report within 60 days that outlines its volume of adversely
classified assets, its asset concentrations, the adequacy of its allowance for loan losses, its anticipated
level of retained earnings, and the source and timing of additional funds to fulfill future capital and loan-
loss reserve needs. In addition, Orion must submit a plan within 90 days outlining how it intends to
separate its credit administration and loan production operations, outline a plan to strengthen the
management of its commercial real estate portfolio, and develop a strategic plan to reduce its risk.

Utah Association of Appraisers: Real Estate Outlook Looks Grim
According to economists at the recent Utah Association of Appraisers held its Mid-Year Economic
Symposium, the economic outlook looks grim, and relief may not arrive any time soon. Jim Wood, director
of the University of Utah's Bureau of Business and Economic Research, told the audience of 300
appraisers and other real estate professionals that the current economy is in a recessionary environment.
The Symposium was held in Salt Lake City on August 20.

According to Wood, the rapid loss of construction jobs in Utah has contributed to much of the decline, and
the current downturn rivals the economic turbulence the state experienced during the 1980. Wood also
pointed out that construction jobs account for approximately 40 percent of all jobs lost from the state's
economy this year. Kelly Matthews, an economist with Wells Fargo, echoed Wood's views adding that as
long as the housing market struggles, it will continue to burden the state’s economy.

Several analysts believe that unethical conduct by some lenders, real estate agents and appraisers has
contributed to the housing crisis. According to the Associated Press, experts and industry insiders –
including some appraisers – believe the failure to monitor the appraisal industry effectively has
contributed to the housing market's downturn. Rick Lifferth, MAI, SRA, president of the Utah Association
of Appraisers, said that some appraisers are feeling pressured by both lenders and sellers to inflate
values.

"In the residential business, it's become more of the norm than the exception," Lifferth said. "You come up
with any number the customer wants to keep the business." He also commented that the practice of
inflating property values is so pervasive that it is almost commonplace, which is hurting the credibility of




13 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
the appraisal profession. Lifferth praised the Utah Division of Real Estate for its increased efforts to sift
out unethical appraisers.

Several subprime loans that have defaulted may be contributed to individuals who practice unethical
behaviors. According to Wood, the number of foreclosures in Utah will likely increase significantly in the
coming months. "Right now, we're at about 4,000 foreclosure filings in Utah [in 2008]," Wood said.
Residential real estate agents also will have to cope with the slow market this year and in 2009, he said.
"We might be able to see by 2010 some life and some expansion again."

Illinois Governor Appoints Four AI Members to State Board
Illinois Governor Rod Blagojevich welcomed four Appraisal Institute members – James Blaydes, SRA;
Gary Harvey, SRA; T.J. McCarthy, SRA; Lee Lansford, Associate member- residential – to the Illinois
Real Estate Appraisal Board. Secretary of the Illinois Department of Financial and Professional
Regulation Dean Martinez announced their appointments on August 25.

Jim Blaydes, SRA, said he believes the appointment will allow him to contribute his time to the agency to
help improve the industry in its current housing turmoil. Blaydes added, ―As past president of the Chicago
Chapter of the Appraisal Institute and an officer of Illinois Coalition of Appraiser Professionals, I have
seen a need to become very proactive to help improve our profession.‖

Gary Harvey, SRA, feels honored and privileged to serve on the Board. ―The Department of Professional
Regulations, along with the current Appraisal Board, is extremely committed to upholding the appraisal
laws of Illinois and protecting the public trust,‖ Harvey said.

T.J. McCarthy, SRA, a reappointed Board Member, is excited to serve another term. ―We have a new
Appraisal Director in Illinois, Brian Weaver, and he is doing great things with the appraisal licensing
bureau,‖ McCarthy commented.

Associate member Lee Lansford, another reappointed Board Member, is both honored and excited to
serve another term. Lansford said, ―The Board serves the interests of the people of Illinois, and I will work
to faithfully fulfill my obligations to those whom I serve.‖

As members of the Board, the appointees will be responsible for reviewing all licensed education and
applications for licenses, handling all disciplinary complaints filed against appraisers and assisting the
State in drafting new Laws and Rules. The Board meets 12 times each year.

They will join appraiser Board Members Robert Gorman, MAI, David DuBois, MAI, and Joseph Alford for
a total of seven appraisers on the Board. Their terms expire on June 30, 2010.

Maine Governor Appoints Mark L. Plourde, MAI, to State Board
Mark L. Plourde, MAI, managing partner of Maine Valuation Company, has been appointed by Gov. John
E. Baldacci to serve on the Maine Board of Real Estate Appraisers. The primary responsibilities of the
Board are to identify qualified applicants for licensure, to issue licenses and renewals to applicants who
have met licensure requirements and to promulgate rules as necessary to ensure protection of the public
to enforce the Uniform Standards of Professional Appraisal Practice. The Board was established to
protect the public through examination and licensure of persons who wish to conduct real estate



14 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
appraisals for a fee in the state of Maine as mandated by the Federal Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.

Plourde, of Standish, Me., is a Cum Laude graduate of the University of Southern Maine with a B.S. Degree
in Business Management. Maine Valuation Company is a full service commercial real estate appraisal
firm. Plourde also served as Investigator to the Maine Board of Real Estate Appraisers from 1998 to
2004, as well as a term on the State Claims Commission from 1998 to 2002.

Virginia to Require Lenders to Disclose Appraisal Fees, Get Background
Checks
Virginia lenders are now required to disclose to mortgage borrowers at the loan settlement any appraisal
fees charged to the borrowers. The bill, S.B. 158, was among legislation that the Virginia General
Assembly recently enacted to help mortgage borrowers. Other legislation included S.B. 797, which
requires lenders to offer certain foreclosure prevention services to solvent homeowners with subprime
mortgages not yet in foreclosure; and H.B. 408, which prohibits certain actions by firms that vow to help
distressed homeowners avoid foreclosure. Mortgage holders are generally exempt from the measure.

In addition, Virginia's Bureau of Financial Institutions toughened its regulation of mortgage lender and
broker firms, including mandating for the first time that executives at loan origination firms agree to be
fingerprinted and subject to nationwide criminal background checks. The August 10 ruling stems from
2008 Virginia General Assembly legislation amending the Virginia Mortgage Lender and Broker Act of
1987. Lawmakers approved the bill, H.B. 1487, which was introduced in response to complaints about
lender practices that contributed to the nationwide foreclosure crisis.



The legislation and regulations set new licensing conditions that:
        require top officials at mortgage origination firms to consent to be fingerprinted and pay for
         nationwide criminal background checks on them;
        mandate that mortgage origination firms subject job applicants to criminal history checks and
         deny employment to applicants who have been convicted of felony or misdemeanor charges
         involving fraud, misrepresentation or deceit.



Licensed firms may ask the Bureau of Financial Institutions, part of the State Corporation Commission, for
a waiver allowing the hire of an individual with a criminal history, according to bureau spokeswoman
Katha Treanor.


For the full text of H.B. 1487, visit http://docket.scc.virginia.gov/vaprod/main.asp, and entering case
number BFI-2008-00289 under "Search Cases." The other bills may be accessed via
http://legis.state.va.us/ by entering the applicable bill number in the bill search box on the left-hand side of
the home page.




15 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
Around the Industry
Appraisal Groups: Inadequate Valuation Consideration in TARP
As the House and the Senate work through proposed changes to the newly proposed Troubled Asset
Relief Program, in which the government will relieve lenders of illiquid mortgage securities, potentially to
the tune of $700 billion, the Appraisal Institute has encouraged policymakers to include valuation-related
language in the massive bill, as well as bring to the fore the many valuation-related issues involved. The
current drafts of the TARP program do not adequately address such critical issues of valuation, according
to a September 24 letter the organization wrote to Treasury Secretary Henry Paulson, Jr., and Federal
Board Chair Ben Bernanke.

―Virtually every level, including the purchase and management of assets, requires specialized real estate
appraisal expertise to promote the protection of taxpayers and the public interest,‖ said Bill Garber,
director of government relations at the Appraisal Institute. ―However, the current proposal pending before
Congress does not sufficiently address valuation concerns, an issue in which the consumers and
businesses in this country need restored confidence.‖

The Appraisal Institute was joined by the American Society of Appraisers, the American Society of Farm
Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers in its
September 24 letter.

The appraisal groups provided several suggestions to protect taxpayers, including:

        Establishing an executive-level chief appraiser to create appraiser qualification criteria at the
         Federal Deposit Insurance Corporation.
        Conducting verifiable portfolio analysis by qualified, local appraisers to increase confidence levels
         in the current market. .
        Protect neighborhood property values by requiring the use of professional, qualified real estate
         appraisers that adhere to generally accepted appraisal standards, to conduct the valuation of
         such property.

―The network of appraisal organizations stand ready to assist the Treasury, FDIC, Congress and others
involved in crafting this critical program to provide accurate valuations of properties used at all levels,‖
added Garber. ―The solution to the current crisis requires massive mortgage renegotiations, and we
strongly believe that expert advice at the street level can restore stability in the mortgage market and
build a foundation to turn the tide for other financials.‖

For the full comment letter, visit
www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2008/AI-ASA-ASFMRA-NAIFAonTARP-
Final.pdf

Financial Assistance Available for Hurricane Victims through AIRF
In response to the recent hurricanes in Texas, Louisiana and Mississippi that have impacted many
Appraisal Institute members and other appraisers, the Appraisal Institute Relief Foundation has issued a




16 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
call for applications for assistance. Through its Relief Foundation, the Appraisal Institute offers financial
assistance to victims of such disasters to aid in their recovery.

Members and employees of the Appraisal Institute and those who have made meaningful contributions to
the appraisal industry are eligible to receive assistance. To apply, fill out an application available at
www.appraisalinstitute.org/about/AIRF/.

The letter also solicited tax-deductible contributions to the Foundation. Donations and completed
applications for financial assistance can be sent to: Appraisal Institute Relief Foundation; c/o Charlie Lee;
Appraisal Institute; 550 W. Van Buren Street, Suite 1000; Chicago, IL 60607. Applications can also be e-
mailed to relieffoundation@appraisalinstitute.org.

The AIRF was formed in 2005 in the wake of Hurricane Katrina. To date, the AIRF has received
approximately $273,000 in chapter, individual member and Appraisal Institute employee contributions,
and has disbursed approximately $73,000 to 44 individuals. Funds received by the AIRF are allocated
directly to victims requiring assistance, with the exception of marginal administrative costs, which have
been limited to required financial accounting services and tax obligations.

For more information about AIRF, visit www.appraisalinstitute.org/about/AIRF/.

Lower-than-Expected Property Appraisals Reduce Lehman Brothers
Settlement
An appraisal of Lehman Brothers Holdings Inc.’s real estate assets has resulted in a settlement of over
$40 million less than expected. On September 20, a U.S. bankruptcy judge approved a revised version of
British bank Barclays Plc's deal to purchase the core U.S. business of Lehman Brothers Holdings Inc.
Included in the revised purchase agreement was real estate totaling $1.29 billion, according to Lehman's
lawyer Harvey Miller. The real estate components of the deal include $960 million for Lehman's New York
headquarters and $330 million for two New Jersey data centers. Miller said Lehman's original estimate
valued its headquarters at $1.02 billion but an appraisal last week from CB Richard Ellis valued it at $900
million.

In a seven-hour Manhattan court hearing that started on September 19 and lasted past midnight, U.S.
Bankruptcy Judge James Peck approved the sale, saying he had found no better alternative for the
assets Lehman sought to sell. "I have to approve this transaction because it is the only available
transaction," he said.

On September 16, Barclays agreed to buy Lehman's North American investment banking and capital
markets businesses for about $1.75 billion after Lehman filed the largest U.S. bankruptcy case in history.
In the revised deal, Barclays would absorb about $47.4 billion in securities and assume $45.5 billion in
trading liabilities, attorneys said. The original deal called for $72 billion in securities and $68 billion in
trading liabilities.

―Appraising in Difficult Market Conditions‖ AppraiserCAST Available Now
The Appraisal Institute’s latest podcast, ―Appraising in Difficult Market Conditions,‖ features a discussion
about appraising in today’s difficult market conditions and the many challenges they pose to appraisers.
Appraisal Institute instructors Mark R. Rattermann, MAI, SRA, and Mark V. Smeltzer, SRA, share their



17 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
insight and offer guidance on this topic. Discussions encompass completing appraisal work in markets
where property values are declining and appraising properties that are in, or entering, foreclosure.

―Appraising in Difficult Market Conditions‖ is the latest in the Appraisal Institute’s AppraiserCAST series of
podcasts that tap the expertise of Appraisal Institute members, who share their knowledge of and passion
for the profession. The podcasts are online audio programs that can be downloaded to personal
computers or portable devices such as the Apple iPod and other MP3 players and can then be accessed
and listened to at one’s leisure.

Past episodes featured updates on the Home Valuation Code of Conduct; Valuation for Financial
Reporting; and green building; as well as tips on contracting government work and expanding your career
horizons.

To download any of the AppraiserCASTs, visit www.appraisalinstitute.org/profession/podcast.aspx.

Success of Mexican Real Estate Market Will Depend on Developer
Adaptability
The negative impacts of the coming United States recession on the coastal real estate markets in Mexico
will depend on the characteristics of the specific market, according to Bruce D. Greenberg, MAI, SRA.
The geographic and financial demographics of the buyers, and the price points and amenities offered by
the developers play a large role in the success of the market, he said, adding that, ―Developers that adapt
to the current market dynamics and accept the nature of the downturn will be able to succeed with
projects throughout the duration of the U.S. downturn.‖

His remarks came in a September 7 speech at the American International Real Estate Expo &
Conference (AIREEC). The presentation spoke to the stability of Mexican markets, especially tourism, the
internalization of the Mexican financial sector, and second-home buyers’ ability to purchase real estate in
Mexico during the current downturn of the U.S. economy.

Greenburg, founder and President of Valuaciones Montaña Verde SA de CV, will speak at numerous
upcoming events: the Congreso Nacional AMPI in Cancun, Mexico; Resort Development in Carlsbad,
Calif.; and two Urban Land Institute events: their annual conference in Mexico City and their Latin
American Conference and Fall Meeting in Miami.

The Appraisal Institute has also delivered some international presentations in recent weeks, including the
                           th
keynote speech for the 24 Pan Pacific Congress by President R. Wayne Pugh, MAI. In the September
23 speech, Pugh addressed preparing for the future of the profession through cooperation with
international organizations and upholding ethics on a global scale. In July 2008, AI representatives
attended the FECISVAL conference in Mexico, with whom the Appraisal Institute is planning a joint
conference in 2009.

Mall Growth Stunted by Economy, Overbuilding
For the first time since the 1990-1991 recession, occupied retail space in major U.S. markets is expected
to decline this year, falling by 1.2 million square feet, projects Property & Portfolio Research.
Overbuilding, along with the darkening economy and slowing consumer spending, has seen some big




18 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
retailers curtailing expansion and closing stores, leading experts to say that the current high occupancy
rates at malls and strip centers may not return for years.

According to Property & Portfolio Research Inc. of Boston, developers have built one billion square feet of
retail space in the 54 largest U.S. markets since the start of 2000, 25 percent more than what they built
during the same period of the 1990s. In 2007, occupied space grew nearly 61 million square feet, the firm
says. Retailers like Wal-Mart Stores Inc., Home Depot Inc. and Starbucks Corp. helped drive the building
boom. A sign of the times, Home Depot announced it would close 15 unprofitable stores and cancel 50
proposed ones earlier this year.

Green Street Advisors, a real-estate research firm, says 13 strip shopping centers under development
have been canceled this year and 90 others have been delayed by the seven shopping-center developers
it monitors.

Shopping-center owners with a hefty focus on development are compensating for the construction
slowdown by trying to raise rents, sell older centers and shift development abroad. David Simon,
chairman and chief executive of Simon Property Group Inc., the largest U.S. mall owner with 323 malls,
sees "a decade of little new development" and a shakeout. "There were a lot of projects that shouldn't
have been built" in recent years, he said.

Retailers, however, are benefiting from the building boom. As a result, they are experiencing cheaper
rents, shorter lease terms and larger allowances from landlords for outfitting stores. This year, the rents in
new lease signings are 10.4 percent lower on average than the asking price, says market researcher Reis
Inc. of New York.

OSCRE Publishes Lease Abstract Standard
A standard designed to support the exchange of condensed summaries of lease documents between
landlords, tenants, brokers, leasors, portfolio managers and other stakeholders was published September
16. The Open Standards Consortium for Real Estate, the leading standards development organization for
the real estate industry, published the Lease Abstract Exchange Standard Version 1.0 to enhance
accuracy and speed of data exchange, provide a universal data format for exporting and importing data to
and from different software systems, and reduce software capital expenses & integration requirements,
according to a release. OSCRE also aimed to support single original entry and reuse of accurate data
and increased productivity for accounting, property and facilities management and work orders, a
spokesperson said.

OSCRE Standards are initiated and developed by member organizations looking to improve the high
value and high cost business processes. The Appraisal Institute is a member organization.

The first phase of the standard is intended for use in United States commercial settings with incremental
updates planned in phases to adapt the standard for use in other countries and regions. Due to strong
interest by the business community, software vendors have begun implementing the Lease Abstract
Standard into their products to meet the demand to do more with less, faster and with increased quality.

For more information on OSCRE, or to download any of their standards, visit www.oscre.org.




19 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
New Construction, Coercion Addressed in ASB’s September Q&A
Sales history for new construction, appraiser coercion, and confidentiality and review appraisers were the
main topics addressed by the Appraisal Standards Board in its September USPAP Q&A.

The ASB said that in the case of a site with newly constructed improvements, all prior sales history of the
site should be analyzed, per Standards Rule 1-5(b). To be consistent with the purpose of USPAP and
intent of SR 1-5, an appraiser is required to analyze all prior sales that include the subject property, the
ASB said.

The ASB further ruled that while USPAP does not require an appraiser to certify in his or her appraisal
report that he or she has not been coerced to provide predetermined results, such a statement would be
consistent with the requirements of USPAP Standards Rule 2-3, which requires the appraiser to certify
that his or her ―engagement in this assignment was not contingent upon developing or reporting
predetermined results.‖

In terms of the Confidentiality section of the Ethics Rule, the ASB said that appraisers are allowed to
discuss an appraisal with a review appraiser as long as authorization from the client is received. The
Confidentiality section of the Ethics Rule states that ―an appraiser must protect the confidential nature of
the appraiser-client relationship.‖ Appraisers may disclose confidential information or assignment results
relating to an assignment to the client and persons specifically authorized by the client.

Also addressed in the September Q&A was inclusion of state appraisal licenses in appraisal reports.
USPAP does not directly address the issues of appraiser licensing, however, some licensing jurisdictions
have laws that govern the circumstances under which a licensee may provide a copy of his or her license.

For the full Q&A, visit
www.appraisalfoundation.org/s_appraisal/bin.asp?CID=12&DID=1246&DOC=FILE.PDF.

Marred by Allegations of Overestimated Assessment
New York City officials may have manipulated the new New York Yankee’s stadium’s assessed value by
10 times its market value to obtain an IRS tax exemption, according to a charge by New York State
Assemblyman Richard Brodsky. At a September 18 hearing, the Domestic Policy Subcommittee looked at
the financing of the new $1.3 billion Yankee Stadium in New York City. According to Brodsky, an
outspoken critic of the stadium’s financing, the city used comparable land values in Manhattan rather than
the South Bronx to determine the assessed value of the property. Rep. Dennis Kucinich, D-Ohio, who
heads the House Oversight and Government Reform Subcommittee, echoed Brodsky’s views stating that
he found "waste and abuse of public dollars" in the financing of the stadium. Brodsky testified to the
congressional panel that between $550 million to $850 million of taxpayer money has been earmarked for
this project.

New York's mayor Michael Bloomberg, who did not attend the hearing, stated earlier that the stadium is
"a great project."

"We want these kinds of facilities here. Having new stadiums is as important as other things in terms of,
not just the spirit for the people who live here, but our economy," Bloomberg said. Kucinich disagrees, "In
the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars



20 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
subsidizing a project that is for the exclusive benefit of a private entity, the Yankees, but also we have
discovered serious questions about the accuracy of certain representations made by the City of New York
to the federal government."

According to Kucinich, the congressional panel found "substantial evidence of improprieties and possible
fraud by the financial architects of the new Yankee Stadium." No one from the either the city or the
Yankees spoke at the hearing. Yankees representatives have agreed to testify at a later hearing to be
held October 7. Discussions with New York City officials regarding their appearance before the
subcommittee are ongoing.

Expert Discusses Distressed Real Estate Valuation
Realizing the importance of keeping its members up-to-date on new valuation techniques to measure
value in the current economic environment, the Metro New Jersey Chapter of the Appraisal Institute
recently conducted the popular seminar, Analyzing Distressed Real Estate. The seminar, which took
place on September 12 at Rutgers University Inn, was lead by James MacCrate, MAI, SRA, and was
attend by real estate brokers, property owners and property appraisers. The four-hour seminar is
designed to benefit real estate professionals, appraisers and brokers in their review and analysis of
distressed real estate. The seminar also examines the relationship between entrepreneurial incentive,
debt, investment risk and value in today's real estate market.

―Major downturns have occurred in the last 40 years when capital is difficult and/or costly to obtain and/or
when over-building has occurred. As businesses go through recessions, contractions, and revivals –
which lead into the next expansion cycle – real estate follows a similar sequence of changes. The
durations of the real estate cycles vary," MacCrate stated. "As a result of this decline in real estate values,
it is less likely that baby boomers, who drove the real estate market for the last 35 years and are now
reaching retirement age, will continue to invest in real estate."

MacCrate will also be presenting this seminar for the Connecticut Chapter of the Appraisal Institute on
October 13. MacCrate, along with Ted Anglyn, MAI, Brent Tozzer, MAI, and Jeffrey Miller, MAI, CCIM,
are currently updating the seminar and extending it to seven hours. The revised program will provide
critical insight on how capital markets affect distressed real estate and will address why market analysis is
imperative to effectively analyzing these type properties. Key additions will include how to value a failed
subdivision and how a land-residual technique can aid appraisers and analysts in forecasting value on
vacant land. The release date for this update is still to be determined.

Bank of America Purchases Merrill, Feds Bailout AIG, Lehman Averts
Bankruptcy
After substantial negotiations between federal officials and Wall Street executives, in an effort to stave off
a downward spiral in the markets, Bank of America has agreed to buy Merrill Lynch; the federal
government has extended a loan to AIG to prevent the insurer from filing for bankruptcy; and Barclays
purchased Lehman Brothers after it filed for bankruptcy on September 15. It remains unclear how the
markets will react by these events and whether other financial institutions will falter.

Bank of America has offered to purchase Merrill Lynch for $50 billion. The stock-based purchase will
create a global financial giant involved in everything from fixed-income trading to stock underwriting to
credit card lending. ―Acquiring one of the premier wealth management, capital markets, and advisory



21 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
companies is a great opportunity for our shareholders,‖ Bank of America Chairman and Chief Executive
Officer Ken Lewis said. ―Together, our companies are more valuable because of the synergies in our
businesses.‖ As part of the deal, Merrill’s 15,000 brokers will merge with Bank of America’s smaller group
of financial advisors. The new entity would rival Citigroup, the largest U.S. bank in terms of assets.

To prevent AIG from filing for bankruptcy, the Federal Reserve intervened on September 16 by providing
the privately held company with a two-year $85 billion emergency loan after losing billions of dollars
resulting from the deterioration in the mortgage and credit markets. In exchange, the government will get
an 80 percent stake in the world’s largest insurer and have the right to remove senior management.
Under the deal, AIG will repay the money in full with proceeds from the sale of some of its assets. ―Policy
holders will be protected, jobs will be saved,‖ commented New York Gov. David Paterson. The
government opted for the highly unusual corporate rescue to prevent further instability from occurring
through the nation’s already-stressed financial system.

A major concern during the meetings was to avert a rapid liquidation of Lehman Brothers, which has been
hit hard by the credit crisis and falling real estate values. After filing for bankruptcy protection on
September 15, Barclays, Britain’s third-largest bank, purchased the 158-year-old financial institution’s
North American investment banking and trading operations for the cut-rate price of $250 million.

In light of the current credit crisis, the Federal Reserve has announced new initiatives to expand
emergency loan programs. According to Fed Chairman Ben Bernanke, the central bank is broadening the
types of collateral that financial institutions can use to obtain emergency loans. They’ve agreed to set up
a $70 billion loan pool that banks, brokerages and other financial companies can access if necessary.

London’s LIBOR Rate Surge Hits U.S. Mortgages
A surge in the overnight London Interbank Offered Rate (LIBOR), to 6.44 percent September 16, may
create a further downward spiral in the already struggling U.S. housing market. In addition, shorter-term
gains in LIBOR rates may indicate future increases as risk continues to grow and lenders demand higher
compensation. According to the British Bankers’ Association, the rate surged 3.33 percentage points, its
biggest jump in at least seven years.

Daily LIBOR rates are used to calculate monthly adjusting mortgage resets, including some option ARMs.
Approximately six million U.S. mortgages consisting mostly of subprime and prime adjustable rate
mortgages are linked to LIBOR. Because many U.S. mortgages linked to LIBOR do not limit the size of a
loan’s first reset, a monthly mortgage payment could double or even triple.

Home prices in the U.S. will most likely continue to decrease through 2010, according to a statement by
Freddie Mac on September 15. ―If the LIBOR market seizes up and stays that way, it’s going to
complicate everything,‖ said Bill Fleckenstein, president of Fleckenstein Capital in Seattle. ―What you are
seeing is the unwinding of the financial system as we know it.‖

Tightening Credit Market Leads to Cash Real Estate Purchases
As the credit market continues to tighten, potential home buyers are struggling to obtain financing. As a
result, many buyers are turning to cash. ―Cash is king right now,‖ said Jack McCabe, a Florida real estate
analyst. ―To get a loan these days you have to have really excellent credit, a minimum 700 FICO score;
some even want 720 or 740.‖ Over the past year, Florida real estate companies have been experiencing



22 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
an increase in cash transactions. ―Cash buyers are definitely playing a bigger part in what is a shrunken
marketplace,‖ McCabe said.

According to Budge Huskey, southeast region executive vice president at NRT LLC, one of the largest
residential real estate brokerages in the nation, the credit crunch has been particularly hard in Florida.
NRT’s cash transactions increased from only 25 percent in August 2007 to nearly 40 percent, he said. ―Is
that because everyone suddenly has more cash? No, I don’t think so,‖ Huskey said. ―It’s because
individuals who would have been buyers were unable to obtain a mortgage. They were effectively
removed from the market.‖

Michael Saunders & Co. spokesperson Tom Heatherman echoes Huskey’s views. From January to
August 2007, 38.5 percent of Saunders’ sales involved buyers paying cash. However, between the same
period this year, 54.5 percent of transactions involved cash.‖ The tightening of the credit market is
certainly a factor,‖ Heatherman said. ―We’re talking about being up almost 20 percentage points this year
versus last year, so the market is obviously at work here.‖

The upper end of the real estate market has historically involved more cash purchases. According to
Steve Bailey, vice president of Premier Properties of Southwest Florida, the high-end market is different
when it comes to cash. The majority of his firm’s luxury transactions do not involve a mortgage. ―At those
higher price points, we have 70 or 75 percent of our buyers using cash,‖ Bailey said. However, although
transactions may be done with cash, it does not mean the buyer is not borrowing from another source.
―They can be tapping into a margin account, or a personal trust, or any number of other options people on
that level frequently have available to them,‖ Bailey noted. Because of this, it can be difficult to put a
figure on how many deals are truly conducted without any borrowing.

Appraisal Institute to Present at Green Building Conference
The Appraisal Institute will offer its one-day seminar, An Introduction to Valuing Green Buildings, in
conjunction with Greenbuild, the U.S. Green Building Council Conference, November 18. Geared toward
those who want to learn long-term cost-benefit analysis and the implication for the building valuation
process, the seminar has been approved by the U.S. Green Building Council Education Provider
Program.

The seminar explores the history of the ―green‖ building movement in the U.S. such as design principles,
cost-benefit analysis and the implications for the valuation process, including how buildings are analyzed
and valued for investment purposes. At the end of the seminar, participants will be able to:
     Identify the relevant components of a sustainable property.
     Discover green buildings resources.
     Evaluate construction costs in the context of long-term benefit, capital and operating costs, and
        relative to net income from operations and reversion.
     Analyze the relevance of green features in the marketplace.
     Assess market and investment risks relative to potential rewards.
     Identify who pays the costs and who receives the benefits for the sustainable elements
        incorporated in green construction.
     Provide a competent and reliable estimate of market value in the context of available data.




23 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
Each year, Greenbuild offers a wide selection of USGBC LEED (Leadership in Energy & Environmental
Design) workshops taught by highly qualified LEED Faculty™ and industry experts before and after the
conference education sessions. For workshop descriptions, visit
www.greenbuildexpo.org/Program/leed_workshops.html.

Greenbuild itself will take place November 19-21 at the Boston Convention and Exhibition Center at 415
Summer Street in South Boston. The Appraisal Institute course will be offered November 18 from 8:30
a.m. to 5 p.m. at a cost of $495. While workshop attendees are not required to sign up for the conference,
to register for the workshops, attendees must go through the normal conference registration. To do so,
visit www.greenbuildexpo.org/Register

For more information on Greenbuild, visit www.greenbuildexpo.org/Program/.

Basic Appraiser Education Online at a Package Discount
Appraisers registering for any of the three newly packaged online education offerings, will save 15
percent off the individual course prices. The price discount is applicable for the Appraisal Institute’s 75-
Hour Appraiser Trainee Licensing Package; 75-Hour Licensed Residential Appraiser Package Upgrade;
and 150-Hour Licensed Residential Appraiser Package. These online packages are geared toward
students looking to begin or continue their appraisal careers.

The 75-Hour Appraiser Trainee Licensing Package caters to anyone thinking of starting a career as a real
property appraiser. It includes the courses 30-Hour Basic Appraisal Principles, 30-Hour Basic Appraisal
Procedures and 15-Hour National USPAP Online Equivalent.

For appraiser trainees looking to become a licensed residential appraiser, the 75-Hour Licensed
Residential Appraiser Package Upgrade offers the next level of education to achieve that goal. The
coursework includes 15-Hour Residential Market Analysis and Highest & Best Use; 15-Hour Residential
Report Writing and Case Studies; 30-Hour Residential Sales Comparison and Income Approach; and 15-
Hour Residential Site Valuation and Cost Approach.

The 150-Hour Licensed Residential Appraiser Package is for beginning appraisers who are committed to
a real property appraiser career and are looking to earn their Residential Appraiser License. It
encompasses both of the above packages.

For more information about online education, visit www.appraisalinstitute.org/online, e-mail
tbe@appraisalinstitute.org, or call 312-335-4207.

2008 Fall Resources Catalog Available Online
In addition to the annual print version, the Appraisal Institute 2008 Fall Resources Catalog is available
online in an easy-to-use, interactive version. Resources contains all of the Appraisal Institute’s
publications, classroom education, and online education programs offered this fall.

Yoon Hernandez, Appraisal Institute Online Marketing Manager, said the interactive version offers
ultimate convenience to readers everywhere since they can virtually ―flip through‖ the catalog wherever
they have Internet access and can conduct quick keyword searches to find exact Appraisal Institute




24 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
offerings they’re looking for. ―Since the digital catalog is fully interactive, you can also buy an AI book or
register for an AI course as you’re browsing,‖ Hernandez said.

Resources is issued semi-annually and sent via mail to all AI members. The online version is available to
members and non-members, at www.appraisalinstitute-digital.com/resourcescatalog/2008fall/. The next
Resources will be released in spring of 2009.

Second Quarter Investor/Lender Lawsuits Jump
Mortgage-related litigation and legal actions filed in the second quarter by shareholders against mortgage
firms jumped by more than 50 percent from the prior quarter. Those were the findings announced in the
Second Quarter Mortgage Litigation Report, based on 45 lawsuits and other legal actions covered by
MortgageDaily.com during second-quarter 2008.

During the second quarter, 14 investor lawsuits filed against mortgage companies were tracked by
MortgageDaily.com. According to the report, four investor class actions were filed against IndyMac
Bancorp Inc., three investor lawsuits were filed against Downey Financial Corp. and Franklin Bank Corp.
faced at least two shareholder lawsuits.

Other case types covered in the report include compliance, foreclosure and mortgage fraud. New actions
on active mortgage-related cases tied to bankruptcy, employment, secondary marketing and servicing all
eased from the first quarter. Cases tied to individual bankruptcies and foreclosures are generally
excluded from the report, which was prepared with the assistance of Washington, D.C.-based Weiner
Brodsky Sidman Kider PC.

FDIC Stands Ready for More Expected Bank Failures
Federal Deposit Insurance Corporation Chairman Sheila Bair said more banks will fail this year, and
stressed that "it is absolutely critical that [banks] get [their] balance sheets in order." Her comments came
during a September 4 Florida Bankers Association dinner in Sarasota.

Stating that the credit downturn is far from over, Bair said asset quality problems are putting more
pressure on the funding side of the balance sheet, with liquidity problems having contributed in varying
degrees to all 10 bank failures that have already occurred this year. "Given the trajectory [and a weak
economy], strong liquidity management is more important than ever," Bair stressed, and added that
having enough cash, securities, and other marketable assets on-hand is absolutely vital. "The same can
be said for the ability to maintain stable funding from core deposits and other funding sources," she said.

She warned that liquidity problems can hit an institution fast and hard, "which is why it is so important to
have ample liquidity on hand and readily available." Early warning signs of liquidity pitfalls down the road
include:
      rapid asset growth funded by potentially volatile liabilities;
      reliance on large depositors or concentrated funding sources;
      offering rates significantly above the local deposit market and through Internet sites;
      negative publicity;
      a decline in asset quality or earnings performance;
      counterparties who increase collateral requirements; and
      shrinking, or outright loss, of credit lines.



25 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
The FDIC is revisiting its off-site monitoring to better detect those problems, Bair said, and added that the
goal was to help on-the-ground examiners identify and resolve them promptly. The week of August 25,
the regulator sent a letter to top executives at all banks FDIC supervises to highlight the agency's
concerns, Bair said. "Bankers must understand the stability and volatility of the funding sources they use,"
she stressed. "If a bank relies on volatile, and credit sensitive, liquidity strategies and other complex
strategies ... like securitization and secondary market sales ... management should step up liquidity risk
measuring and monitoring."

Bair put this in perspective by highlighting the banks that have failed so far this year and noting that in the
year leading up to their demise, growth in brokered deposits was more than 100 (going from 9 percent of
assets to more than 20 percent). At the same time, their asset growth was nominal at about 4 percent.

In spite of the recent draw down to cover losses, the deposit insurance fund "is in a strong financial
position to weather a significant increase in bank failures," Bair said. The fund currently stands at $45
billion, and a steady stream of premiums is coming in. In addition, the FDIC also has a $30 billion line of
credit at Treasury that it could draw on if needed to cover additional losses. However, Bair said, "We don't
expect to have to use this line."

WaMu Suit Settled out of Court
The case between California appraiser Jennifer Wertz and Washington Mutual Bank, First American
Corp., eAppraiseIT, Lenders Services, FNIS, Inc., and Susan Richter, has been settled out of court.
Wertz, who filed a 12-count lawsuit against the defendants in January 2008, stated, ―The case has been
settled to the mutual satisfaction of the parties.‖ The amount of the settlement and terms of the
agreement are sealed by the court.

The case stemmed from a request by Richter, a Sales Manager employed by WaMu, who in May 2007,
allegedly insisted that Wertz change her appraisal report to indicate ―stable‖ market conditions instead of
―declining‖ so that a loan could be approved. Wertz contested that her appraiser independence from
outside influence was violated.

The other two parties were involved in that in July 2006, WaMu began outsourcing its appraisal work
through LSI and eAppraiseIT. Wertz said she accepted offers to provide appraisal work for these entities.
However, in June 2007, shortly after Richter requested that Wertz change the reports and she refused to
do so, Wertz alleged that WaMu demanded that LSI and eAppraiseIT not use her services to complete
any more appraisals.

To view the complete case, visit
http://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/files/WertzPrimarySuit.pdf.

Updated Real Estate Damages Textbook Now Available
The Appraisal Institute recently released Real Estate Damages: Applied Economics and Detrimental
Conditions, second edition, which provides a framework for applying fundamental economic principles
and innovative valuation techniques to address the unique problems that arise in complex valuation
situations.




26 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
This updated text, authored by Randall Bell, MAI, with contributing authors Orell C. Anderson, MAI, and
Michael V. Sanders, MAI, SRA, contains basic tools for detrimental condition analysis, a review of 10
classifications of detrimental conditions and updated and expanded listing of reference works and
relevant agencies, associations and online resources. It presents straightforward procedures for solving
complex, sometimes even catastrophic, valuation problems with added discussion of the September 11
terrorist attacks, the 2004 tsunami and Hurricane Katrina. New, real-life case studies on landslides,
infestation, mold and construction defects are also included.

Real Estate Damages is being offered to members for $45 and non-members for $55, plus shipping &
handling. To access the table of contents or order online, visit
www.appraisalinstitute.org/realestatedamages or call 800-504-7440 (between 8a.m.–5 p.m. ET). Use
promotion code RED08E when ordering.

Forecasting Revenue Seminar Now Offered Online
Forecasting Revenue is now available in an online format. Developed by William ―Ted‖ Anglyn, MAI, this
online seminar’s seven modules provide insight on rent levels, vacancy and suggestions for additional
revenue sources from all income-producing types. The foundation of the program is comprised of
analyzing rent rolls, calculating and forecasting base rent, and forecasting rent on vacant space.

Forecasting Revenue is geared toward owners, brokers or appraisers of income-producing real estate. It
is approved for seven hours of Appraisal Institute continuing education credit. Registration fee is $114 for
members; $137 for non-members For more information or to register for an online session, visit
www.appraisalinstitute.org/education/seminar_descrb/Default.aspx?sem_nbr=OL-787&key_type=SO.

Slight Home Appreciation Seen in July
There was nearly a full percent appreciation in house prices on a national level in July, according to a
September 9 release by Integrated Asset Services, LLC. The July 2008 IAS360 House Price Index
showed a 0.9 percent increase, which reflects a -11.4% decline from July 2007 to July 2008.

The monthly IAS360 House Price Index is a comprehensive housing index tracking monthly change in the
median sales price of detached single-family residences across the U.S. The index, based on all arms-
length transactions, tracks data at a ―neighborhood‖ level, reports on the changes in 360 counties, nine
census divisions, four regions, and the nation overall.

At the broader census region level, results for July show three out of four U.S. census regions
experiencing gains in house prices, with only the West region continuing to show a decline. On a year-
over-year basis, however, all four census regions are still posting losses, the most notable being the
West, the only region with a double-digit decline, according to the report.

Results for the month of July at the Census Division level showed six out of nine U.S. census divisions
posting gains during July, but only two—East North Central, which posted the largest jump in July, and
West South Central, which posted the largest decline—have appreciated year over year.

Due to the timeliness of the data, the IAS360 House Price Index is subject to revisions on a monthly
basis. IAS also provides ―neighborhood‖ level house price trends through its iMVI product. More
information on iMVI can be found on the IAS website, www.iasreo.com/cs.html. IAS, founded by REO



27 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
industry experts, specializes in default mortgage services including valuation, reconciliation and full cycle
REO disposition. For more information, visit www.iasreo.com.

HVCC Topic of Latest AppraiserCAST, Upcoming Webinar Series
The pending Home Valuation Code of Conduct and the potential impact on the valuation industry is the
topic of the latest Appraisal Institute podcast. In the latest AppraiserCAST, Director of Government and
External Relations Bill Garber discusses the agreement that spurred the creation of the HVCC as well as
key developments since the April 2008 comment period. The new AppraiserCAST is available
www.appraisalinstitute.org/profession/podcast.aspx.

The HVCC also plays a prominent role in the Appraisal Institute’s upcoming Appraiser Independence
Webinar Series. Part I of the three-part series, Appraiser Independence: Home Valuation Code of
Conduct, will be held immediately after the release of the HVCC, expected to be released in the coming
weeks. Keynote speaker Kenneth R. Harney, columnist for the award-winning, nationally syndicated
column titled ―The Nation’s Housing,‖ will join issue experts Jacqueline Doty, Director of Collateral Policy
for Freddie Mac, and Robert T. Murphy to discuss the fundamentals of the HVCC and the code’s wide-
ranging impact on the appraisal industry.

As supplements to Part I, Part II and Part III of the series will highlight recent policy changes promoting
appraiser independence, including the HVCC, Regulation Z (Truth in Lending Act) and Federal Housing
Administration appraisal reforms. The viewpoints of veteran residential fee appraisers, lenders and
appraisal management companies, as well as FHA representatives, will comprise the webinars. The cost
for each webinar is $35 for members; $75 for non-members. More details and online registration will be
available soon at www.appraisalinstitute.org.

Valuing Historic Preservation Easements Course to Debut Soon
Intensive training and discussion on the valuation of historic preservation easements and a focus on
appraising the value of preservation easements donated as charitable gifts under the Internal Revenue
Code will be the focus of a new Appraisal Institute course. In October, the Appraisal Institute will launch
Appraising Historic Preservation Easements in Chicago, which will feature methods and techniques that
can also be applied to the appraisal of preservation easements granted in order to obtain either state or
local income tax or property tax deductions/credits.

Appraising Historic Preservation Easements is geared toward certified real estate appraisers who
appraise income-producing properties or single-family homes, IRS agents, real estate attorneys,
preservationists and anyone involved in historic preservations. Registration fee is $325 for Appraisal
Institute members; $375 for non-members. This course has been approved for 20 hours of Appraisal
Institute continuing education credit and has been submitted for 20 hours of state continuing education
credit.

For more information or to register for an upcoming offering in Chicago, New York or Alexandria, Va., visit
www.appraisalinstitute.org/education.

Timely FHA Appraising Seminar to Debut September 12
As a result of Congress’ recent mandate that Federal Housing Administration appraisers demonstrate
verifiable education on FHA appraisal requirements, the recent elimination of the FHA exam, and FHA



28 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
and Fannie Mae appraising becoming increasingly similar to one another, the Appraisal Institute is
unveiling Introduction to FHA Appraising: What Appraisers Need to Know about HUD Policies,
Procedures and 2008 Roster Eligibility to keep appraisers up-to-date on the latest information regarding
the FHA appraisal process. The seminar will provide both experienced and novice FHA appraisers a high
level of understanding and knowledge regarding today’s FHA appraisal policies.

Introduction to FHA Appraising: What Appraisers Need to Know about HUD Policies, Procedures and
2008 Roster Eligibility is ideal for all residential appraisers who want to expand their business. Offerings
begin September 12 in Troy, Mich., with another 10 offerings slated over the next month, nationwide.
Registration fee is $175 for Appraisal Institute members; $225 for non-members.

For more information and to register for an upcoming seminar, visit
www.appraisalinstitute.org/education/seminar_descrb/Default.aspx?sem_nbr=806&key_type=SO.

For those unable to attend the seminar, the Appraisal Institute’s companion online course, FHA and the
Appraisal Process, is available on an ongoing basis. Registration fee is $114 for members; $137 for non-
members. For more information or to register, visit
www.appraisalinstitute.org/education/seminar_descrb/Default.aspx?sem_nbr=806&key_type=SO.

AARO Responds to Attack on Appraiser Regulation
The Association of Appraiser Regulatory Officials has come out against a recent Associated Press report
that characterizes the national system of real estate appraisal regulation as ―crippled‖ and ―ineffective.‖
The August 18 AP report explored the effectiveness of Title XI of FIRREA, Congress’ mandate for U.S.
states and territories to pay their own way in the organization and administration of their appraisal
regulatory programs that certify and regulate real estate appraisers.

AARO said the majority of appraiser regulatory agencies function properly and in compliance with
FIRREA and that since the current system’s launch, jurisdictions have imposed thousands of sanctions
against appraisers. Prior to the current system of national regulation, no disciplinary actions were levied
against incompetent or unethical appraisers, according to AARO. In addition to the sanctions, thousands
of appraiser applications for licensure or certification have been denied, which has prevented ―unqualified
or unethical individuals from entering the profession.‖ Another means of regulation is the Appraisal
Subcommittee’s biennial field audits of regulatory jurisdictions to ensure compliance with FIRREA.

AARO said it is continually working to improve appraiser regulation, including its new two-and-a-half day
Appraiser Regulatory Investigator Training Course, which will improve a jurisdiction’s ability to process
appraiser enforcement cases and promote a higher degree of consistency of enforcement between
jurisdictions and within each jurisdiction. The course is scheduled to begin in the first quarter of 2009.

The Appraisal Institute used the same AP report in an August 19 letter to all members of the Senate
Banking Committee, to reiterate its concern about the lack of responsiveness by some federal and state
appraiser regulators in carrying out Title XI responsibilities, particularly when it comes to enforcing
requirements imposed by state appraiser regulatory agencies. The AI noted that the article has brought
the ―same imperfections of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 into the public dialog that the Appraisal Institute has been expressing to Congress since 2001.‖




29 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
To view the AI’s letter to the Senate, visit the Comments section at
www.appraisalinstitute.org/newsadvocacy/letrs_tstimny.aspx.

Unreleased Appraisal at Heart of 9/11 Land Dispute
An unreleased appraisal is stalling the sale and bringing to a stalemate a deal for a quarter-acre of a
Shanksville, Pa., land that overlooks the meadow where United Flight 93 crashed on September 11,
2001. Svonavec Inc., a local coal company that owns the land, has allowed the public’s free use of it for
the ―temporary‖ memorial, as it has been known, but had in 2006 asked for the right to collect donations
to pay for security. When denied that request, the company allowed for two more years of use, but
terminated that ―handshake‖ lease effective September 5.

The two-and-a-half years of negotiations with the company since 2006 have been strained according to
Patrick White, vice president of Families of Flight 93, a group trying to buy the land. White said that
Svonavec’s treasurer, Michael Svonavec, told the families group that he thought the land was ―worth $50
million, but you can have it for $10 million.‖ Svonavec said he never made the comment. In June, the
Park Service resubmitted to Svonavec Inc. the same offer it had made the year before: $250,000 for the
273 acres. The company has not made a counteroffer, Svonavec lawyer Patrick Svonavec said, because
it has not been given copies of two appraisals the Park Service had done and then rejected. ―I suggest
what they’re doing is hiding the appraisal,‖ he said. ―And I guarantee you we could all sit down and
negotiate this tomorrow if they’d release the appraisals.‖

Joanne Hanley, the Park Service superintendent for the Flight 93 National Memorial, said the appraisals
were rejected because they did not conform to the standards of the Department of the Interior, which
oversees the service.

The ―temporary‖ memorial has moved just across the road, on about an acre of land that is part of some
900 acres that Families of Flight 93 bought this year. The Park Service and the group still wants to buy
the 273 acres that include the temporary site and most of the ―sacred ground‖ where Flight 93 crashed,
which is most critical to a proposed 2,200-acre permanent memorial.

Lawyer Patrick Svonavec said the Park Service was welcome to continue to use the land without a lease.
―We don’t want them to move,‖ Svonavec said.

Vice President White said he remained optimistic that a deal could be worked out soon. The goal is to
open the $58 million first phase of the permanent memorial in 2011, the 10th anniversary of the attacks.
To achieve that, the Park Service said construction must start next summer.

Hanley Wood: Home Sales, Market Confidence Rises
Sales of both new and existing homes posted monthly gains in July, the first time since July 2007 that
both sectors posted increases in the same month. New home sales in July rebounded off their lowest
levels seen since September 1991 in June and inventory continues to fall. These combined trends will
improve the supply/demand imbalance in the market, according to Hanley Wood Market Intelligence.

New home sales in July increased 2.4 percent to a seasonally-adjusted 515,000 homes, up from 503,000
in June. Sales for the previous three months, however, were revised lower by 46,000 units. The number



30 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
of new homes for sale continued to decline as builders pulled back production. New home inventory
declined to 416,000 units, which is the lowest it has been since October 2004. In July, median new home
prices increased for the second straight month to $230,700.

Annualized sales of total existing homes in July rebounded to its strongest pace since February. Sales
increased 3.1 percent from June levels to 5,000,000 units. Sales of existing homes are down 13.2 percent
from the 5.76 million units in July 2007. Median existing home prices in July declined to $212,400 from
$215,100 in June. This is the first time since February that median existing home prices posted a monthly
decline. The number of existing homes for sale increased 3.87 percent to 4.7 million units. At the current
sales pace, there are 11.2 months of existing homes supply on the market which is an all-time high.

National average mortgage rates declined to 6.40 percent in the August 28 Freddie Mac Primary
Mortgage Market Survey, the second straight week that rates have declined. Furthermore, the August 22
Mortgage Bankers Association’s seasonally adjusted Purchase Mortgage Index increased slightly to
315.9, a 0.6 percent increase from the prior week’s 314.0, but a 25.5 percent drop from the same period
last year.

The positive reports on the housing and economic fronts helped the markets regain some confidence in
late August, according to the Hanley Wood release. Preliminary Growth Domestic Product estimates
showed the U.S. economy growing at a surprisingly healthy pace while the Consumer Confidence Index
posted its second straight monthly gain.

Real Estate Roundtable: Low Expectations for Commercial Real Estate
Market in Coming Year
A survey released August 12 shows that commercial real estate is suffering under the weight of troubles
in the U.S. financial markets and the overall economic slump. These two factors led to low expectations
for the real estate market in the upcoming year, dropping 10 percentage points to 53 percent since the
last survey, taken in April, according to the Real Estate Roundtable, an organization of real estate
ownership, development, lending, management firms and trade associations.

―Real estate executives clearly feel today that market conditions have deteriorated over the last 12
months,‖ said Jeffrey DeBoer, the Roundtable’s president and chief executive officer. Decision-makers
feel that the real estate income-producing economy is in trouble. ―Although there are regional pockets of
commercial real estate strength and weakness, as is the case in residential real estate markets, survey
respondents generally represent national firms, and therefore, their answers reflect nationwide market
concerns,‖ DeBoer added.

Access to debt financing has played a large role. Ninety-five percent of the 110 respondents said that
access debt financing is worse than one year ago. DeBoer said that both commercial mortgage-backed
securities and bank financing are among drivers to blame for these low sentiments. In addition, 74
percent of respondents said access to equity financing has been reduced since last year, and nearly 90
percent believe that property values will plateau or drop slightly over the next year.

The survey, the Roundtable’s second, was conducted in the first two weeks of last month. It will be
produced quarterly.




31 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
CREW Joins FIABCI as a Principal Member
The International Real Estate Federation (FIABCI) has approved the CREW (Commercial Real Estate
Women) Network as its latest principal member. Members of the CREW Network, which is dedicated to
the advancement of women in commercial real estate, practice in over 66 major markets across North
America and represent every discipline within the industry.

―We welcome CREW as a Principal Member in FIABCI and look forward to networking with this
prestigious group of quality professionals,‖ said Charles Tyler Clay, President of FIABCI USA.

Lynny Osenbaugh, MAI, 2008 CREW Network President, said, ―We’re very excited to have been
accepted as a principal member within the International Real Estate Federation.‖ Osenbaugh, President
of Osenbaugh & Associates, Inc. a Houston-based real estate firm, added, ―FIABCI brings together so
many different cultures and countries within the real estate industry and this is very important in a world
that is clearly becoming more globally oriented.‖

FIABCI, of which the Appraisal Institute is a principal organization as well, is an organization of real estate
professionals in 65 countries which represents more than 100 national real estate associations, over 2
million professionals, and serves as special consultant with NGO status to the Economic and Social
Council of the United Nations Organization. FIABCI helps members acquire knowledge, develop networks
and optimize business opportunities throughout the world. For more information, visit www.FIABCI.org.




32 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
Inside the Institute
Appraisal Institute Issues 45-Day Notice
At its November 7, 2008, meeting in San Antonio, Texas, the Appraisal Institute Board of Directors will
consider proposed amendments to the Appraisal Institute Bylaws and Regulations, including changes to
the Leadership Development and Nominating Committee; training and transition for the associate
member on Board of Directors; and education requirement equivalencies for both residential associate
members outside the United States and for dual associate members (commercial and residential).

Other proposals relate to a requirement to attend at least 200 class hours for SRA membership; an
equivalency for College Degree Requirement for SRA Membership; and continuing education
requirements for associate members.

Members can download a summary of the proposed amendments, as well as the full text of such
amendments, via the ―My Appraisal Institute‖ page of the Appraisal Institute’s Web site at
www.appraisalinstitute.org. To access, members should enter their username and password on the home
page and then click on the link underneath ―News and Reminders.‖ The summary and full text is also
available upon request to the National Office, at 312-335-4408.

Members who have any comments on the proposed changes, should contact their elected Directors
and/or e-mail comments to 45daynotice@appraisalinstitute.org. Comments sent to this e-mail address will
be compiled for distribution to the Board of Directors prior to the Board meeting.

Y.T. and Louise Lee Lum Library Announces New Online Catalog
On October 6, Appraisal Institute members searching the Lum Library’s online catalog will be greeted with
a new interface and functionality. The two systems that make up the current catalog have been merged
into one user-friendly, easy to navigate, and intuitive catalog, according to Library Director Eric Goodman.
New features include icons to identify the type of material: book, article, paper, power point presentation,
multimedia and InfoExchange Ads. Appraiser News Online searchability is being added in the coming
weeks.

External resources are easily found on the catalog’s home page which includes forms to request property
data information. An Internet Resources section has been created and is constantly updated. The new
online catalog has been made possible by the Appraisal Institute Education Trust.

To access the catalog, visit www.appraisalinstitute.org/profession/lumlibry.aspx.

FHA-Relevant Info Should be Added to Designated Member Profiles
In light of the recent mandate by Congress that Federal Housing Administration appraisers demonstrate
verifiable education on FHA appraisal requirements, the demand for FHA education is increasing, and
FHA appraisers across the country are reporting that their percentage of FHA business is rising. Because
it is generally recognized that FHA business will continue to grow exponentially, the Appraisal Institute is
encouraging its designated members who have FHA experience and education, make themselves more
marketable by including this information in their Member Profile.




33 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
The Appraisal Institute’s Find an Appraiser function pulls the information from those profiles, so when
users search for FHA appraisers, designated members who have filled out their profile accordingly will be
separated from those without FHA experience. The new search function will display names randomly, as
opposed to alphabetically, which is how the former version displayed results. All search results are ―re-
randomized‖ every 20 minutes to give all members equal opportunity to appear at the beginning of the
listing.

To complete the profile, designated members should follow these steps:
    1. Log in with your username and password and go to the ―My Appraisal Institute‖ section
    2. Click on the ―My Member Profile‖ link that appears in the top left-hand corner of the ―My Appraisal
       Institute‖ menu
    3. Click on the ―Property Types and Subcategories‖ link; click on ―Residential‖; and then select
       ―FHA‖ to indicate your FHA-related expertise.

For those with limited or no FHA appraising experience, the Appraisal Institute can help. FHA seminars
are available in online and classroom formats. For more information and to register, visit
www.appraisalinstitute.org./education/seminar_descrb/Default.aspx?sem_nbr=806&key_type=SO.

2009 Comp Exam Schedule and Registration
The Appraisal Institute is now accepting applications for the 2009 offering of the General Comprehensive
Exam, which will be held at the Pearson VUE Testing Centers nationwide. Since space is limited at the
testing centers, associate members are encouraged to apply for the exam as soon as they become
eligible.

An eligible examinee must be a general associate member in good standing, have met the MAI college
degree requirement, and have passed all MAI educational requirements. Associate members can view
their remaining designation requirements by logging into My Appraisal Institute at
www.appraisalinstitute.org. The associate member must meet all of the exam requirements prior to
submitting an application.

Applications for the 2009 offerings of the General Comprehensive Exam are available on the Web site at
www.appraisalinstitute.org/membership/members_downloads/guidebook.pdf. Applications must be
received in Chicago no less than eight weeks prior to the examination date. The 2009 General
Comprehensive Exam dates are: January 29–30; April 22–23; July 28–29; and October 28–29.

For more information on the testing or other designation requirements, contact the Associate Member
Service Center at associate@appraisalinstitute.org or call 312-335-4111.

August Spotlight: Appraisal Regulatory Reform, Pressure to Hit Numbers
The August Spotlight on the Appraisal Institute features articles with topics ranging from shortcomings in
the appraisal regulatory structure to the pressures appraisers still feel to tailor valuations. Spotlight is a
compendium of national press clippings that comprise Appraisal Institute members, staff or policies.

For all of these stories, visit www.appraisalinstitute.org/newsadvocacy/Spotlight/current_issue.aspx.




34 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
ECONOMIC INDICATORS – JULY 2008
Market Rates and Bond Yields

                                                    July08       Jan08       July07        Jan07        July06      July05
Reserve Bank Discount                               2.25         4.48        6.25          6.25         6.25        4.25
Prime Rate                                          5.00         6.98        8.25          8.25         8.25        6.25
Federal Funds Rate                                  2.01         3.94        5.26          5.25         5.24        3.26
3-Month T Bills                                     1.63         2.75        4.82          4.98         4.95        3.22
6-Month T Bills                                     1.93         2.75        4.83          4.95         5.06        3.42
3-Month CD                                          2.79         3.84        5.32          5.32         5.46        3.57
LIBOR-3 month rate                                  3.00         3.95        5.35          5.35         5.49        3.55
5-Year Bond                                         3.30         2.98        4.88          4.75         5.04        3.98
10-Year Bond                                        4.01         3.74        5.00          4.76         5.09        4.18
30-Year Bond*                                       4.57*        4.33*       5.11*         4.85*        5.13*       4.48
Municipal Tax Exempts Aaa                           4.44         4.12        4.26          3.89         4.39        4.18
Municipal Tax Exempts A                             4.92         4.49        4.58          4.23         4.92        4.53
Corporate Bonds Aaa                                 5.67         5.33        5.73          5.40         5.85        5.06
Corporate Bonds A                                   6.47         6.06        6.30          5.93         6.36        5.44
Corporate Bonds Baa                                 7.16         6.54        6.65          6.34         6.76        5.95

Stock Dividend Yields
Common Stocks—500                                   2.27         2.06         1.80         1.81         1.94        1.82

Other Benchmarks
Industrial Production Index**                       111.8**      114.2**      113.9**      112.1**      113.5** 108.3**
Unemployment                                        5.7          4.9          4.6          4.6          4.8     5.0
Monetary Aggregates
 M1, $ Billions                                     1,397.8      1,364.6      1,368.7      1,371.4      1,372.4 1,346.8
 M2, $ Billions                                     7,703.0      7,498.6      7,269.3      7,081.1      6,852.0 6,528.7
Member Bank Borrowed Reserves
 $ Billions^                                        N/A          1.143        0.262        0.211        0.350       0.425
Consumer Price Index
 All Urban Consumers                                220.0        211.1        208.3        202.4        203.5       195.4
Per Capita Income
                                                    2Q08        1Q08        2Q07          1Q07         2Q06      1Q06       2Q05
Per Capita Personal
 Disposable Income
Annual Rate in Current $s                           33,330      32,917      32,014        31,644       30,665 30,279 29,093
Savings as % of DPI(††)                             2.6         0.2         0.3           1.1          0.6    1.0    0.5

*As of April 2006, the Fed went back to reporting 30-yr rates; the historical data is 20+ year rates. A factor for adjusting the daily
nominal 20-year constant maturity in order to estimate a 30-year nominal rate can be found at www.treas.gov/offices/domestic-
finance/debt-management/interest-rate/ltcompositeindex.html.
**On November 7, 2005, the Federal Reserve Board advanced to 2002 the base year for the indexes of industrial production,
capacity, and electric power use. This follows the December 5, 2002, change to a 1997 baseline, from the previous 1992 baseline.
Historical data has also been updated.
^ As of March 2008, the Federal Reserve no longer supplied the total reserves.




35 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
Conventional Home Mortgage Terms

                                                 July08          Jan08   Jul07   Jan07   July06 July05
New Houses Loans—U.S. Averages
Interest rate                                    6.29            6.02    6.70    6.35    6.81    5.76
Term                                             29.3            29.0    29.4    29.5    29.2    29.2
Loan Ratio                                       75.5            78.6    77.6    75.4    75.5    75.1
Price                                            349.1           360.2   356.1   368.2   346.0   330.7

Used House Loans—U.S. Averages
Interest rate                                    6.48            6.04    6.80    6.42    6.82    5.73
Term                                             28.3            28.5    29.4    29.2    28.9    28.3
Loan Ratio                                       76.4            78.3    80.2    79.0    77.2    74.2
Price                                            300.9           292.1   287.9   281.1   292.6   299.0


Conventional Home Mortgage Rates by Metropolitan Area

                         2Q08     2Q07      2Q06      2Q05
Atlanta                  6.11     6.34      6.68      5.82
Boston                  5.99     6.31      6.44      5.60
           #
Chicago                  6.11     6.62      6.73      5.71
             #
Cleveland                6.07     6.37      6.55      5.98
       #
Dallas                   6.19     6.44      6.74      5.89
         #
Denver                   6.11     6.39      6.65      5.64
        #
Detroit                  6.17     6.73      6.73      5.76
Houston                 6.23     6.61      6.81      5.96
Indianapolis             6.33     6.65      6.79      6.07
Kansas City              5.93     6.24      6.41      5.67
                 #
Los Angeles              6.16     6.39      6.58      5.55
      #
Miami                    6.34     6.68      6.84      5.86
               #
Milwaukee                6.27     6.52      6.58      5.79
Minneapolis              6.11     6.37      6.52      5.63
             #
New York                 6.09     6.34      6.57      5.71
                 #
Philadelphia             6.09     6.34      6.81      6.00
Phoenix                  6.27     6.44      6.71      5.82
Pittsburgh               5.93     6.19      6.35      5.98
           #
Portland                 6.11     6.27      6.55      5.71
St. Louis                6.22     6.53      6.72      5.88
San Diego                6.17     6.32      6.52      5.50
                   #
San Francisco            6.19     6.37      6.55      5.50
        #
Seattle                  6.06     6.42      6.52      5.64
Tampa                    6.26     6.54      6.79      5.87
                     #
Washington, D.C.         6.17     6.47      6.82      5.88

¶                Seasonally adjusted
†                Source: Moody's Bond Record
††               Revised figures used when available
#                Consolidated Metropolitan Statistical area
^                The Fed stopped releasing this figure in 2008



36 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008
37 | Appraiser News Online Vol. 9, No. 17 & 18, September 2008