Apr_Updates by r6IfAL

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									Appraiser News Online
Vol. 11, No. 7 & 8, April 2010

Government Update—Commercial/General
        Proposed "Green" Legislation Would Require Higher Appraiser Credentials [Posted April 28, 2010]
        Residential Up, CRE Declines in Latest Beige Book [Posted April 28, 2010]
        SEC Charges Goldman Sachs with Mortgage Fraud [Posted April 21, 2010]
        FDIC Board Proposes to Charge Big Banks "Risk" Fees; Open for Comment [Posted April 21, 2010]
        Regulators‘ In-fighting Fanned Flames of WaMu Demise: IG Report [Posted April 21, 2010]
        SEC Proposes 5 Percent "Skin in the Game" Requirement [Posted April 14, 2010]
        OCC‘s Dugan Calls for Underwriting Standards [Posted April 14, 2010]
        Lincoln, Chambliss Work on Derivatives Bill for Financial Regulatory Reform [Posted April 14, 2010]
        Retrofitting Buildings Part of Lugar‘s Energy Efficiency Proposal [Posted April 14, 2010]
        Bank Portion of TARP Yields $10 Billion; Small Banks Prove a Drag [Posted April 14, 2010]
        Subprime, Collateral Debt Obligations Focus of Latest Regulatory Inquiry [Posted April 14, 2010]
        Fed Ends Legacy CMBS Program with an $857 Million Issue [Posted April 7, 2010]

Government Update—Residential
        Fed Made $47.4 Billion in 2009 from Housing Investments [Posted April 28, 2010]
        FHA Revises Q&A to Address Turnaround Time, Fees, AMCs [Posted April 21, 2010]
        TARP Inspector General Calls for Appraisals in HAMP, Forced Writedowns [Posted April 21, 2010]
        Fannie Mae Reduces Waiting Period after Deed-in-Lieu [Posted April 21, 2010]
        Good Underwriting Key to Veterans‘ Low Defaults, but Rates Rising [Posted April 14, 2010]
        Former OFHEO Heads Blame Conflicting Missions for Fannie‘s Woes [Posted April 14, 2010]
        FHA Originations Drop; Refi Requests Up [Posted April 14, 2010]
        FHA Increases Lender Net Worth Requirement, Requires Sponsorship for Brokers [Posted April 7,
         2010]
        Government Relaxes Standards on $4 Billion Neighborhood Stabilization Plan [Posted April 7, 2010]
        Freddie Provides Multi-Family Mezzanine Details [Posted April 7, 2010]

Inside the States
        Nevada AMC Regulations Now in Effect [Posted April 28, 2010]
        Tennessee Attorney General Clarifies that Appraisers Can Do Evaluations [Posted April 28, 2010]
        Florida Completes Legislative Action on AMC Law [Posted April 28, 2010]
        Nebraska Enacts Unfavorable BPO Legislation [Posted April 21, 2010]
        Virginia Enacts New AMC Law [Posted April 21, 2010]
        Judge Orders Appraiser Files Turned over in Colorado Case [Posted April 14, 2010]
        Joni Herndon, SRA, Reappointed to Florida Board [Posted April 14, 2010]

Around the Industry
        AI Says Fraud Study Shows Importance of Competence, Ethics [Posted April 28, 2010]
        Appraisal Organizations Release Board Funding Model Legislation [Posted April 28, 2010]
        Federal Judge Disparages Use of AVMs to Deny Credit [Posted April 28, 2010]
        February Housing Mixed in Latest S&P/Case-Shiller Indices [Posted April 28, 2010]
        Moody‘s Commercial Index Dips for First Time in Four Months [Posted April 28, 2010]



550 W. Van Buren St., Suite 1000, Chicago, IL 60607 | T 312-335-4100 F 312-335-4400 | www.appraisalinstitute.org
         Sales of New Homes Jumps 27 Percent in March [Posted April 28, 2010]
         Existing Home Sales Increase across the Country [Posted April 28, 2010]
         MBA: Mortgage Application Activity Jumps in April [Posted April 28, 2010]
         Commercial/Multifamily Originations Down 46 Percent in 2009 [Posted April 28, 2010]
         Real Estate Firms Intend to Increase Spending on Green: Survey [Posted April 28, 2010]
         Fitch: Up to 11 Percent CMBS Default Rate by Year‘s End [Posted April 28, 2010]
         $222 Billion Offering Shows Signs of Life in Private RMBS Market [Posted April 28, 2010]
         Morgan Stanley Property Losses Equal $5.4 Billion [Posted April 28, 2010]
         Atlantic Yards Development Reaches Agreement with Final Residents [Posted April 28, 2010]
         Servicer Asks for Stytown/Peter Cooper to Be Sold Separately [Posted April 28, 2010]
         Appraiser Organizations Urge State Boards to Look at Broker Opinions of Value [Posted April 21,
          2010]
         Draft AMC Statement of Principles Open for Comments through May 1 [Posted April 21, 2010]
         Appraisal Institute Praises ‗Green‘ MLS Tool Kit [Posted April 21, 2010]
         Latest Gallup Poll Shows Homebuyer Sentiment Running High [Posted April 21, 2010]
         Housing Starts, Homebuilder Confidence Rise in Latest Reports [Posted April 21, 2010]
         Architecture Billings Index Continues Upward Trend [Posted April 21, 2010]
         MBA Panelists Discuss HVCC, FHA Appraisal Issues [Posted April 21, 2010]
         Simon Sweetens Deal for General Growth Properties [Posted April 21, 2010]
         Hotel Analysts' New Forecast: Market to Stabilize by 2011, Rebound in 2012 [Posted April 21, 2010]
         March CMBS Delinquencies Surge; Stuyvesant Town Leading Contributor [Posted April 21, 2010]
         Fed Closes Eight Banks in Five States; Ripple Effects Felt from Last Year‘s Closures [Posted April
          21, 2010]
         Drop in RE Values Hampers Small Business Lending [Posted April 21, 2010]
         Appraisal Orgs Seek RESPA Clarification Regarding AMCs and Fees to Appraisers [Posted April 14,
          2010]
         Annual External Appraisal Requirement Included in Final Investment Standards [Posted April 14,
          2010]
         Distressed Homes Account for 29 Percent of Sales [Posted April 14, 2010]
         Distressed CRE Rises 10 Percent to $187 Billion [Posted April 14, 2010]
         Commercial Price Index Rises; Now up 15 Percent over May's Bottom [Posted April 14, 2010]
         Shopping Center Vacancies Rise, Rates Fall in First Quarter [Posted April 14, 2010]
         MBA: Mortgage Application Activity Falls in April [Posted April 14, 2010]
         AI Publishes New Book on Appraisal Review Process [Posted April 14, 2010]
         Accounting Boards to Push for Mark to Market [Posted April 14, 2010]
         Freddie Mac, Others Discuss New Short Sales Environment [Posted April 7, 2010]
         Rumored $500 Million Multi-Party CMBS Deal Excites Industry [Posted April 7, 2010]
         Class Action Updates on Rels, Landsafe [Posted April 7, 2010]
         February Boasts More Home Loan Recoveries than New Defaults; First Time in 4 Years [Posted
          April 7, 2010]
         Pending Home Sales Spike in February [Posted April 7, 2010]
         Apartment Vacancies at Record High, Rates Drop [Posted April 7, 2010]
         Realpoint: Total CMBS Delinquencies Could Reach $70 Billion by Mid-year [Posted April 7, 2010]
         Survey: CRE Values to Drop in 2010 [Posted April 7, 2010]
         REITs Post Best First Quarter Since 2006 [Posted April 7, 2010]
         Trepp: More Bank Failures, Comparable Value Loss Predicted in 2010 [Posted April 7, 2010]



2 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
         Bankrupt Hotel Chain to Be Auctioned off in May [Posted April 7, 2010]
         Fabled Texas Stadium Gets Leveled; Future Use Unknown [Posted April 7, 2010]
         ASC Unveils New Web Site [Posted April 7, 2010]
         Appraiser Indicted in Texas Fraud Scheme [Posted April 7, 2010]

Inside the Institute
         AI Offers Designated Members Free ExactBid Listing [Posted April 28, 2010]
         AI in the News: Immediate Past President Featured on CNBC [Posted April 28, 2010]
         In Memoriam [Posted April 28, 2010]
         AI Board Votes to Give Members More Continuing Education Options [Posted April 21, 2010]
         Rick Borges, MAI, SRA, Nominated for 2011 AI Vice President [Posted April 21, 2010]
         AI Annual Membership Meeting: Improving Financials Reported [Posted April 21, 2010]
         AI in the News: Appraisal Institute President Discusses Need for Appraisal Standards [Posted April
          21, 2010]
         AI President Conducts New York Media Tour [Posted April 14, 2010]
         Appraisal Institute News Coverage Reaches More Than Half Billion [Posted April 14, 2010]
         AI in the News: Appraisal Institute ―Volunteer of Distinction‖ Featured [Posted April 14, 2010]
         Appraisal Institute Gains 700 Fans and Followers via Facebook, Twitter [Posted April 14, 2010]
         Sandra Adomatis, Dennis Key, Pamela Kinkade Named AI ―Volunteer of Distinction‖ for April
          [Posted April 7, 2010]
         Appraisal Institute Designates 25 Members in March [Posted April 7, 2010]
         AI in the News: New York MAI‘s Article Featured [Posted April 7, 2010]

Economic Indicators – February 2010




3 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Government Update – Commercial/General
Proposed "Green" Legislation Would Require Higher Appraiser Credentials
The House Financial Services Committee celebrated Earth Day by approving the Green Resources for
Energy Efficient Neighborhoods, or GREEN Act, April 22.

The act includes a provision supported by the Appraisal Institute that would define any property with
energy efficient features/improvements as a ―complex‖ appraisal assignment that therefore would require
a higher competency level, such as certification.

Further, the proposed legislation would ensure timely delivery of relevant information about the property –
such as plans and specs, green energy labels and certifications and HERS ratings – to appraisers, which
to date has often been difficult for appraisers to obtain.

―The amended Green Act addresses two of the biggest obstacles in green valuation today – appraiser
access to data and property information and the competency of appraisers engaged by lenders to
conduct the appraisal,‖ said Bill Garber, Appraisal Institute director of government and external relations.
―Oftentimes appraisers have difficulty obtaining basic property information relevant to the assignment,
which ties the hands of the appraiser and the appraisal process. The sponsors of H.R. 2336 are to be
commended for recognizing the complexities involved in green valuation and highlighting the importance
of having qualified appraisers conducting these assignments,‖ he added.

The GREEN Act, which was introduced by Reps. Ed Perlmutter, D-Colo., and Judy Biggert, R-Ill., also
provides incentives to lenders and financial institutions that are intended to help move the nation‘s
housing and building stock toward greater energy efficiency, create jobs and make places to live and
work more sustainable and affordable.

―In order to save green, we must go green,‖ Perlmutter said in a joint news release with Biggert. ―By
prioritizing energy efficiency practices, we can ease the woes of homeowners, lenders, financial markets,
builders and our environment.‖

In the past two years, the GREEN Act has passed a full House vote, but has yet to be considered by the
Senate. This year, Perlmutter and Biggert made some consensus changes to the bi-partisan bill to
improve its chances of going to a Senate vote.

―The (revised) GREEN Act will forge a new path for achieving energy and cost savings in our nation‘s
buildings, homes and offices,‖ said Biggert, who is also co-chair of the Congressional High-Performance
Building Caucus. ―It utilizes creative financing mechanisms, demonstrations, and incentives to promote
the use of the latest in sustainable building designs and technologies. At the same time, it places a
premium on energy efficient construction and upgrades that will revitalize investment in the green jobs of
tomorrow. Speeding these technologies out of the lab and into our nation‘s building supply will pay
dividends for years to come for homeowners, the economy and for the environment,‖ she added.

The bill now moves to the House floor, where it could become part of the financial reform or energy
debates.



4 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Residential Up, CRE Declines in Latest Beige Book
Eleven of the 12 Federal Reserve districts indicated that overall economic activity increased somewhat,
according to the central bank‘s latest Beige Book, released April 14. St. Louis was the only district to
describe softened conditions since the last report, issued March 3.

Lending activity was mixed in a number of districts. Atlanta, St. Louis and Kansas City described weaker
demand across all categories, San Francisco said demand for loans at the lower end of the spectrum was
flat and Dallas indicated that demand may be stabilizing. Although credit standards remained steady
across the nation, New York, Cleveland and Kansas City reported tighter standards for commercial
mortgages, while several business contacts in Atlanta reported difficulty in obtaining credit. San Francisco
and Dallas indicated that standards continue to be tight.

Credit quality varied among the districts. While New York reported an increase in delinquency rates for
most loan types, Philadelphia and Richmond reported little change, and Cleveland described conditions
as mixed. Chicago reported improvements in consumer and business loan quality, while Dallas indicated
that credit quality was either stabilizing or improving.

The Fed reported that home sales increased in most districts except St. Louis, which noted mixed
conditions, and San Francisco, which described activity as flat. New York, Kansas City, Dallas and San
Francisco indicated that sales activity for high-end homes was sluggish. Most districts reported that home
prices were stable except New York and Atlanta. However, New York, Atlanta, St. Louis, Minneapolis and
Dallas reported modest increases in residential construction activity.

All districts described commercial real estate activity as slow except Richmond, which reported an
increase in commercial leasing, and Dallas, which described activity as mixed. Boston indicated that most
leasing activity consisted of renewals that were leasing less space. New York reported that Class A office
rents in Manhattan were down 20 percent to 25 percent from the previous year, while Philadelphia,
Richmond, Kansas City and Dallas indicated that lease concessions were placing downward pressure on
rents.

Although most districts reported that commercial construction continued to be weak, Cleveland noted
some development in the energy and industrial sectors.

To view the Federal Reserve‘s latest Beige Book in its entirety, including a breakdown of the districts, visit
www.federalreserve.gov/fomc/beigebook/2010/20100414/default.htm.

SEC Charges Goldman Sachs with Mortgage Fraud
The Securities and Exchange Commission filed a civil lawsuit against Goldman Sachs Group Inc. on April
16. The suit alleges that the giant Wall Street bank defrauded investors in connection with profitable
trades for a hedge fund that had bet on the housing market‘s collapse and subprime loans without
notifying investors of a conflict of interest.

According to the SEC, Goldman structured and marketed a synthetic collateralized-debt obligation that
hinged on the performance of subprime residential mortgage backed securities. The SEC complaint said




5 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
the CDO was created in early 2007 when the U.S. housing market and related securities were beginning
to show signs of distress, according to The Wall Street Journal.

At the center of the lawsuit is John Paulson, a hedge fund investor whose firm Paulson & Co. made
billions of dollars by betting that the nation's housing market would crash. Paulson‘s company was
responsible for selecting the mortgage-backed securities used by Goldman‘s CDO, but investors were
never informed by Goldman that Paulson‘s company had a stake in the failure of the subprime mortgage
market.

While Paulson has not been charged with fraud, Fabrice Tourre, a Goldman vice president whom the
SEC said was mainly responsible for creating the questionable mortgage product, has been charged. The
product in question is the synthetic CDO known as ABACUS. As investors lost $1 billion on Goldman
investments, Paulson made roughly $1 billion and Goldman made nearly $15 million from Paulson‘s
company for structuring and marketing the product, according to the Journal.

Goldman has issued a statement that calls the SEC charges ―completely unfounded in law and fact.‖

The SEC‘s complaint filed against Goldman may just be the tip of the iceberg when it comes to civil
action. According to the Journal, the financial regulator is currently investigating whether other mortgage
deals arranged by some of Wall Street's biggest firms may have crossed the line into misleading
investors.

The SEC is looking into similar deals where large financial firms may have designed products aimed at
allowing key clients, such as hedge funds, to bet on a sharp housing downturn. Among the firms that
created mortgage deals that soon went sour were Deutsche Bank AG, UBS AG and Merrill Lynch & Co.,
now owned by Bank of America Corp. It isn't known precisely what deals the SEC is investigating.

FDIC Board Proposes to Charge Big Banks "Risk" Fees; Open for
Comment
To discourage risky lending behavior by the nation‘s largest financial institutions, the Federal Deposit
Insurance Corp. has proposed a new scorecard system in which the regulator would stress test banks‘
stability during a financial crisis and use that information to determine fee levels for deposit insurance.

According to an April 13 Wall Street Journal story, the FDIC would stress test any bank with more than
$10 billion in assets. Those gauged to be less stable would be required to pay more to the government in
case they failed in order to cover the costs the FDIC would incur.

The proposed changes were preliminarily approved by the FDIC‘s five-member board and are currently
open for 60 days for public comment. After comments are collected, the FDIC‘s board will vote again
whether to move the process forward. According to an April 13 Reuters News article, if approved by the
FDIC board, the new fees could be in place as early as 2011.

The FDIC collects about $14 billion in deposit insurance fees per year from the banking industry. If
implemented, the proposed fee change would not directly result in the FDIC receiving more money, but
instead would shift the burden for funding the deposit-insurance fund to riskier large institutions.




6 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
―The proposed system is fairer and less pro-cyclical because it charges for risk when it is assumed, and it
provides incentives for institutions to avoid excessive risk during economic expansions," FDIC Chairman
Sheila Bair said in an April 13 meeting of the agency, according to Reuters.

In addition to measuring the risk rates taken by the nation‘s largest banks, the FDIC proposal also would
allow the agency to take a closer look at highly complex financial institutions that have more than $50
billion in assets and holding company assets of more than $500 billion. FDIC staff told the Journal that
these firms, which number less than 10, would be subject to additional risk evaluations given the nature of
their business.

Regulators‘ In-fighting Fanned Flames of WaMu Demise: IG Report
In-fighting between two government banking regulators charged with overseeing Washington Mutual
helped fan the flames of the lender‘s demise in 2008, according to a joint report released by the
Inspectors General of the Federal Deposit Insurance Corp. and the Treasury Department.

Washington Mutual was the largest bank failure in U.S. history. According to an April 16 Associated Press
story, the bank's sales of subprime mortgage securities to investors leapt from $2.5 billion in 2000 to $29
billion in 2006. The 119-year-old thrift, with $307 billion in assets, was eventually sold to JPMorgan for
$1.9 billion after failing as a result of the subprime collapse.

As the Obama administration pushes for major financial regulatory reforms, lawmakers on the Permanent
Subcommittee on Investigations held an April 16 hearing to chide the heads of the Office of Thrift
Supervision and the FDIC over reports that both agencies – as the primary and backup regulators of
Washington Mutual – failed to act appropriately to handle acknowledged problems within the bank both
prior to and during the financial crisis.

The OTS was especially reprimanded as Sen. Carl Levin, D-Mich., the panel chair, ripped into the agency
for its lack of oversight and inability to enforce changes.

―It is not only feeble enforcement, it is pitiful enforcement," said Levin, according to the Associated Press.

He continued that the OTS "was more of a spectator on the sidelines, a watchdog with no bite, noting
problems and making recommendations, but not trying to correct the flaws and failures it saw."

The OTS was also criticized for sparring with backup regulator FDIC in 2008. The joint Inspector General
report concluded that both agencies spent weeks in-fighting when credit markets were severely freezing
up. According to the report, the OTS refused for months to downgrade Washington Mutual, thus
preventing the FDIC from taking a more active role in the troubled bank‘s oversight.

For the FDIC‘s part, the Inspector General report found that the agency could have taken further
enforcement actions to remedy or prevent unsafe or unsound practices, despite the reluctance of the
OTS.

The findings of the Inspector General report and subsequent subcommittee hearing come as lawmakers
are deciding how best to reform the nation‘s financial regulatory system. Under the reform plan being




7 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
supported by the Obama administration, the OTS would be slated for elimination. Its responsibility would
be passed on to other agencies.

SEC Proposes 5 Percent "Skin in the Game" Requirement
The Securities and Exchange Commission released proposed rules that would require banks and other
asset-backed security sponsors to have ―skin in the game‖ and prevent them from selling such securities
if those institutions aren‘t willing to assume at least some level of risk.

The SEC‘s proposal would require asset-backed security sponsors to retain 5 percent of the credit risk of
the security while also requiring banks and other ABS issuers to disclose in-depth information on every
loan in a mortgage-backed security. In addition, the SEC‘s proposal would strip credit rating agencies of
their formal role in evaluating certain bonds backed by consumer loans, like home mortgages, and place
the responsibility of vouching for these loans on the bond issuers.

Loans affected by the SEC proposal, and in which issuers would be required to have skin in the game,
include bundled ABS such as home mortgages, auto loans and student loans. SEC commissioners
unanimously approved the proposed changes, although the Times reported at least two of the five
commissioners expressed misgivings.

The proposed changes are now in the midst of a 90-day public comment period before coming back to
the commission for revision and final approval. If passed, the 5 percent requirement would have a
significant impact on the $9.5 trillion market for securities backed by consumer loans.

For more information on the proposed rules, visit www.sec.gov/news/press/2010/2010-54.htm.

OCC‘s Dugan Calls for Underwriting Standards
Comptroller of the Currency John Dugan told the Financial Crisis Inquiry Commission April 8 that
regulators should have done a better job overseeing mortgage underwriting among bank and non-bank
lenders, according to a Bureau of National Affairs story.

Dugan said a main factor in the recent financial crisis was poor credit underwriting, particularly by non-
bank mortgage brokers and originators who were ―virtually unregulated.‖ Dugan said the gain in market
share by those non-bank lenders put pressure on banks regulated by the OCC to lower their mortgage
underwriting standards, the BNA reported.

―I believe the government should establish minimum, common sense underwriting standards for
mortgages that can be effectively applied and enforced for all mortgage lenders, whether they are
regulated banks or unregulated mortgage companies,‖ Dugan said. ―If we had such basic, across-the-
board rules in place 10 years ago on income verification, down payments and teaser rate mortgages, I
believe the financial crisis would have been much less severe than it was.‖

According to the BNA article, Dugan said that commercial real estate lending has been a much larger
factor in the failure of national banks, particularly smaller institutions. He blamed the failures on high
concentrations of such loans, rather than on poor underwriting. Dugan said the OCC published
concentration guidance in 2006 that included benchmarks for appropriate levels of commercial loans, but
not ―hard caps.‖



8 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Former Comptroller of the Currency John Hawke echoed former Fed Chairman Alan Greenspan's views
that securitization was the factor most responsible for inflating the housing bubble. According to the BNA,
Hawke said the ―top-down‖ demand from subprime mortgage-backed securities investors encouraged a
steady erosion of loan underwriting standards during the past decade.

For more information on the hearing, visit www.fcic.gov/hearings/04-08-2010.php.

Lincoln, Chambliss Work on Derivatives Bill for Financial Regulatory
Reform
Senate Agriculture Committee Chair Blanche Lincoln, D-Ark., and Ranking Member Saxby Chambliss, R-
Ga., have been tasked with the next phase of President‘s Obama‘s hope for a wide-reaching and
significant financial regulatory reform bill: what to do with derivatives oversight.

The question remained unanswered in the bill sponsored by Sen. Christopher Dodd, D-Conn., and
approved by the Senate Banking Committee in March. Previously, Banking Committee members Jack
Reed, D-R.I., and Judd Gregg, R-N.H., had worked for months toward a bipartisan deal on over-the-
counter derivatives, but reached an impasse in late March.

According to an April 1 story in The Washington Post, Lincoln and Chambliss hope to strike a workable,
bipartisan deal that can be shepherded through their committee before month‘s end. It is expected that
any derivatives compromise would be attached to Dodd‘s larger proposal, although it could also be voted
through separately.

Lincoln and Chambliss are seen as more conservative than Reed and Gregg, as evidenced by Lincoln
recently telling a U.S. Chamber of Commerce gathering that she supports transparency in the derivatives
market and requiring clearinghouses to approve and back most deals to guard against systemic risk.

She also said she would try to avoid duplicative regulation. ―The swaps market will be regulated, but let
me say this,‖ the Post quoted Lincoln as saying. ―I don‘t believe in overreaching or regulation for
regulation‘s sake. We must be surgical with how we regulate.‖

Over-the-counter derivatives are basically bets that are made between investment banks and clients
regarding the values of assets such as stocks, bonds and mortgages. At present, these transactions are
mostly unregulated and allow parties to execute deals in private, with no transparency.

Retrofitting Buildings Part of Lugar‘s Energy Efficiency Proposal
Hoping to reinvigorate the stalled climate change debate, Sen. Richard Lugar, R-Ind., has proposed a
―streamlined‖ energy and climate plan that includes incentives for energy efficiency in homes, commercial
buildings and manufacturing facilities by 2030, according to an April 9 Real Estate Roundtable Weekly
article.

The plan also calls for tighter standards for residential, commercial and industrial appliances and
equipment. To promote energy retrofits in homes, small businesses and commercial buildings, the
proposed ―National Building Retrofit Program‖ suggests incentives such as rebates, direct loans, loan
guarantees, letters of credit and other financial products to ―leverage private investment in energy efficient



9 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
retrofits of homes and multifamily, commercial or industrial buildings,‖ the Real Estate Roundtable
reported.

However, a main concern is establishing provisions for mandatory national targets for improved energy
efficiency building performance in new residential and commercial construction.

View Lugar‘s ―Practical Energy and Climate Plan‖ at
http://lugar.senate.gov/energy/legislation/pdf/PracticalEnergyPlan.pdf.

Bank Portion of TARP Yields $10 Billion; Small Banks Prove a Drag
Recent repayments by Goldman Sachs and American Express have pushed to $10 billion the profits
made by the U.S. government on loans made to banks who took funds through the Treasury
Department‘s Troubled Asset Relief Program, according to an April 6 Financial Times story.

According to analysis by consultancy group SNL Financial, the government‘s financial sector investment
that was originally expected to cost taxpayers $76 billion might now prove profitable. Through March 30,
of the 49 financial companies that had repaid their TARP funds, the annualized rate of return for
taxpayers was at 8.5 percent. SNL noted that when calculating repayment averages it excluded
institutions such as Citigroup, which still has common shares held by the Treasury.

The good news of a $10 billion profit for taxpayers is soured, however, by SNL‘s finding that investments
in smaller banks may prove loss-making. According to SNL research, 28 lenders currently holding $1.9
billion in TARP funds are being regarded as ―under-capitalized.‖

By contrast, Goldman Sachs and American Express have generated an annualized return for the
government of 20 per cent and 23 per cent, respectively, after repurchasing warrants in July 2009,
according to SNL. In addition, the government stands to make a further profit on its future sale of its 27
percent stake in Citigroup.

Unfortunately, the banking sector wasn‘t the only industry loaned money, meaning taxpayers may still end
up on the hook for $117 billion through TARP loans doled out to the auto industry and insurance and
financial services giant AIG.

Subprime, Collateral Debt Obligations Focus of Latest Regulatory Inquiry
Former officials of Citigroup Inc., one of the nation‘s largest financial institutions, were grilled by
lawmakers on April 8 over their roles in business decisions that ultimately led to the bank‘s instability and
cost taxpayers $45 billion to bail out, according to a Bloomberg News story.

Charles Prince, who formerly served as Citigroup‘s chief executive officer, and Robert Rubin, who was
head of the bank‘s executive committee, defended themselves before the Financial Crisis Inquiry
Commission. Members spent three hours investigating the men‘s culpability for more than $58 billion in
write-downs by Citigroup on assets tied to risky subprime mortgages and other financial instruments.

 Bloomberg reported that members of the panel criticized Prince and Rubin for the fact that no one in a
leadership role seemed to know what was going on in the market.




10 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
―I‘m particularly struck by how much the two of you did not know about what was going on within your
organization,‖ Phil Angelides, the commission‘s chairman, told Prince and Ruben.

As noted by Bloomberg, losses on the collateralized debt obligations – created by repackaging mortgage
bonds into new securities – were responsible for crippling New York-based Citigroup and triggering the
$45 billion federal bailout, the largest of any financial firm. The government still owns 27 percent of
Citigroup, which it has announced it plans to sell over the next year.

Defending himself, Prince blamed the financial crisis on a combination of prolonged low interest rates, the
growth of the securitization market, policies encouraging home ownership and the ―patchwork nature‖ of
subprime mortgage regulation, reported Bloomberg.

Rubin admitted that he had spotted market excesses, but that warning signs of an impending financial
collapse were not obvious at the time.

Lawmakers also wanted to know if Citigroup had misled analysts and investors about the bank‘s
exposure to the subprime market. In less than a month, between Oct. 15 and Nov 4, 2007, Citigroup
leaders had first claimed their institution‘s subprime exposure was at $13 billion, but a few weeks later
had listed their exposure at $55 billion.

Both Prince and Rubin maintained they had not misled investors, but admitted a regulatory overhaul is
needed to reduce the financial system‘s vulnerability.

The Financial Crisis Inquiry Commission has been mandated by Congress to produce a report by the end
of this year on the causes of the financial crisis.

Fed Ends Legacy CMBS Program with an $857 Million Issue
The sun has set on a portion of the Federal Reserve‘s Term Asset-Backed Securities Loan Facility, or
TALF, program designed to inject life into the struggling market for legacy commercial mortgage-backed
securities. On March 30, the Fed announced it had settled $857 million in loan requests for the March
subscription round in its legacy CMBS program, thus concluding the first half of a $1.25 trillion
government effort to prop up the nation‘s economy. The newly issued CMBS portion of TALF is set to
expire June 30.

Since purchases began in January 2009, the TALF program was intended as a vehicle to unfreeze
investor demand for mortgage bonds. Though initially targeting only newly issued CMBS, the program
was expanded in June to include legacy CMBS. In all, the Fed settled approximately $12.3 billion in loan
requests for legacy CMBS, according to data from the Federal Reserve Bank of New York.

As for newly issued CMBS, to date, there has been only one request: a $72 million transaction in
November 2009. But more deals could be in the pipeline or, as GlobeSt.com pointed out in a recent
article, the purpose of TALF for newly issued CMBS could have already been served now that a handful
of non-TALF CMBS deals have been offered and at least one more – a $500 billion deal through the
Royal Bank of Scotland (see related story) – is rumored to be on the verge of introduction.




11 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Overall, analysts are crediting the TALF program with holding mortgage interest rates at near-record lows
and slowing the nationwide decline in home prices that had threatened to send the economy into an
extended slump. As Susan M. Wachter, professor of real estate and finance at the Wharton School of the
University of Pennsylvania, told The New York Times on March 31, ―The potential maelstrom of
destruction was out there, bringing down not only the housing market but the overall economy. That‘s
what was stopped.‖

She called the Fed‘s mortgage purchases ―the single most important move to stabilize the economy and
to prevent a debacle.‖




12 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Government Update – Residential
Fed Made $47.4 Billion in 2009 from Housing Investments
The Federal Reserve transferred a record $47.4 billion to the Treasury Department in 2009 as a result of
its housing-related programs, according to an April 21 report in The New York Times. The central bank's
payment to the Treasury in 2009 was a $15.7 billion, or 50 percent, increase over 2008.

The rise in income was primarily the result of interest earned from the Fed‘s 2007 strategies to acquire
mortgage-backed securities and debts owned by Fannie Mae and Freddie Mac as well as to increase its
holdings of Treasury securities. The Fed also profited from troubled banks that took advantage of its
discount window and other emergency lending programs.

Fed Chair Ben Bernanke now faces a new set of challenges as the Fed prepares to tighten monetary
policy and return its balance sheet to a normal size. The Fed‘s comprehensive income in 2009 was $53.4
billion, up $17.9 billion from 2008 while its balance sheet currently stands at roughly $2.3 trillion, about a
250 percent increase from 2008.

―The Fed can only play this game as long as the public is willing to hold its liabilities,‖ Vincent Reinhart, a
former director of monetary affairs at the Fed, told the Times. ―If it tried to increase its balance sheet
tenfold, say, the public would be unwilling to hold those reserves. You‘d get dollar depreciation and
inflation.‖

FHA Revises Q&A to Address Turnaround Time, Fees, AMCs
The Federal Housing Administration released an updated list of frequently asked questions April 15,
addressing a number of commonly encountered appraiser concerns. Among the issues the FHA
addressed: reasonable and customary fees; the selection of appraisers by appraisal management
companies; reporting AMC appraiser pressure; and turnaround times on appraisal assignments.

In regard to customary and reasonable fees, the FHA has stated that the marketplace ―best determines‖
what is reasonable and customary. Although the FHA makes it clear that it does not set these fees, the
agency notes that it expects lenders to know what is reasonable and customary in the areas in which they
lend and to ensure proper payment to appraisers.

As for appraiser selection, the FHA expects the lender, not the AMC, to (along with the appraiser) be
responsible for the quality and accuracy of the appraisal. According to the FHA, any appraiser who
chooses to be the low bidder on an assignment is still held accountable to his or her obligation to submit a
credible and accurate opinion of value.

A common concern amongst appraisers has been where to turn if they feel they are being asked by an
AMC to perform an unethical assignment or accept an unreasonable assignment fee. Because the FHA
has no regulatory power over AMCs, any action taken must be done so between the appraiser and the
lender employing the AMC, according to the FHA. If an appraiser is asked to act unethically, the FHA
recommends they report the instance to the lender and notify their appropriate state authority. In 10
states, AMCs are regulated by a state board or agency. (For the latest, see also ―Virginia Enacts New
AMC Law.‖)



13 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Another common concern among appraisers has been pressure to quickly turn around assignments. On
this issue, the FHA has left what is deemed appropriate to the appraiser and AMC.

―FHA does not set acceptable turnaround times for completion of appraisal assignments,‖ read the
agency‘s FAQs. ―Appraisers should always be familiar with the terms of an assignment and not accept
assignments which have unrealistic terms. What is an acceptable turnaround time for one appraiser may
be unacceptable to another appraiser.‖

To view the FHA FAQs document addressing common appraiser concerns, visit
www.hud.gov/offices/hsg/sfh/appr/faqs_fees-time.pdf.

TARP Inspector General Calls for Appraisals in HAMP, Forced Writedowns
Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), called for
the Department of Treasury to utilize appraisals for the Home Affordable Modification Program to protect
against fraud. Barofksy‘s comments came during April 20 testimony before the Senate Finance
Committee, and are highlighted further in a quarterly report issued to Congress.

Citing concerns that inferior methods of valuation could lead to fraud, Barofsky told lawmakers, ―Treasury
should abandon its differing valuation standards across HAMP and adopt the Federal Housing Authority`s
appraisal standard for all HAMP principal reduction and short sale programs.‖

Richard Maloy, MAI, SRA, chair of the Appraisal Institute‘s Government Relation Committee, said the
change would allow the Treasury Department to avoid conflicts and enhance due diligence in these
increasingly used modification programs. ―Today‘s real estate market challenges and complexities of loan
modifications beg for competency and independence provided by professional real estate appraisers,‖
Maloy said. ―We urge the Department of the Treasury to implement this sound recommendation to
reinforce a common sense due diligence requirement.‖

In a quarterly report, also released April 20, SIGTARP said it may be in the best interests of the economy
for the White House to force lenders to make principal reductions for struggling homeowners who owe
more than their home is worth.

In March, the Obama administration announced substantial changes to HAMP, in which lenders who help
write down principle for underwater mortgages will receive government subsidies. But as Reuters recently
reported, that program is voluntary and can only be successful in situations where banks participate to
team with homeowners.

The SIGTARP report noted that allowing mortgage servicers the opportunity to opt in or out of the HAMP
program made it inconsistent. As such, they recommend that Treasury ―re-evaluate the voluntary nature
of its principle reduction program and, irrespective of whether it is discretionary or mandatory, Treasury
should consider changes to better maximize its effectiveness,‖ the SIGTARP report stated.

―Until the Treasury fulfills its commitment to provide a thoughtfully designed, consistently administered,
and fully transparent program, HAMP risks being remembered not for catalyzing a recovery from our




14 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
current housing crisis, but rather for bold announcements, modest goals, and meager results,‖ according
to the report.

Of primary concern to SIGTARP is that since HAMP‘s rollout the home foreclosure crisis has not abated.
According to the SIGTARP report, nearly 2.8 million foreclosures were initiated in 2009. More ominously,
this year is on pace to be even worse – with more than 932,000 foreclosure filings already recorded
during the first quarter of 2010.

The Treasury has said it will comment on SIGTARP‘s recommendations to its principle reduction program
in mid-May – after 30 days to analyze the watchdog‘s findings.

To read Barofsky‘s full testimony, visit http://finance.senate.gov/hearings/hearing/?id=bc66e07e-5056-
a032-5230-8f0a007f3611. To view SIGTARP‘s latest quarterly report to Congress in its entirety, visit
www.sigtarp.gov/reports/congress/2010/April2010_Quarterly_Report_to_Congress.pdf.

Fannie Mae Reduces Waiting Period after Deed-in-Lieu
Fannie Mae has reduced to two years the waiting period for borrowers to obtain a new mortgage after
losing a home through a deed-in-lieu of foreclosure transaction or a short sale, according to an April 19
Inman News report. Previously, such borrowers were required to wait four years, or two years if their
home sold in a short sale.

Under the new policies, which will apply to loan applications submitted after June 30, borrowers who
completed a deed-in-lieu or short sale within the past two years will be able to obtain a new mortgage in
two years as long as they are able to submit a 20 percent down payment, according to Inman.

For those who completed a deed-in-lieu or short sale within the past two to four years, or if extenuating
circumstances were involved, borrowers will be able to obtain a new mortgage in two years as long as
they are able to submit a 10 percent down payment.

According to Fannie Mae, current waiting periods will remain the same for borrowers who have been
foreclosed on or who have declared bankruptcy, according to Inman. However, while borrowers typically
are required to wait five years to re-establish credit after a foreclosure, under the new policies, borrowers
who can prove extenuating circumstances may become eligible for a loan after three years.

Borrowers who have filed for Chapter 7 or Chapter 13 typically must wait four years before becoming
eligible for a loan. However, for those who have filed for Chapter 7, the waiting period may be reduced if
they can prove extenuating circumstances. For those who have filed for Chapter 13, the waiting period
also may be reduced if all or part of their debt has been paid.

Good Underwriting Key to Veterans‘ Low Defaults, but Rates Rising
Fueled by strict underwriting standards, required income verification and a consumer audience of reliable
military personnel, the Department of Veteran Affairs‘ loan guarantee program has outperformed any
other major government lending program during the economic downturn. However, recent analysis shows
it has not been impervious to market conditions.




15 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Even while issuing loans that require no down payment, the VA‘s program has posted fewer defaults than
the program implemented by the Federal Housing Administration, according to an April 6 American
Banker article. The article credits the VA‘s emphasis on strong underwriting and adherence to its lending
rules and guidelines, despite the lure of larger profits through riskier lending.

Of the VA‘s 1.3 million active loans, only 5 percent have delinquent payments of 90 days or more,
according to American Banker. And that number is up by two-thirds from five years ago. In that same
period, serious delinquency on prime mortgages ballooned to 6.3 percent, increasing by a factor of seven,
reported American Banker.

A key factor to the VA‘s success has been that the department inspects 10 percent of the loans it
guarantees at the time of origination, and reviews lender performance every one to three years, thus
allowing itself to seek indemnification for poorly underwritten loans or, if necessary, suspend a lender
from its program. As American Banker reported, in 2008 the VA forced lenders to indemnify it on $3.7
million in guarantees; in 2009 that number was up to $6.7 million.

Even with its strict underwriting rules in place, the VA has still felt the strain of the weakened economy.
While low in comparison to the rates at national banks and the FHA, default rates on VA loans have been
slowly rising – a fact that underlines the idea that even the tightest lending standards can‘t mitigate all the
risk. This is due in part to the shoddy lending practices of some of its lenders, who were writing
mortgages that racked up 15 percent-plus default rates in less than two years, and also due to the
economy. Regardless, as American Banker noted, even with the spike in under-performing loans, the
VA‘s overall portfolio still performed better relative to prime mortgages across the board.

Former OFHEO Heads Blame Conflicting Missions for Fannie‘s Woes
Former regulators said that troubled government-sponsored enterprise Fannie Mae was toppled by
conflict between its mission to foster homeownership and the profit demand it faced as a publicly traded
company, according to Bloomberg News.

At an April 9 Financial Crisis Inquiry Commission hearing in Washington, Armando Falcon Jr. and James
Lockhart said that political support for Fannie Mae and Freddie Mac helped thwart efforts to reform the
two companies before losses forced the government takeover in September 2008. According to
Bloomberg, Falcon, who oversaw the companies from 1999 to 2005 as director of the Office of Federal
Housing Enterprise Oversight, said the public-private structure bred ―greed, excessive risk-taking and
abuse.‖

Daniel Mudd, Fannie Mae‘s chief executive officer from 2005 until the U.S. takeover in 2008, said
maintaining balance between the government-imposed mission of promoting homeownership and
maintaining profitability as a publicly traded company became increasingly difficult amid competition in the
mortgage market, Bloomberg reported.

Fannie Mae began increasing its investment in specialized mortgages including subprime loans in 2006,
after its market share of residential mortgages fell to less than 24 percent from a high of more than 40
percent, Mudd told the panel. Commissioner Keith Hennessey, a former economic adviser to President
George W. Bush, said the company‘s jump into alternative loans ―contributed to the housing bubble,‖
Bloomberg reported.



16 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Mudd told the panel that purchases of the loans, which accounted for 27 percent of the company‘s
portfolio and 58 percent of its losses by 2007, were aimed at rebuilding market share and fulfilling the
mission of increasing homeownership among lower-income borrowers, Bloomberg reported.

FHA Originations Drop; Refi Requests Up
According to a Federal Housing Authority monthly activity report, FHA single-family originations tailed off
in February as loan production fell to $22.3 billion for the month. Severe weather may account for the
drop, according to an April 8 National Mortgage News article.

In January, originations had risen to $30.1 billion from December‘s figure of $26 billion.

Although the FHA report showed that the serious delinquency rate fell in February to 9.17 percent from
January‘s rate of 9.4 percent, the demand for streamlined refinancing through the federal mortgage
insurance program has increased, which could be problematic.

While they used to be considered low-risk transactions, out of the 329,400 streamlined refinances
conducted in the fiscal year that ended Sept. 30, 2009, 5.5 percent are currently 90 days or more past
due, National Mortgage News reported. As of February, the FHA had already approved an additional
134,800 streamlined refinances and anticipates an additional 311,500 approvals by Sept. 30.

FHA Increases Lender Net Worth Requirement, Requires Sponsorship for
Brokers
The Federal Housing Administration said it will soon issue regulations to increase the net worth
requirements of FHA-approved lenders, strengthen lender approval criteria and begin making lenders
liable for the oversight of mortgage brokers. The move, announced April 5, is part of the FHA's effort to
reduce and better manage counterparty risks to its insurance funds.

The new policy, which finalizes a proposed rule issued in September, immediately requires lenders
applying for FHA eligibility to have a minimum net worth of $1 million, up from the previous $250,000
requirement. According to the FHA, its current lenders will have up to one year to comply with the net-
worth requirement; as will its FHA-approved small business lenders have up to one year to meet a newly
imposed $500,000 minimum net-worth requirement.

The FHA‘s revised rules also end the ability of mortgage brokers to be independently approved to
originate FHA loans. FHA-approved lenders will now need to sign off on their relationship with a broker.
Current brokers who have independent FHA approval will lose that status as of Dec. 31, 2010.

―These changes support quality mortgage lenders while excluding organizations that are ill-equipped to
handle the risk associated with market variations,‖ FHA Commissioner David H. Stevens said in the FHA
news release. ―That is particularly important now when a robust, competitive mortgage finance market is a
crucial element in rebuilding the American economy. Lenders bear the overall risk of FHA-endorsed
loans, therefore it makes sense for them to approve their counterparties and have sufficient capital to
operate,‖ he added.




17 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
To view the FHA‘s news release announcing its recent changes, visit
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-
070.

Government Relaxes Standards on $4 Billion Neighborhood Stabilization
Plan
Recognizing that its rules were unintentionally preventing communities from spending government funds
on abandoned and foreclosed properties, the Department of Housing and Urban Development
announced on April 2 that it was relaxing standards for its Neighborhood Stabilization Program.

The changes, which are effective immediately, will allow cities, counties and states to buy properties in
mortgage default and uninhabitable homes with lingering code violations through the government‘s $4
billion neighborhood program.

The problem with the program to date has been that city, state and county officials have had trouble
spending the NSP grant money because federal rules are confusing and cash investors have often outbid
them for residential properties, according to an Associated Press story.

As HUD recently reported, the NSP was started in the midst of the nation's foreclosure crisis, but a year
later about a third of more than 300 local governments that got grants have barely been able to use their
available funds.

"The original NSP rules this Administration inherited through language from the 2008 legislation limited
the impact of the Neighborhood Stabilization Program and we've heard that clearly from our partners on
the ground," HUD Secretary Shaun Donovan said in an April 2 news release. "The rules needed to be
more flexible so our local partners can put taxpayer dollars to work quickly to stabilize neighborhoods
hard-hit by foreclosure.‖

Among the changes to the program, HUD is trying to make it easier for communities to buy foreclosed
properties by giving them a larger pool to work from. Now a community can buy a property that is at least
60 days delinquent on its mortgage if the owner has been notified, or if the property owner is 90 days or
more delinquent on tax payments.

In addition, HUD expanded the definition of an abandoned property to include homes where no mortgage
or tax payments have been made for at least 90 days or a code enforcement inspection has determined
that the property is not habitable and the owner has taken no corrective action within 90 days of
notification of the deficiencies.

Freddie Provides Multi-Family Mezzanine Details
In order to recapitalize multi-family properties and ease deleveraging, Freddie Mac will partner with
experienced multifamily lenders to assist borrowers with multifamily properties in need of financing or
refinancing. In a March 31 news release, the government-sponsored enterprise said it will allow
mezzanine debt on qualifying senior multifamily mortgages that it purchases.

―The intent is to help the industry reduce the number of properties that may otherwise become defaults,




18 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
timely workouts or foreclosures if they don‘t get much-needed financing,‖ Mike May, senior vice president
of multifamily at Freddie Mac, said in the news release.

Under the program, Freddie Mac multi-family lenders will originate first mortgages with loan-to-value
ratios of up to 75 percent, according to the news release. The government-sponsored enterprise then will
work with the lenders to provide borrowers up to an additional 15 percent. Subsequently, Freddie Mac will
then purchase qualifying first mortgages to either place in its portfolio or securitize into a multifamily
mortgage-backed security.

Because the mezzanine portion of the financing is backed by the borrower‘s equity, Fannie Mac said
there is no additional risk placed on them.




19 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Inside the States
Nevada AMC Regulations Now in Effect
Nevada‘s law requiring the registration and regulation of appraisal management companies became
effective April 20, after the state‘s Legislative Commission‘s Subcommittee to Review Regulations
approved final implementation April 19.

As approved by the subcommittee, the regulations require an AMC to apply for a license to operate. In
addition, AMCs that utilize appraiser fee schedules are required to submit them to the Real Estate
Division along with their application. The regulations also require AMCs to disclose the amount of money
being paid to the appraiser and the amount retained by the AMC, and the appraiser performing services
for AMCs to disclose those amounts as part of the appraisal report. Lastly, the regulations require that
reviews of appraisal performed on property located in Nevada must be performed by an appraiser who is
licensed or certified in the state.

The approval of the regulations is the culmination of a year-long process to enact and implement AMC
legislation in the state. The effort was strongly supported by the two AI chapters in Nevada and the
Coalition of Appraisers in Nevada.

To view a copy of the approved regulations, visit
www.appraisalinstitute.org/newsadvocacy/downloads/Final_AMCRegulations_Nevada.pdf.

Tennessee Attorney General Clarifies that Appraisers Can Do Evaluations
Licensed or certified appraisers may perform evaluations that are not compliant with the Uniform
Standards of Professional Appraisal Practice in limited circumstances, according to Tennessee Attorney
General Robert E. Cooper Jr.

In a March 5 opinion, Cooper stated, ―An evaluation of the value of real property … is not an ‗appraisal‘ or
‗appraisal report‘ because it is expressly exempted from the definitions and requirements … so long as it
is used for (the) limited purposes.‖

These purposes for which evaluations are permitted as opinions of value included federally related
transactions where an appraisal is not required under federal law, or when the evaluation is used solely
by a financial institution in their records to document the collateral or asset value, according to Cooper.
Evaluations that are developed for any other purpose are ―opinions of value‖ and must be performed by
an appropriately licensed appraiser.

The AG‘s opinion states that the appraiser licensing statutes and the exemptions for evaluations do not
conflict and that USPAP ―appl[ies] to all appraisal except for … evaluations‖ permitted under state law.

To view a copy of Cooper‘s formal opinion – which he issued in response to a written request for
clarification from the Tennessee Real Estate Appraiser Commission – visit
www.appraisalinstitute.org/newsadvocacy/downloads/EvalAttnGen3-5-20101.pdf.

Florida Completes Legislative Action on AMC Law


20 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The Florida Legislature has passed a bill that would require appraisal management companies operating
in the state to register with the Florida Real Estate Appraisal Board.

The bill requires that each owner, officer, director and general partner of an AMC ―must be competent and
qualified to engage in appraisal management services with safety to the general public and those with
whom the person may undertake a relationship of trust and confidence.‖ The legislation also spells out
standards of practice for AMCs, including improperly influencing, or attempting to influence, appraisers.

If signed into law, the bill would become effective on July 1, 2011, making Florida the 11th state to enact
such legislation. Similar legislation is also currently pending in at least 10 other states.

To view a copy of the Florida legislation, visit
www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_h0303er.docx&DocumentType=
Bill&BillNumber=0303&Session=2010.

Nebraska Enacts Unfavorable BPO Legislation
Nebraska Gov. Dave Heineman signed into law legislation April 14 that will permit real estate agents and
brokers to provide broker price opinions or comparative market analyses for loan origination, extension,
renewal or modification.

Because L.B. 931 was enacted with an emergency clause, the new law became effective April 15.
Previously, Nebraska law was similar to that in 22 other states that limited the ability of agents and
brokers to provide BPOs or CMAs only to assist buyers and sellers in determining a price in conjunction
with a listing, purchase or sale.

In enacting this law, Nebraska becomes the first state to allow the use of BPOs and CMAs specifically for
loan origination purposes where an appraisal is not required under federal law. Under this law, real estate
professionals will be able to provide BPOs and CMAs as evaluations for all real estate loans below
$250,000, some business loans up to $1 million and most refinance transactions. According to the law,
however, a BPO and CMA performed for these purposes ―may not be used as the sole basis to determine
the value of the real estate.‖

In testimony to the Nebraska legislature‘s Business, Commerce & Insurance Committee in early
February, Appraisal Institute President Leslie Sellers, MAI, SRA, stated, ―We are in the midst of the
greatest financial crisis since the Great Depression. Now is not the time to loosen collateral valuation
standards by allowing less qualified agents and brokers to perform BPOs for loan origination and renewal
purposes.‖ Sellers‘ testimony was given on behalf of the Appraisal Institute, American Society of
Appraisers, American Society of Farm Managers and Rural Appraisers, and National Association of
Independent Fee Appraisers.

In his testimony, Sellers further added, ―Policymakers at all levels must return to basics – the three Cs:
credit, capacity, collateral. Policies should not be watered down or obfuscated to benefit a few. Existing
collateral valuation standards should be maintained. The ability of an agent or broker to perform a BPO
should not be expanded beyond the uses currently permitted under Nebraska law. It is simply not in the
public trust.‖




21 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Also testifying in opposition to the legislation were members of the Nebraska Chapter of the American
Society of Farm Managers and Rural Appraisers. The legislation was supported by the Nebraska Bankers
Association and the Nebraska Realtors Association.

For more information on L.B. 931, visit
http://nebraskalegislature.gov/bills/view_bill.php?DocumentID=9709.

Virginia Enacts New AMC Law
Gov. Bob McDonnell signed legislation (H.B. 408) April 11 that made Virginia the 10th state to enact new
regulations regarding the operation of appraisal management companies. The new law will become
effective July 1.

Under the law, AMCs operating in Virginia will be prohibited from influencing or attempting to influence
the development, reporting, result or review of a real estate appraisal through coercion, extortion or
collusion by withholding or threatening to withhold timely payment or future business from an appraiser.
AMCs also will be prohibited from: removing an appraiser from an AMC‘s panel without first giving written
notice to the appraiser; altering an appraisal report; or requiring an appraiser to provide the AMC with a
digital signature or seal. The legislation also states that AMCs cannot prohibit an appraiser from
disclosing in the appraisal report the actual fees charged by an appraiser for appraisal services, and that
the compensation of an appraiser shall comply with the requirements of the Federal Housing
Administration.

Virginia‘s law is different than the other nine laws currently in place in that it does not require that AMCs
register with the state appraiser board or another government agency. Opponents of a registration
process persuaded Virginia legislators to mistakenly believe that the state does not have the authority to
regulate many AMCs that are owned by federally regulated financial institutions, or to provide valuations
in conjunction with loans that are overseen by the federal government.

The other states with AMC laws currently in place are Arkansas, California, Indiana, Louisiana, Nevada,
New Mexico, Oregon, Utah and Washington. Legislatures in at least 15 other states are currently
considering similar proposals.

For more information on H.B. 408, visit http://legis.state.va.us/.

Judge Orders Appraiser Files Turned over in Colorado Case
A group of landowners fighting to get records of alleged misdeeds by appraisers involved in conservation
easements has won a lawsuit against Colorado after a judge ordered the Division of Real Estate to turn
over its files, Business Week reported April 9.

The landowners told Denver District Court Judge Sheila A. Rappaport that the Colorado Department of
Revenue unfairly challenged tax credits and deductions they took after donating conservation easements.
The governor's office says the disputed credits total $100 million – money the state needs with a $1.5
billion budget deficit, Business Week reported.




22 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Property owners said the easements were valued by appraisers who were disciplined by the state and
that appraisers who falsely inflated appraisals should have been held responsible. They also said some of
the appraisals may have been justified, but there is no way to find out without the files.

Rappaport gave the state 30 days to hand over files of appraisers William Milenski and John Stroh, who
were disciplined by the board over allegations they inflated land values. According to state records,
Milenski was allowed to surrender his license in 2008 and avoid punishment and Stroh was given
probation and a fine, Business Week reported.

J.D. Wright, president of Land Owners United, which represents 80 landowners fighting the state, asked
Gov. Bill Ritter to cease all audits and re-evaluate the state tax program after their tax credits were
challenged by federal and state authorities because of faulty appraisals, Business Week reported.

State tax credits under the program jumped from $2.3 million in 2001 to $98 million in 2008, fueled in part
by a change in 2003 that allowed the credits to be transferred and sold. A 2009 report put at $274 million
the total credits from 2000 to 2007 that are in question, Business Week reported.

The Colorado Department of Revenue has notified 295 landowners and easement credit buyers that their
credits were being disallowed because the easements were overvalued by state-licensed appraisers. It
ordered them to pay the credits along with penalties and interest, Business Week reported.

Joni Herndon, SRA, Reappointed to Florida Board
Gov. Charlie Crist reappointed Joni Herndon, SRA, to the Florida Real Estate Appraisal Board on March
31. Her current term will expire Oct. 31, 2013. She has served on the board since February 2006.

Herndon said the biggest challenge currently facing the board is regulating appraisers in the current
appraiser management company climate. She said she hopes to see full approval of H.B. 303 – which
deals with AMCs and which the Florida House of Representatives passed, with the Appraisal Institute‘s
support – by the end of this year‘s legislative session. Once the Florida Legislature has approved
legislation for the registration and regulation of AMCs, it will be the duty of the FREAB and the Division of
Real Estate to write the rules for their operation in Florida, Herndon said.

The FREAB administers and enforces Florida real estate appraiser license law. Empowered by Florida
statute to promulgate the rules and regulations affecting Florida real estate appraisers, the FREAB
consists of seven members – two state-certified residential members, two state-certified general
members, two consumer members and one user member.

―My membership on the FREAB gives me an opportunity to share my appraisal knowledge and
experience with other appraisers in Florida,‖ Herndon said. ―Most of the appraisers I meet at the FREAB
meetings are there for disciplinary reasons, and I try to find a way to educate them on proper appraisal
practice and USPAP compliance.‖

Herndon said her most notable accomplishment on the board was passing a rule in 2009 that supervisory
appraisers have to be state certified for four years prior to taking on a trainee appraiser. Previously, the
rule allowed an appraiser to become a supervisory appraiser the minute they became state certified.




23 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Around the Industry
AI Says Fraud Study Shows Importance of Competence, Ethics
A new study indicating that reports of mortgage fraud in the United States increased 7 percent from 2008
to 2009 shows why lenders need to hire competent, ethical appraisers, Appraisal Institute President
Leslie Sellers, MAI, SRA, said April 26.

―These results are further evidence that lenders need to reconsider who they engage to perform appraisal
assignments,‖ Sellers said. ―The best way to mitigate real estate valuation fraud is to hire a competent,
ethical appraiser.‖

The Appraisal Institute is the nation‘s largest professional organization of real estate appraisers. Sellers
was reacting to the 12th Periodic Mortgage Fraud Case Report by the Mortgage Asset Research Institute,
a LexisNexis service, issued at the April 25-28 Mortgage Bankers Association's annual National Fraud
Issues Conference in Chicago.

The Appraisal Institute‘s own research has found that disciplinary actions against appraisers, as reported
by the Appraisal Subcommittee, have increased each year since 2005. There were 2.6 times as many
disciplinary actions from Jan. 1, 2005, to April 1, 2010, as in the previous five-year period. The Appraisal
Subcommittee of the Federal Financial Institutions Examination Council, created by Congress in 1989,
oversees the real estate appraisal process as it relates to federally related transactions.

The Appraisal Subcommittee reported 162 disciplinary actions in 2005, 198 in 2006 (a 22.2 percent
increase from the previous year), 280 in 2007 (41.4 percent increase), 337 in 2008 (20.4 percent
increase) and 413 in 2009 (22.6 percent increase). Through March 31, there have been 78 disciplinary
actions reported this year.

―Regardless of how many of these disciplinary actions were fraud-related, these figures further drive
home the point that appraiser competence and ethics are vital,‖ Sellers said. ―The Appraisal Institute
prides itself on its education, publications and other tools to enhance appraisers‘ competence and ethics.‖

Although Appraisal Institute members represent a large proportion of the total U.S. appraiser population,
they have been much less likely to be subject to disciplinary actions by the states than other appraisers.
In fact, non-Appraisal Institute members received more than eight times as many disciplinary actions than
members did during the past five years. Appraisal Institute members comprise about one-fourth of the
U.S. appraiser population.

The Appraisal Institute‘s research is based on an analysis of data found in the Appraisal Subcommittee
National Appraiser Registry.

To see the Mortgage Asset Research Institute‘s fraud report, go to
http://solutions.lexisnexis.com/forms/MortgageFraudCaseReport12?source=RD_fraudreport. Free
registration is required to view the report.

Appraisal Organizations Release Board Funding Model Legislation


24 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The nation‘s leading professional appraiser organizations released model state legislation April 28 that, if
enacted into law, would ensure that state appraiser boards‘ revenue remains with the boards for
enforcement and administration of licensing laws.

The Appraisal Institute was joined by the American Society of Appraisers, American Society of Farm
Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers in drafting
this model.

The resources that the boards (and their agencies or staffs) currently have at their disposal vary widely.
In some states, the boards are entirely self-sufficient and are allowed to keep all of their revenue for use
in administration and enforcement. In other states, all of the money raised by the board in the form of fees
or fines is put into the state general fund where it can be appropriated for use in other unrelated
programs. Governors also have, in times of need, unilaterally ―swept‖ money out a board‘s coffers in order
to assist in solving unrelated fiscal issues.

An Appraisal Institute review of existing state appraiser board funding statutes has assigned 16 states‘
statutes as strong, 17 as moderate and 11 as weak. Funding of the appraiser board is not dealt with in
statute in 7 states. The need to enact legislation that is based upon the model is greatest in the 11 states
with statutes that require that all of the revenue of the appraiser board be deposited directly into the
general fund, rather than into an account dedicated for the use of the appraiser board.

To view a copy of the model legislation, visit www.appraisalinstitute.org/newsadvocacy/downloads/AI-
ASA-ASFMRA-NAIFABoardFundingModelLegislation.pdf. To view a compilation of the existing state
appraiser board funding statutes, visit
www.appraisalinstitute.org/newsadvocacy/downloads/AppraiserBoardRevenueStatutes.pdf.

For more information, contact Scott DiBiasio, Appraisal Institute manager of state and industry affairs, at
202-298-5593 or sdibiasio@appraisalinstitute.org.

Federal Judge Disparages Use of AVMs to Deny Credit
A class action lawsuit that could have large-scale ramifications for appraisers is continuing its way
through the judicial system after a federal judge denied a motion to dismiss the case. The case involves
the use of an automated valuation model to cancel a home equity line of credit, while requiring an
appraisal to establish the HELOC.

The suit alleges that Chase Manhattan Bank required an appraisal by a licensed appraiser in order for
homeowner Mary Yakas to secure a HELOC; however, the bank used an AVM, not a licensed appraiser‘s
valuation, to cancel the same HELOC four years later. The bank had sought dismissal of the case, but
Judge William Alsup of the U.S. District Court for the Northern District of California denied their request in
January.

The plaintiff‘s claim is that by failing to obtain an appraisal by a licensed appraiser, the bank breached its
contract with the borrower. The plaintiff argued that the bank was obligated to provide an appraisal prior
to cancelling the plaintiff‘s HELOC and by failing to do so, the plaintiff was damaged because her property
value was assessed incorrectly.




25 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Chase had contended that the HELOC agreement was silent as to how the value of the plaintiff‘s property
would be determined for purposes of altering her credit privileges.

The judge sided on behalf of the plaintiff, notably concluding that, moving forward, ―Priority in discovery
shall be promptly given to learning the particulars of the AVM method without prejudice to discovery into
other matters.‖

The judge‘s ruling, which is only preliminary and allows the case to go to litigation, sets a precedent that
AVM valuations could be considered unreliable and misleading to consumers if consumers are being
denied credit on the basis of a non-transparent computer valuation tool as opposed to the documentation
of a full appraisal.

February Housing Mixed in Latest S&P/Case-Shiller Indices
Despite 11 of the 20 metropolitan statistical areas reporting drops in year-over-year home prices, the
annual rates of decline improved in February according to the latest Standard & Poor‘s/Case-Shiller
Home Prices indices released April 27.

The 10-city composite was up 1.4 percent and the 20-city composite was up 0.6 percent – the first time
that the annual rates for the two composites are in positive territory since December 2006, according to
the report.

As noted in the report, home prices across the country were at late summer/early autumn 2003 levels.
From peak levels, the 10-city composite was down 30.7 percent as of February and the 20-city composite
was down 30.3 percent. On a seasonally adjusted basis, the 10-city composite inched up 0.1 percent in
February compared to the previous month while the 20-city composite dropped 0.1 percent.

―While the year-over-year data continued to improve for 18 of the 20 MSAs and the two composites, this
simply confirms that the pace of decline is less severe than a year ago. It is too early to say that the
housing market is recovering,‖ David Blitzer, chair of Standard & Poor‘s Index Committee, said in the
report. ―Existing and new home sales, inventories and housing starts all show tremendous improvement
in their March statistics. The homebuyer tax credit, available until the end of April, is the likely cause for
these encouraging numbers and this may also flow through to some of our home price data in the next
few months.‖

Home prices fell in all 20 MSAs, as well as the two composites, in February compared to the previous
month except in San Diego. Of the MSAs, 12 fell by at least 1 percent. Charlotte, Las Vegas, New York,
Portland, Seattle and Tampa, recorded new index lows as measured in the current housing cycle.

While Charlotte and Cleveland had each posted seven consecutive months of negative returns as of
February, Atlanta, Boston, Denver, New York and Tampa trailed closely behind with six consecutive
negative months. However, monthly returns have improved somewhat in Atlanta, Denver, Las Vegas,
San Diego, Seattle and Washington, D.C.

Moody‘s Commercial Index Dips for First Time in Four Months
After four months of increasing commercial real estate prices, commercial property values dropped 2.6
percent in February from the previous month as the number of distressed sales grew, according to the



26 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
latest Moody‘s/REAL Commercial Property Price Indices. Prices are down 41.8 percent since peaking in
October 2007, MBA NewsLink reported.

The index, released April 20, measures the change in sales prices for commercial real estate property
based on the repeat sales of the same assets at different points in time.

"From November to January, commercial real estate prices increased by an aggregate 6.3 percent," Nick
Levidy, a managing director at Moody's, told NewsLink. "As noted in our previous reports, however, we
did not feel that these increases were sustainable in the short term, particularly given current low
transaction volumes. With continued low volume in February and a larger proportion of repeat sales
considered distressed, it is unsurprising that prices have once again headed lower."

As noted in the report, the number of sales transactions dropped in February by nearly 10 percent
measured in dollars and 30 percent measured in loan volume. However, among all property types, the
number of repeat sales increased to nearly 32 percent in February compared to just 20 percent in 2009
and 4 percent in 2008.

Although JP Morgan reported that newly signed office lease profitability has dropped by more than 60
percent, leasing activity and the pricing index bottomed in summer 2009, and commercial property
appraisals have stabilized, according to NewsLink. JPMorgan noted that appraisal-based core portfolio
investments are currently at about negative 1 percent, while total returns were positive in 2010 for the first
time in two years.

―The appraisal community adjusted pricing contemporaneously with the transaction market,‖ Dave Esrig,
a senior real estate portfolio manager at JPMorgan, told NewsLink. ―At the end of 2008 and 2009, the
corrections were quite brutal as they were in the transaction market.‖

Despite the unemployment rate stabilizing among office workers, JPMorgan reported ―a huge divergence‖
between ―office-using unemployment‖ and office occupancy. ―There was a huge amount of pessimism
early in the game so (landlords) slashed prices dramatically,‖ Esrig said. ―Tenants and landlords are both
seeing a certain stability going forward in the relative supply-demand relationship of office buildings.‖

In the retail sector, JPMorgan reported that the number of store openings increased from December 2007
through February 2010 in neighborhood centers but declined in malls and power centers as consumers
spent more on necessities while avoiding larger-ticket purchases, NewsLink reported.

JPMorgan also noted that the apartment sector has begun showing signs of stabilizing. ―The timing is
coming in as we expected, the stability in (apartment) rents is early versus other asset classes, but we do
not see the strong spikes … in apartments that we are going to see ... in office just because of the slack
of housing stock out there,‖ Esrig added.

Sales of New Homes Jumps 27 Percent in March
Spurred by mild weather and the home buyer tax credit, sales of newly built homes shot up 27 percent in
March to a seasonally adjusted annual pace of 411,000 units, according to data released by the
Commerce Department on April 23.




27 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
March‘s increase was the largest monthly gain in 47 years and the strongest month since July 2009,
according to the Associated Press.

The 411,000 units, up from February‘s revised rate of 324,000 units, outpaces the results of a survey
conducted by Thomson Reuters in which economists said they expected March‘s rate to reach only
330,000 units, according to the Associated Press.

The Internal Revenue Service said about 1.8 million households have taken advantage of the home buyer
tax credit at a cost of $12.6 billion, according to the Associated Press. "These robust numbers say the
(home buyer tax) credit is working," David Crowe, chief economist at the National Association of Home
Builders, told the Associated Press. Crowe expects new-home sales to plateau after April, weaken slightly
and then remain stable through the rest of 2010.

New home sales in March increased across the country. By region, sales in the South and Northeast
surged 44 percent and 36 percent, respectively, while the West rose six percent and the Midwest
increased 3 percent.

Median new home prices fell 3.4 percent in March to $214,000 – the lowest since August 2009 – from
February‘s downwardly revised figure of $221,600, according to an April 26 Hanley Wood Market
Intelligence report. That marks a 4.3 percent increase from a year ago.

New home inventory inched down 2 percent in March from the previous month on a non-seasonally
adjusted basis to 227,000 units, marking 31 consecutive months of declines, Hanley Wood reported. On a
seasonally adjusted basis, new home inventory fell to 228,000 units. Based on the current sales pace,
there is now a 6.7-month supply of new homes on the market on a seasonally adjusted basis, the lowest
level since December 2006.

Existing Home Sales Increase across the Country
Sales of existing homes increased 6.8 percent in March to a seasonally adjusted annual rate of 5.35
million units from February‘s rate of 5.01 million units, according to an April 22 National Association of
Realtors news release. The pace remains 16.1 percent above the March 2009 rate of 4.61 million units.

―Sales have been above year-ago levels for nine straight months, and inventory has trended down from
year-ago levels for 20 months running,‖ Lawrence Yun, NAR‘s chief economist, said in the release. ―The
home buyer tax credit has been a resounding success as these underlying trends point to a broad
stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth
that may have been wiped out without the housing stimulus measure.‖

The sales rate of single-family existing homes rose 7.3 percent in March to a seasonally adjusted annual
rate of 4.68 million units from February‘s figure of 4.36 million units, NAR reported. That marked a 13.3-
percent increase from the 4.13 million units recorded a year ago. Sales of existing condominiums and co-
ops increased 3.1 percent in March to a seasonally adjusted annual rate of 670,000 units from February‘s
figure of 650,000 units, up 39.3 percent from the 481,000 units reported a year earlier.

By region, existing home sales in the Northeast increased 6 percent in March to an annual rate of
890,000 units, up 25.4 percent from a year ago. The Midwest rose 7.2 percent to an annual pace of 1.19



28 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
million units, up 15.5 percent from a year ago. The South increased 7.1 percent to an annual pace of 1.97
million units, up 13.9 percent from a year ago, while the West rose 6.6 percent to an annual rate of 1.3
million units, up 14 percent from a year ago, according to NAR figures.

First-time buyers accounted for 44 percent of home purchases in March, up 2 percent from February,
while investors accounted for 19 percent, unchanged from the previous month. Repeat buyers accounted
for the remaining transactions. All-cash sales accounted for 27 percent of all purchases while distressed
homes accounted for 35 percent.

NAR reported that the median existing home price for all home types logged in at $170,700 in March, up
0.4 percent from a year ago. The median existing single-family home price also came in at $170,700, up
0.6 percent from a year ago, while the median existing condominium price was $170,600, down 0.7
percent from a year ago. Distressed homes typically sold at a 15 percent discount.

By region, the median price in the Northeast was $249,800, up 8.9 percent from a year ago. The Midwest
came in at $139,300, up 0.2 percent from a year ago. The South logged in at $154,800, up 5.2 percent
from a year ago, while the West came in at $209,400, down 7.9 percent from a year ago.

Existing home inventory increased 1.5 percent in March to 3.58 million units, NAR said. Based on the
current sales pace, there is now an 8-month supply of existing homes on the market, down 1.8 percent
from a year ago and 21.7 percent from the record 4.58 million units reached in July 2008.

MBA: Mortgage Application Activity Jumps in April
Loan refinance applications surged in the week ending April 16, according to the Mortgage Bankers
Association‘s weekly Mortgage Application Survey. The survey showed that the Market Composite Index,
which measures mortgage loan application activity, jumped 13.6 percent on a seasonally adjusted basis
from the previous week and 13.9 percent on an unadjusted basis.

The four-week moving average for the Market Index fell 3.1 percent on a seasonally adjusted basis.

Mortgage refinancing activity also rose with the Refinance Index increasing 15.8 percent from the
previous week. Refinancing made up 60 percent of applications, up slightly from 58.9 percent the
previous week, while adjustable-rate loan activity fell to 6 percent, compared to 6.3 percent the week
prior. The four-week moving average for the Refinance Index fell 5.9 percent on a seasonally adjusted
basis.

The MBA‘s Purchase Index increased 10.1 percent from the previous week on a seasonally adjusted
basis. On a non-adjusted basis, the index increased 11 percent from the previous week, down 5.2
percent from a year ago. The four-week moving average for the Purchase Index increased 2 percent on a
seasonally adjusted basis.

―Treasury rates fell last week causing a decline in mortgage rates. As a result, refinance applications
picked up over the week, as some borrowers took advantage of this recent rate volatility to lock in a low
fixed-rate loan,‖ Michael Fratantoni, MBA‘s vice president of research and economics, said in the
release. ―Purchase applications continued to increase coming out of the Easter holiday, as we approach
the end of the home buyer tax credit, and are up modestly over last month.‖



29 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Meanwhile, the average rate on a 30-year fixed loan decreased to 5.04 percent from the prior week‘s 5.17
percent, while points, including origination fees, increased from 0.91 to 0.98 for 80 percent loan-to-value
ratio loans, the MBA reported. The average rate on a 15-year fixed loan decreased from 4.45 percent to
4.34 percent, while points, including origination fees, increased from 0.8 to 0.98. The average rate on a
one-year adjustable rate mortgage inched down from 7.02 percent to 6.95 percent, while points, including
origination fees, increased from 0.27 to 0.28.

In related news, mortgage rates remained steady from the previous week at 5.07 percent in Freddie
Mac‘s April 22 Primary Mortgage Market Survey. As reported by Hanley Wood, the 30-year fixed rate has
averaged 5.02 percent in 2010.

Commercial/Multifamily Originations Down 46 Percent in 2009
The volume of commercial and multifamily mortgage originations dropped 46 percent in 2009 to $82.3
billion among repeat reporters in the Mortgage Bankers Association‘s 2009 Commercial Real
Estate/Multifamily Finance: Annual Origination Volume Summation released April 22.

The drop in originations, which occurred across most property types and investor groups, were spurred
by reductions in loans intended for credit companies, REITS, mortgage REITs, investment funds,
commercial mortgage-backed securities, collateralized debt obligations and other asset-backed security
conduits, the MBA said. By property type, office lending had the largest decease in originations followed
by retail and hotels/motels.

―Relatively few commercial mortgages were made in 2009, as the recession curtailed both the supply of
and demand for new mortgage debt,‖ Jamie Woodwell, MBA‘s vice president of commercial real estate
research, said in the report. ―As the recession has receded, origination volumes have picked up slightly,
but the absolute levels remain low.‖

Commercial banks and savings institutions, which were responsible for $19.8 billion, or 24 percent, of
commercial and multifamily mortgage lending activity in 2009, was the largest investor group, the MBA
reported. Representing $36.5 billion, or 44 percent, of all lending activity, the multifamily sector was the
most popular property type.

According to the report, Federal Housing Administration/Ginnie Mae loans totaled $5.8 billion in 2009, up
168 percent from 2008. However, multifamily loans for Fannie Mae only totaled $15.9 billion, down 32
from a year ago, while Freddie Mac came in at $15.2 billion, down 24 percent.

Real Estate Firms Intend to Increase Spending on Green: Survey
According to a recent survey conducted by industrial technology firm Johnson Controls, commercial real
estate companies plan to revive their investment in energy efficient technology this year after such
spending dipped in 2009, REIT.com reported April 26.

The survey showed that more than half of the 1,400 respondents from the commercial real estate sector
intend to make capital investments in energy conservation in 2010. More than 80 percent of respondents
indicated that efficiency is a ―priority‖ for all new building and retrofitting this year, REIT.com reported.




30 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Johnson Controls noted that almost 40 percent of those who responded said that limited access to capital
was holding back their ability to invest in green technologies. Respondents expressed particular interest
in low-cost strategies, such as energy efficient lighting, REIT.com reported.

Fitch: Up to 11 Percent CMBS Default Rate by Year‘s End
The default rate for $536 billion of loans packaged into commercial mortgage-backed securities has
reached 7 percent and is expected to reach 11 percent by the end of 2010, according to Fitch Ratings.

The late-payment rate, those that are at least 60 days past due, has skyrocketed over the past year
because of squeezed rent payments and the stagnant market for new CMBS, according to an April 21
Wall Street Journal story.

Among securities facing big problems is a $4.2 billion CMBS deal underwritten in 2006 by Goldman
Sachs Group Inc. and Royal Bank of Scotland Group PLC unit Greenwich Capital. The deal is expected
to see an 11.7 percent loss, the highest of any 2006 CMBS issue analyzed by Fitch, the Journal reported.

With all the defaults, the CMBS market is heading toward a restructuring, the Journal reported. According
to Deutsche Bank AG, about $70 billion in loans are in the hands of so-called special servicers, or
companies that represent holders of CMBS with underlying loans that are in default or imminent default.

Servicers have restructured about $13.7 billion of those loans, according to estimates by analysts at
Deutsche Bank. Such restructurings, which include extending loan maturities and reducing interest rates,
could help bondholders and borrowers avoid bigger losses as the economy recovers. But some
borrowers still wind up defaulting, according to the Journal.

$222 Billion Offering Shows Signs of Life in Private RMBS Market
In a major development signaling the re-emergence of the secondary market for private residential
mortgage-backed securities, Redwood Trust Inc. has disclosed it that it plans to issue about $222 million
of bonds backed by home-mortgage loans.

The bundled loans, which have been made by a unit of Citigroup Inc. over the last 11 months, will be the
first in nearly two years to be offered without a government guarantee from Fannie Mae, Freddie Mac or
any other government-sponsored entity, according to an April 22 story in The Wall Street Journal.

Reflecting the newfound caution of the financial investment sector, Redwood is being more open and
accountable in its offering to investors. According to the Journal, potential buyers of the securities are
being given more documentation relating to the mortgage borrowers‘ verified income and assets. In
addition, Redwood has opted to hold both the riskiest slice of the deal and a 5 percent stake to meet
potential future federal rules requiring companies to keep a share of their deals, which is also known as
keeping "skin in the game."

There is also a renewed emphasis on the quality of the loans. Unlike just a few years ago when
borrowers with low credit scores could get loans that would be resold on the secondary market, the
planned Redwood deal includes no borrower with a credit score below 702, according to the Journal. The
loans set to be offered are considered high-quality prime jumbo loans – with the average size of the 255
loans backing the securities hovering around $933,000.



31 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The re-emergence of the RMBS market is seen by many analysts as a key component to reviving the
economy. At the peak of the housing boom in 2006, private-label issues accounted for 56 percent of the
$2 trillion in U.S. mortgage securities sold to investors, according to Inside Mortgage Finance, an industry
publication, and reported by the Journal. Currently, around 90 percent of home-mortgage loans are
guaranteed by Fannie, Freddie or the Federal Housing Administration.

Already the preliminary term sheet Redwood filed with the Securities and Exchange Commission is
drawing interest from big banks. According to an April 22 story on DSNews.com, several of the biggest
lenders have snagged a piece of the action.

How the upcoming Redwood offering impacts the broader RMBS market remains to be seen. While
demand for this initial offering appears to be strong, some investment managers remain leery about the
long-term rejuvenation of the sector.

As Scott Simon, a managing director at Pacific Investment Management Co. of Newport Beach, Calif.,
told the Journal, ―It's hard to get excited about this deal given the current remaining uncertainties
surrounding lien priority."

Morgan Stanley Property Losses Equal $5.4 Billion
Morgan Stanley may lose $5.4 billion, or two-thirds of its $8.8 billion real estate fund, due to poor property
investments, according to fund documents reviewed by The Wall Street Journal. That likely would make it
the biggest loss in the history of private-equity real estate investing, the Journal reported April 21.

Over the past 20 years, Morgan Stanley's real estate unit was one of the biggest buyers of property
around the world with approximately $174 billion in deals since 1991; the funds for those deals were
raised mostly from pension funds, college endowments and foreign investors. The losses come from
investments in properties such as the European Central Bank's Frankfurt headquarters, a big
development project in Tokyo and InterContinental hotels across Europe, among others, the Journal
reported.

The loss also poses a huge challenge for the firm as it tries to resuscitate its Morgan Stanley Real Estate
Funds business, known as Msref. The soured investments made by the $8.8 billion fund, Msref VI
International, continue to be a distraction for Morgan Stanley as it tries to extricate the fund from complex
deals around the world. In many cases, the company can't walk away from foundering investments
because the fund made billions of dollars in guarantees, the Journal reported.

Morgan Stanley now is negotiating with lenders to reduce the fund's obligations on the money it
borrowed, its interest payments, renovation costs and other expenses, according to the Journal. Its
success or failure at reviving its business will help determine whether private equity shops run by
investment banks play as big a role in real estate in the upcoming decade as they did in the past two.

Furthermore, proposed new regulations in Washington could limit banks' ability to manage real estate
funds.

Atlantic Yards Development Reaches Agreement with Final Residents


32 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Forest City Ratner Cos. has reached agreements with the final eight residents still living in the project
footprint of its $4.9 billion Atlantic Yards mixed-use development in Brooklyn.

Agreements with seven of the residents were announced April 20, while the project's most vocal critic,
Develop Don't Destroy Brooklyn founder Daniel Goldstein, reached a separate agreement on April 21,
GlobeSt.com reported. All eight faced eviction.

In a DDDB statement, Goldstein confirms published reports that he has agreed to vacate his
condominium by May 7 in exchange for a $3 million payment. He has also agreed to step down from his
role as spokesman for DDDB, which has opposed the project since 2004, and also has removed his
name from the last lawsuit pending against the project, GlobeSt.com reported.

Goldstein said that he and representatives of the Empire State Development Corp., which had seized the
title to his property through eminent domain in March, met with State Supreme Court Justice Abraham
Gerges, who encouraged both sides to come to a settlement. Gerges had ruled in favor of the state in
March, writing that he found "no merit" in any of the 14 motions brought by Goldstein and local
businesses, GlobeSt.com reported. According to an April 23 New York Daily News story, Goldstein said
the people of a community should be consulted before the government condemns their property to make
a rich developer even richer. He said a large portion of the $3 million settlement will go toward legal fees.

The seven residents with whom FCRC reached agreement April 20 all live in rental units, and FCRC
Executive Vice President MaryAnne Gilmartin said in a statement that her company will help them find
new housing, GlobeSt.com reported.

The settlement marked the end of a David-versus-Goliath fight that has captivated Brooklyn for years.
Bruce Ratner, the chief executive of FCRC, has started work on a $1 billion basketball arena for the Nets,
the centerpiece of Atlantic Yards, and has the right to build 16 towers with up to 6,000 apartments, office
space and a hotel. At least 30 percent of the units are for tenants with moderate or middle incomes, The
New York Times reported April 21.

Servicer Asks for Stytown/Peter Cooper to Be Sold Separately
The special servicer overseeing the defaulted loans on Stuyvesant Town/Peter Cooper Village – the most
expensive single residential property deal in the U.S. – has asked a U.S. District Court judge to allow it to
proceed with an auction and sell the two massive Manhattan apartment complexes separately, Reuters
reported April 23.

Lawyers for CWCapital, the special servicer, asked the court to issue a summary judgment so it can
proceed with the sale of the complexes that until now have been thought as of one. In an April 23
research note, Deutsche Bank CMBS analysts Richard Parkus and Harris Trifon wrote that "CWCapital
undoubtedly believes that marketing the two properties for sale individually will yield broader investor
interest, if for no other reason than by shrinking the price tag," Reuters reported.

On the other side of the coin, potential owners may not be interested in managing the properties as
individual entities. The April 23 note also said, "Considering the two properties have been jointly managed
and operated since they were built following World War II, this undoubtedly yields some cost savings; it is




33 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
unclear if potential owners will be interested in buying and operating the properties separately," Reuters
reported.

When a consortium led by private equity firm Tishman Speyer bought the two complexes in 2006 for more
than $5.4 billion, about $3 billion of mortgages were securitized into CMBS bonds. Technically, Tishman
Speyer bought the properties in two separate sales, Reuters reported.

The loan was transferred into special servicing after the owner defaulted on the $4.4 billion debt used to
help finance the deal in late January, Reuters reported.

Appraiser Organizations Urge State Boards to Look at Broker Opinions of
Value
The nation‘s leading organizations of professional appraisers recently told all 50 state appraiser boards
that real estate agents and brokers may be providing broker opinions of value of commercial real estate
without appropriate appraiser credentials.

The Appraisal Institute was joined on the April 20 letter by the American Society of Appraisers, the
American Society of Farm Managers and Rural Appraisers, and the National Association of Independent
Fee Appraisers.

The organizations stated that the performance of BOVs by agents and brokers ―blatantly disregards
numerous state statutes that require appraiser credentialing for opinions of value of real estate‖ and
urged the boards to ―take aggressive enforcement action against any provider of a BOV who does not
hold an appropriate appraiser credential.‖

The organizations drew to the boards‘ attention that there are several entities in existence that offer
training programs for agents and brokers who wish to provide BOV services.

Many of these training programs purport to train agents and brokers in valuation techniques, such as the
income approach to value; applying a capitalization rate to a net operating income stream; and the
elements of cash flow-based valuation. These programs also state that brokers will be compensated for
providing such valuation services and even provide sample ranges for valuation fees.

According to the organizations, ―Performance under these conditions [may] constitute a direct violation of
many state laws that strictly prohibit compensation for valuation services to individuals who have not met
rigorous education, experience and testing requirements as certified and licensed real estate appraisers.‖

The organizations heralded Nevada as a state that already has taken enforcement action against two
agents and brokers who provided opinions of value without an appraiser‘s license.

To view a copy of the letter, visit
www.appraisalinstitute.org/newsadvocacy/letrs_tstimny.aspx#Comments.

Draft AMC Statement of Principles Open for Comments through May 1
The Appraisal Institute is accepting through May 1 public comments on the exposure draft of ―Appraiser
and Management Company Statement of Principles.‖ The Statement is a joint effort of the Appraisal



34 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural
Appraisers, and the National Association of Independent Fee Appraisers.

The principles are intended to promote and support the development of credible appraisals prepared by
competent appraisers for financial institutions and other clients.

Following the public comment period, the professional appraiser organizations are intending to invite
AMCs to adopt the Statement of Principles in their interactions with appraisers, their clients and
consumers.

A copy of the draft Statement of Principles is available at
www.appraisalinstitute.org/newsadvocacy/downloads/key_documents/AMC_StatementOfPrinciples.pdf.

To provide feedback, e-mail AMCStatementofPrinciples@appraisalinstitute.org.

Appraisal Institute Praises ‗Green‘ MLS Tool Kit
The Appraisal Institute on April 21 praised a new resource that will help real estate appraisers provide
even more reliable valuations on homes with energy efficient features.

The Green Multiple Listing Service Tool Kit (www.greenthemls.org) provides guidance on enhancing data
in the MLS, which will empower appraisers to make well-supported comparisons, analyses and
adjustments. Besides the Appraisal Institute, other organizations that collaborated on the tool kit include
the National Association of Realtors, the National Association of Home Builders and the U.S. Green
Building Council.

―We are pleased to participate in this important effort to enhance the data found in the MLS,‖ said
Appraisal Institute President Leslie Sellers, MAI, SRA. ―With more data on homes‘ energy efficient
features, appraisers will be able to perform more comparisons and analytical analyses and therefore
present even more reliable valuations, which will benefit everyone involved in a real estate transaction.‖

As Appraisal Institute member Don Briggs, MAI, SRA, wrote on the Green MLS Took Kit‘s website:
―Consumers and real estate agents frequently ask about how much green improvements increase
property values. Unfortunately, there is no way to find out because such features have not been added as
searchable fields in most MLSs today. However … certified green homes have a clear market advantage
over conventional homes.‖

The tool kit provides a snapshot of the green home industry, outlines why adopting a green initiative for
the MLS is important and offers strategies for effective changes. The recommendations in the tool kit are
a ―best practices‖ and step-by-step guide to a successful implementation.

The tool kit also contains access to supporting documents and resources that will assist the process of
greening the MLS. These resources include links to case studies of MLS systems which have completed
a green initiative, example data entry forms containing searchable green features, a glossary of green
terms, and much more.




35 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
―Given their reliance on data, appraisers would be thrilled with more robust information in the MLS,‖
Sellers said. ―That‘s especially true when it comes to a home‘s energy efficient features.‖

As Briggs wrote on the website: ―An MLS that gathers information with more accuracy becomes more
valuable to appraisers. As the green home comparable data improves, the appraiser can begin to support
the value placed on other green home features such as water efficiency, materials and resources, and
indoor environmental quality. As a result, they will be able to more accurately assess and place proper
value on green homes.‖

The Appraisal Institute is an innovative leader in green valuation. The organization signed the Vancouver
Valuation Accord with other valuation organizations, offers seminars on green valuation topics (―Valuation
of Green Residential Properties‖ and, for commercial real estate, ―An Introduction to Valuing Green
Buildings‖), and publishes relevant articles in its quarterly publications (The Appraisal Journal and
Valuation magazine). Next month, the Appraisal Institute will publish a book on the topic (―An Introduction
to Green Homes‖) and next year it plans to offer a green building certificate program.

To download the 36-page Green MLS Tool Kit, go to www.greenthemls.org/pdfs/Green_MLS_Toolkit.pdf.

Latest Gallup Poll Shows Homebuyer Sentiment Running High
Nearly three-fourths (72 percent) of Americans think it is a good time to buy a new home, up 1 percent
from a year ago but 19 percent higher than in 2008, according to a Gallup survey released April 15.

The survey found that 77 percent of Americans expect home prices in their area to either remain the
same or increase in the next year, up 13 percent from a year ago. Broken down, 34 percent of Americans
expect prices to increase, up 12 percent from a year ago, while 43 percent expect prices to remain the
same, up 1 percent from a year ago.

By region, confidence that home values will rise was strongest in the East and West, where 39 percent of
respondents in each area indicated an increase in prices, compared to 34 percent of respondents in the
South and 24 percent of respondents in the Midwest.

That confidence level, combined with low interest rates, should equate to more home sales in the short-
term, the report stated, which will not only stimulate the real estate market but also the overall economy.
However, the report noted that foreclosures and distress sales continue to be an issue for some areas of
the country as unemployment remains high.

Housing Starts, Homebuilder Confidence Rise in Latest Reports
Overall housing starts increased 1.6 percent in March to a seasonally adjusted annual rate of 626,000
units, according to U.S. Commerce Department data released April 16.

February‘s figure, originally reported as a 5.9 percent drop, was revised as a 1.1 percent increase,
according to Hanley Wood Market Intelligence‘s April 16 Key Indicator Alert.

While single-family starts dropped a slight 0.9 percent in March, multi-family starts surged 18.8 percent to
a rate of 95,000 units, according to an April 16 news release from National Association of Home Builders.




36 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
By region, overall housing starts in the South jumped 18.2 percent. However, the Midwest, Northeast and
West posted drops of 28.4 percent, 8.3 percent and 2.1 percent, respectively.

 ―After an uncertain couple of months, homebuilders are gradually getting back to what they do best as
the spring home buying season commences and consumers return to the market,‖ NAHB Chair Bob
Jones said in the release. ―While we still have a long way to go, today‘s numbers are an indication that
builders are looking down the road with a bit more optimism.‖

Overall permit activity increased 7.5 percent in March from the previous month to a seasonally adjusted
annual rate of 685,000 units. Multi-family permits rose 15.4 percent to 142,000 units, while single-family
permits increased 5.6 percent to 543,000 units. By region, overall permit activity in the Midwest and South
increased 17.6 percent and 18.4 percent, respectively, while the Northeast and West posted drops of
19.5 percent and 6.7 percent, respectively, according to the NAHB.

―The solid gain in permit issuance last month is particularly welcome news, since those numbers are
generally a reliable indicator of future building activity,‖ David Crowe, NAHB‘s chief economist, said in the
release. ―That said, considerable headwinds continue to impede housing‘s recovery, including the critical
shortage of credit for housing production that is stifling new development in reviving markets.‖

Meanwhile, homebuilder confidence increased in April, according to the latest National Association of
Home Builders/Wells Fargo Housing Market Index released April 15. The index jumped four points from
the previous month to 19, its highest level since September 2009, the NAHB reported.

The housing market index measures builders‘ confidence in the market for newly built single-family
homes. Scores lower than 50 indicate that more builders view sales conditions as poor than good.

By region, the homebuilder confidence index in the Midwest increased five points in March to 15 and four
points in the South to 21. However, the West fell two points to 13, while the Northeast remained steady at
22.

Architecture Billings Index Continues Upward Trend
Following a gain of more than two points in February, the Architecture Billings Index inched up again in
March to 46.1 from the previous month‘s reading of 44.8.

Although the index increased to its highest reading since August 2008, the score continues to indicate a
low demand for design services. Scores lower than 50 represent declining conditions, while those greater
than 50 indicate an industry-wide increase in billings.

―This is certainly an encouraging sign that we could be moving closer to a recovery phase, even though
we continue to hear about mixed conditions across the country,‖ AIA Chief Economist Kermit Baker,
Ph.D., said in an April 21 news release. ―Firms are still reporting an unusual amount of variation in the
level of demand for design services, from improving to poor to virtually non-existent. This increasing
volatility is often a sign that overall business conditions may begin to change in the coming months.‖

The regional averages in March were 50.5 for the Midwest, 40.7 for the Northeast, 46 for the West and
44.4 for the South. The sector index breakdown in March included multifamily residential at 47.3,



37 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
institutional at 46.8, mixed practice at 45 and commercial/industrial at 44.7. New project inquiries in March
came in at 58.5.

The index, released by the American Institute of Architects, is an economic indicator of construction
activity that shows a nine- to 12-month lag time between architecture billings and non-residential
construction spending. It is derived from a monthly ―Work-on-the-Boards‖ survey and produced by the AIA
Economics and Market Research Group. For more information, visit www.aia.org.

MBA Panelists Discuss HVCC, FHA Appraisal Issues
The Home Valuation Code of Conduct and Federal Housing Administration appraisal issues were among
the topics discussed at a recent Regional Conference of the Mortgage Bankers Association in New
Jersey.

At the March 18 conference, a panel of industry participants assembled by Origination News spoke about
how mortgage industry participants are handling the new appraisal realities, the pressure appraisers feel
from appraisal management companies and the impact of tighter appraisal portability rules.

The panelists included: Joseph J. Cudwadie, national sales manager of Olde City Lending Solutions, an
appraisal management company based in Washington, Pa.; Michael DiSalvio, senior account manager,
Genworth Financial, West Deptford, N.J.; E. Robert Levy, executive director of the Mortgage Bankers
Association of New Jersey and of the Mortgage Bankers Association of Pennsylvania; and Joseph
Sheridan of Real Estate Mortgage Network, Edison, N.J.

In response to the HVCC causing ―diminution in appraisal values,‖ Levy said that even lenders not subject
to the Code are reporting lower values. Appraisers are ―being very conservative because of what we just
went through and not wanting to put themselves in a position where they can be accused of coming in too
high,‖ he said.

In regard to FHA Commissioner David Stevens‘ recent assertion that 90 percent of appraisers reported
feeling upward pressure from lenders and others, AMC proprietor Cuwadie said that the HVCC is
intended to stop that, and that AMCs ―are there to set a firewall between the two.‖ He says that AMCs are
the ―whipping boy‖ in the latest controversy.

Sheridan acknowledged that appraisers ―are suffering monetarily due to [the proliferation of AMCs] and
there has to be some adjustment because some of them are being asked to do the same amount of work
for half the pay. And you know what, that is going to be a problem long term.‖

To read the full transcript of the discussion, visit
http://brokeruniverse.com/originationnews/feature/?story_id=532.

Simon Sweetens Deal for General Growth Properties
Two months after Simon Property Group Inc.‘s $10 billion bid was rejected, the mall owner said April 14
that it will match an offer from Brookfield for its rival General Growth Properties Inc. Additionally, it will
invest $2.5 billion into its reorganization, the Associated Press reported.




38 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Simon said its offer also may include an additional $1 billion investment from prominent financier John
Paulson's Paulson & Co. Simon‘s April 14 offer amounts to $10 a share. Its earlier offer of $9 per share
was rejected. Simon added that under its proposal, GGP would not receive any warrants, making the deal
less dilutive than the Brookfield bid. According to Simon, the lack of warrants equates to a benefit of at
least $895 million, or $2.75 per share, AP reported.

General Growth is considering a competing offer from Brookfield Asset Management and a group of other
investors. That deal would inject some $6.5 billion in cash in exchange for shares of the company, AP
reported.

But Simon's new and improved proposal could put it in position to eventually make a play for all of
General Growth because it replaces Brookfield as the cornerstone investor in General Growth's
recapitalization plan. That would leave Simon as one of General Growth's largest shareholders with few, if
any, competitors vying for the rest of the company, The Wall Street Journal reported April 15.

A combined Simon-General Growth entity would own more than 500 retail properties in the U.S.,
including half of the country's most lucrative malls, those with annual sales per square foot of at least
$400. A combination would hold significant clout over the rents retailers pay and where they open their
stores, the Journal reported.

Macerich Co. also hopes to bid on General Growth‘s malls before an April 29 bankruptcy hearing. The
retail landlord raised roughly $1.23 billion in equity, the largest ever secondary offering on record by a real
estate investment trust, and expects to use some of the proceeds to make an offer on some of General
Growth‘s malls. Macerich is already a partner on 12 malls with Simon, The Wall Street Journal reported.

Hotel Analysts' New Forecast: Market to Stabilize by 2011, Rebound in 2012
Hoteliers will continue to see rates decline across all tiers in 2010 but could experience a strong revenue
rebound in 2012, according to a recent forecast issued by PKF Hospitality Research.

Meanwhile, Smith Travel Research‘s updated 2010 U.S. lodging industry forecast calls for lesser drops in
rate and revenue than previously predicted and reverses its forecast of a drop in occupancy, Business
Travel News reported April 12.

STR now expects occupancy will increase 1.9 percent this year to 55.8 percent, bringing occupancy
recovery a year earlier than its previous forecasts. In November, STR said occupancy would drop by 0.2
percent this year. STR president Mark Lomanno said the recovery will pick up in the second and third
quarters of this year, then moderate, Business Travel News reported.

Revenue per available room and rates still will drop this year, though by less than it previously projected,
STR said. It expects the average daily rate will fall by 2.3 percent and revenue per available room
(RevPAR) by 0.5 percent, versus its earlier forecast of 3.4 percent and 3.6 percent drops, respectively,
Business Travel News reported.

PKF's forecast calls for even lesser declines in rate but a bigger decrease in RevPAR. The firm predicts
1.4 percent year-over-year decline in average daily rate this year and a 1.1 percent decline in RevPAR.




39 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Both RevPAR and rate will begin to inch up in 2011 and then have a stronger rebound in 2012, boosted
by projected growth in income and employment, according to PKF.

In related news, 106 hotels in the California‘s Bay Area were either in foreclosure or default on their
mortgages in the first quarter. That was up 10.4 percent from the 96 hotels in the nine-county region that
struggled with mortgage delinquencies in the fourth quarter 2009, Atlas Hospitality Group reported April
12.

This falls in line with two new reports from Lodging Econometrics, which found that nearly 200 hotels in
the U.S. are in trouble with their lenders, and 120 hotel construction projects have been put on hold.

According to an April 17 Travel Weekly story, the Distressed Hotel Asset report includes details on every
hotel with a public record of distress over the last year and a half. Many of the hotel owners are in the
midst of a workout with their lenders and may be selling or in search of new equity partners.

Lodging Econometrics‘ other report details all projects that have been forced to halt construction. Many
are in prime locations and have nationally recognized brand names, according to Travel Weekly.

―New supply additions are declining rapidly. New construction announcements into the pipeline have
been declining for eight consecutive quarters and are expected to continue to decline in the foreseeable
future. New hotels forecasted to open in 2011, 2012 and 2013 will be at cyclical lows,‖ Lodging
Econometrics CEO Patrick Ford told Travel Weekly.

However, not all hoteliers have gotten the news. Despite the 100-plus Bay Area hotels in financial
distress, San Francisco-based hotel management company Joie de Vivre Hospitality is looking to take on
$150 million in fresh investment and a minority owner. According to sources, as many as half a dozen
suitors have been negotiating with the company, but no deal has been signed, the Sacramento Business
Journal reported April 9.

March CMBS Delinquencies Surge; Stuyvesant Town Leading Contributor
Moody's Investors Service reported that the delinquency rate for commercial mortgage-backed securities
posted its largest month-to-month rise, increasing to 6.42 percent in March from February‘s rate of 5.73
percent, according to an April 14 Dow Jones Newswire report.

Two-thirds of the rise has been attributed to a $3 billion loan on the Peter Cooper/Stuyvesant Town
property in Manhattan that went into delinquency, as well as an increase in the delinquency rate on
multifamily properties from 9.36 percent in February to 12.19 percent in March.

After defaulting on nearly $5 billion in debt, Stuyvesant Town‘s ownership group, led by Tishman Speyer
Properties and BlackRock Realty Advisors, agreed to relinquish the massive complex to a group of senior
lenders who had filed a foreclosure action against the property, Dow Jones reported. The subject of the
most expensive single residential property deal in the U.S. was surrendered to creditors in late January.

Although office properties had the lowest delinquency rate in March at 4.12 percent, analysts at Moody‘s
expect the rate to increase in 2010 as hotel and multifamily delinquency rates begin to decline, according




40 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
to the Dow Jones article. Despite the Stuyvesant Town loan default, the Eastern region of the country
performed the best in March with a delinquency rate of 5.14 percent.

Fed Closes Eight Banks in Five States; Ripple Effects Felt from Last Year‘s
Closures
Federal regulators recently closed eight banks across the country, bringing to 50 the total number of bank
failures this year, according to an April 16 Associated Press report. The failure of the eight banks is
expected to cost the Federal Deposit Insurance Corporation‘s deposit insurance fund $984.7 million.

The banks include Florida-based AmericanFirst Bank, First Federal Bank of North Florida and Riverside
National Bank of Florida, with assets totaling $90.5 million, $393.3 million and $3.4 billion, respectively;
and California-based Innovative Bank and Tamalpais Bank, with assets totaling $269 million and $629
million, respectively, according to the AP. Also shut were Massachusetts-based Butler Bank, Washington-
based City Bank and Michigan-based Lakeside Community Bank, with assets totaling $268 million, $1.1
billion and $53 million, respectively.

TD Bank Financial Group, a division of Canada's TD Bank, agreed to acquire the banking operations,
including all the deposits and most of the assets, of the three Florida-based banks. Los Angeles-based
Center Bank agreed to acquire Innovative Bank‘s assets and deposits, while San Francisco-based Union
Bank agreed to acquire Tamalpais Bank‘s operations.

Connecticut-based People's United Bank agreed to acquire Butler Bank, while Washington-based
Whidbey Island Bank agreed to assume the deposits of City Bank along with $704.1 million of its assets.
A buyer has not been found for Lakeside Bank. However, First Michigan Bank has agreed to take over
the failed bank‘s direct deposit operations for federal payments.

There were 140 banks failures in the country in 2009 – the highest rate since 1992 – which cost the FDIC
more than $30 billion, according to the AP. FDIC Chair Sheila Bair expects bank failures to peak in 2010,
with the total number slightly more than in the previous year.

Meanwhile, the failure of Georgia-based Silverton Bank in May 2009 continues to be felt by several banks
that bought into some of its commercial real estate loans, Inside Business reported April 19. Five banks
that purchased portions of commercial participation loans filed a lawsuit on April 9 seeking to block the
FDIC from selling a hotel loan that the federal insurer now controls since taking control of the loan
originator, Silverton Bank. The suit demonstrates the complexities involved with seizing a bank in an era
where an increasing number loans involve more than a single lender and a single borrower.

Drop in RE Values Hampers Small Business Lending
According to an April 15 story in The Wall Street Journal, small business owners who were once able to
tap into home equity for lines of credit are finding the amount banks are willing to lend – if they‘re willing
to lend at all – down significantly, perhaps as much as 90 percent.

Prior to the deflation of the real-estate bubble, home and business properties were a reliable source of
collateral for businesses. But as real estate prices continue to decline, banks have continued to
implement stricter lending guidelines requiring more collateral. John Bredemeyer, SRA, president of
Realcorp Inc. in Omaha, Neb., says that business owners relying on home equity as a line of credit



41 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
should insist their bank completes a full appraisal with an interior inspection, which can potentially
increase the amount the bank is willing to lend.

―Often, banks have relied on public records or drive-by appraisals to base their lending decisions,‖
Bredemeyer said. ―The problem with using assessment records or quick appraisals is that this type of
price analysis fails to take into account home improvements that may increase a home‘s value.‖

But while home improvements can increase the amount of equity available in a home, Bredemeyer
reminds business owners to realize that the downturn in the residential real estate market has likely
affected the value of their home as well.

―Home equity borrowers need to position themselves to maximize the value of their property, yet they also
need to realize that the value of collateral has declined in many areas,‖ Bredemeyer said. ―To increase
their chances of maximizing a loan, requesting a full appraisal puts them in the best position to receive a
loan that makes sense for both their businesses and the bank.‖

The Journal noted Kristian Traylor, president and founder of Sanvean LLC, who bought his home in 2004
and recently thought he could get a home equity line of credit between $50,000 and $75,000 for his
Atlanta-based start-up. After checking with five banks, the highest offer he received was for $8,000.

"It was a little bit of ignorance," Traylor told the Journal. "I thought we were immune because we were in a
hot area."

Appraisal Orgs Seek RESPA Clarification Regarding AMCs and Fees to
Appraisers
The Appraisal Institute has called on the Department of Housing and Urban Development to ensure that
lender management fees are not misleadingly represented as fees to appraisers on the Good Faith
Estimate and HUD-1 documents.

Clarification, the group says, will allow consumers to see the actual costs of all services and alleviate
concerns that pit the profits of appraisal management companies against customary and reasonable fees
to appraisers.

―We believe a clarification by HUD is necessary to avoid consumers paying unnecessarily for services
reported on the appraisal line of the HUD-1 that are actually part of a lender‘s cost of doing business,‖ the
Appraisal Institute wrote in an April 8 letter to HUD Secretary Shaun Donovan. They were joined by the
American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers and the
National Association of Independent Fee Appraisers.

Of concern to the appraiser organizations is that consumers are under the false impression that appraisal
fees are going up. The appraiser organizations blame the confusion on an interpretation of the Real
Estate Settlement Procedures Act that allows fees to an AMC to be passed through the appraisal line of
the HUD-1. Such fees, for processing and administration functions, should be disclosed on the origination
charge line, along with the other processing and administration charges, the groups said.




42 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The appraiser organizations recommended several clarifications to HUD‘s interpretations of RESPA that
would distinguish the functions of appraisal and appraisal management.

To read the appraiser organizations‘ letter to HUD, visit
www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2010/AI-ASA-ASFMRA-
NAIFA_RESPA_FAQs-Final.pdf.

To read HUD‘s frequently asked questions relating to the new RESPA rule, visit
www.hud.gov/offices/hsg/ramh/res/resparulefaqs422010.pdf.

Annual External Appraisal Requirement Included in Final Investment
Standards
Among the components of the newly unveiled 2010 Global Investment Performance Standards is a
recommendation that firms require an annual external real estate appraisal using professional appraisers
and that external appraiser fees not be contingent upon the investment‘s appraised value.

Developed by the Chartered Financial Analysts Institute, and last updated in 2005, GIPS is a set of
standardized, industry-wide ethical principles that provide investment firms with guidance on how to
calculate and report their investment results to prospective clients.

According to the 2010 GIPS, beginning in 2011 firms should value their real estate investments on an
annual basis using an ―external professionally designated, certified, or licensed commercial property
valuer/appraiser.‖ Under the proposed version released for public comment, the annual external valuation
was a requirement, but was changed to a recommendation in the final version.

The 2010 GIPS guidelines retain existing language promoting the hiring of competent real estate
appraisers, including those with a professional designation.

Among other GIPS recommendations, firms are encouraged to change the external party performing the
annual appraisal every three to five years, with valuation methodologies employed being fully disclosed
and clearly presented.

In addition, the 2010 GIPS standards will require that assets be valued using a fair value methodology
when no market value is available. A recommended valuation hierarchy is included as an appendix in the
revised standards.

The CFA‘s GIPS were initially adopted by the organization in January, but not announced by its executive
committee until the close of the first quarter. Organizations in 32 countries contributed to the development
of the GIPS standards and will now play an instrumental role in the worldwide promotion of the standards.

To access the CFA‘s GIPS guidelines, visit
www.cfapubs.org/doi/pdf/10.2469/ccb.v2010.n5.1?cookieSet=1.

Distressed Homes Account for 29 Percent of Sales
Distressed home sales – including short sales and real estate owned transactions – increased in January
to their highest level since April 2009, according to an April 8 First American CoreLogic news release.



43 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Such transactions now account for 29 percent of all sales in the United States. In January 2009, 32
percent of sales fell into that category, representing the largest percentage of the market at the time,
according to First American.

Broken down by type, the REO share of the market increased to 22 percent in January, up from 19
percent in December but down from a year ago when it was at 27 percent. Short sales in January
accounted for 8 percent of sales, up from 7 percent in December and 5 percent from a year ago. During
the 12-month span, there were 740,000 REO sales and 234,000 short sales, according to First American
CoreLogic.

By market, Riverside, Calif., had the highest volume of distressed home sales in January with 62 percent
of transactions falling into this category, followed by Las Vegas at 59 percent and Sacramento, Calif., at
58 percent. Detroit had the highest volume of REO sales with 48 percent of all transactions falling into this
category. San Diego had the most short sales with 19 percent of its market falling into that category.

The discount between market sales and distressed sales has been averaging in the low to mid-30 percent
range in the last 12 months, First American said. The average non-distressed sale price in January was
$247,700, while the average distressed price was $161,600. Broken down by type, the average REO
price was $141,900 in January, while the average short sales price was $215,300.

Distressed CRE Rises 10 Percent to $187 Billion
According to Delta Associates‘ latest report, distressed commercial real estate in the U.S., including
foreclosures and REOs, totaled $187.4 billion, GlobeSt.com reported in an April 12 article. The total
represents a $17.3 billion, or 10 percent, increase over Delta‘s January report and a $49.9 billion, or 33
percent, increase over November 2009‘s figure.

Despite the increase, the rate of growth has fallen since peaking in the first half of 2009 as lenders have
become more willing to work out arrangements with struggling CRE borrowers, GlobeSt.com reported.
"But the real test of distress velocity will come this year and in 2011, as around $600 billion in loans come
due and experts predict up to 350 banks may fail," Delta stated in the report.

Retail CRE continues to struggle the most with $41.7 billion in distressed properties compared with $38.5
billion reported in January. The apartment sector had the most significant jump in distressed properties
since January, increasing from $4.9 billion to $35.8 billion.

According to Delta CEO Greg Leisch, the Washington, D.C., market remains in relatively good shape not
only because much of the region‘s distressed properties are concentrated among four companies, but
because the area‘s banks are performing well.

"We just don't have the risk of many banks failing, which is where the problems are arising in states like
Florida, Nevada and Illinois," Leisch told GlobeSt.com. "When assets fall into the hands of the FDIC, they
become liabilities to the agency, and as soon as real estate becomes a liability it is dealt with irrationally."

Commercial Price Index Rises; Now up 15 Percent over May's Bottom



44 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
According to the Green Street Advisors Commercial Property Price Index, the commercial real estate
markets rose by 2 percent in March, continuing a trend of higher values since prices bottomed in May,
Investment News reported April 11.

Green Street Advisors Inc. said property values have now risen by almost 15 percent since hitting their
lows in May, but values are still off about 30 percent from their late 2007 peak.

Another sign that the hard-hit property sector may be recovering: Reis Inc. said apartment rents rose 0.3
percent during the first quarter, the first gain in five quarters, Investment News reported.

Shopping Center Vacancies Rise, Rates Fall in First Quarter
According to Reis Inc., lease rates at shopping centers declined to $16.62 per square foot in the first
quarter, down 1 percent from the fourth quarter 2009 and down 3.4 percent from a year earlier, the Wall
Street Journal reported April 7.

That marks the seventh consecutive quarter in which lease rates for shopping centers – which are often
anchored by a grocery store and built so that all stores are directly accessible from a common parking lot
– have declined.

Reis said average lease rates at shopping malls – as opposed to centers – during the first quarter were
$38.79 per square foot annually, down 3 percent from a year earlier. That was the sixth consecutive
quarterly decline, the Journal reported.

In the meantime, vacancy rates continued to climb. Vacancies at shopping centers in the top 77 U.S.
markets increased to 10.8 percent in the January-to-March period, up 0.2 percent from the fourth quarter
2009 and up 1.3 percentage points from a year earlier, according to Reis. It is the highest vacancy rate
since 1991, when vacancies reached 11 percent. Reis said vacancy rates at malls in the top 77 U.S.
markets rose to 8.9 percent in the first quarter, up 0.1 percent from the previous quarter, the Journal
reported.

Still, the first-quarter increase was slight in comparison to earlier increases, suggesting that a bottom
could be near. One reason why rising vacancies have started to slow is because discount stores – such
as Dollar General, the electronics chain hhgregg Inc. and apparel stores like Forever 21 Inc. – are rapidly
expanding. That is offsetting some of the vacancies left by the failure of large retailers such as Linen N'
Things and Circuit City, the Journal reported.

Still, Reis director of research Victor Calanog doesn‘t predict positive rent growth until the middle of next
year at the earliest, the Journal reported.

MBA: Mortgage Application Activity Falls in April
Loan refinance applications fell in the week ending April 9, according to the Mortgage Bankers
Association‘s weekly Mortgage Application Survey. The survey showed that the Market Composite Index,
which measures mortgage loan application activity, fell 9.6 percent on a seasonally adjusted basis from
the previous week and 9.5 percent on an unadjusted basis.

The four-week moving average for the Market Index fell 6.2 percent on a seasonally adjusted basis.



45 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Mortgage refinancing activity also fell in April with the Refinance Index dropping 9 percent from the
previous week. Refinancing made up 58.9 percent of applications, up slightly from 58.7 percent the
previous week, while adjustable-rate loan activity inched up to 6.3 percent, compared to 6.2 percent the
week prior. The four-week moving average for the Refinance Index fell 8.8 percent on a seasonally
adjusted basis.

The MBA‘s Purchase Index fell 10.5 percent from the previous week on a seasonally adjusted basis. On a
non-adjusted basis, the index fell 10 percent from the previous week, down 17.5 percent from the same
period a year ago. A drop in government purchase applications, which fell to 19.1 percent, mainly caused
the Purchase Index to fall, according to the release. The four-week moving average for the Purchase
Index fell 0.9 percent on a seasonally adjusted basis.

"Applications for government mortgages dropped substantially last week, following the implementation of
an increase in FHA mortgage insurance premiums," Michael Fratantoni, MBA‘s vice president of research
and economics, said in the release. "Applications for conventional mortgages also dropped last week,
with refinance application volume continuing to drop following last week's jump in rates.‖

Meanwhile, the average rate on a 30-year fixed loan decreased to 5.17 percent from the prior week‘s 5.31
percent, while points, including origination fees, increased from 0.64 to 0.91 for 80 percent loan-to-value
ratio loans, the MBA reported. The average rate on a 15-year fixed loan decreased from 4.54 percent to
4.45 percent, while points, including origination fees, dropped from 0.92 to 0.80. The average rate on a
one-year adjustable rate mortgage inched down from 7.03 percent to 7.02 percent, while points, including
origination fees, fell from 0.29 to 0.27.

In related news, mortgage rates increased from the previous week to 5.21 percent in Freddie Mac‘s April
8 Primary Mortgage Market Survey. As reported by Hanley Wood Market Intelligence, this was the fourth
consecutive week that the 30-year fixed rates have risen and the highest it has been since August 2009.

AI Publishes New Book on Appraisal Review Process
A new book published in April by the Appraisal Institute provides practical instruction on the appraisal
review process and helps promote greater understanding between reviewers and appraisers.

―Appraising the Appraisal: The Art of Appraisal Review,‖ second edition, is written by Richard C.
Sorenson, MAI. He describes common deficiencies in appraisal reports and offers tips for preparing
careful and constructive appraisal reviews that can be applied by appraisers, lenders and other
professionals.

The guide includes updated information on scope of work and data verification, real-world examples that
highlight the qualities of both effective and ineffective appraisal reports, a new case study, handy
checklists and sample review forms.

The 255-page, illustrated softcover book (ISBN: 978-1-935328-08-7) costs $50 ($40 for Appraisal Institute
members) plus shipping and handling. To order, go to www.appraisalinstitute.org/store/p-202-appraising-
the-appraisal-the-art-of-appraisal-review.aspx




46 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Sorenson is the principal of Appraisal Management Consultants, a firm that assists financial institutions
with appraisal review, real estate valuation management and training. Sorenson was previously with First
Chicago Bank (1958-1996) – which became Bank One before merging with Chase in 2004 – in various
appraisal and management positions and was the 1995 national president of the Appraisal Institute. He
teaches appraisal courses and commercial and residential review seminars and has published numerous
articles in appraisal and banking journals.

Accounting Boards to Push for Mark to Market
International Accounting Standards Board Chairman Sir David Tweedie and U.S. Financial Accounting
Standards Board Chairman Robert Herz said they plan to focus on transparency rather than stability in a
soon-to-be-released accounting proposal, according to an April 7 Reuters article.

The two accounting rulemakers are expected to issue a controversial proposal that may change how
banks enter loans on their books.

Over the past year, Tweedie and Herz have faced pressure from politicians and banks to include
economic stability measures when forming new accounting rules. However, Tweedie and Herz disagree.
"Politicians have been saying a major objective of financial reporting is stability – we think it's
transparency," Tweedie told Reuters.

While trying to come up with a reconciliation plan over the past few months, the IASB and FASB have
been debating how banks should value financial instruments. The IASB argues that financial instruments
should be valued at amortized cost so that information about expected cash flows could be garnered.
However, despite opposition from banks, the FASB argues that all financial instruments should be valued
at market levels, which would significantly expand mark-to-market accounting practices.

The upcoming proposal will be open for public comment and considered with other proposals this fall. The
two accounting boards reportedly are particularly interested in receiving input with issues regarding
implementation as well as how regulatory capital requirements may be affected.

Freddie Mac, Others Discuss New Short Sales Environment
A ―Short Sales: The New Rules‖ audio conference, presented by Inside Mortgage Finance, will cover
short sales trends in 2010 and the impact of the government‘s Home Affordable Foreclosure Alternatives
and Home Affordable Modification Program on short sales activity.

Topics that will be covered in the April 22 presentation include: how HAFA is changing the way lenders
approach and handle short sales, the best strategies and tactics for dealing with short sales, how deed-in-
lieu of foreclosure fits into the loss mitigation mix, key processes and requirements for handling short
sales, and steps that can be taken to avoid fraud with short sales.

Speakers are: Robert Kimble, director, non-performing loans – liquidation operations, Freddie Mac; Tom
Popik, research director of the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions; Justin Rand, director of operations, REO, CitiMortgage; Chris Saitta, CEO, Equator Financial
Solutions; and moderator Guy Cecala, publisher, Inside Mortgage Finance.




47 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The 90-minute audio conference will be presented at 2 p.m. EDT April 22. Cost is $377 per dial-in site,
where multiple participants can listen in. For more information and to register, call Erika at 800-570-5744
or visit www.imfpubs.com/catalog/audioconferences/1000013375-1.html.

Rumored $500 Million Multi-Party CMBS Deal Excites Industry
Rumors are swirling that the Royal Bank of Scotland is gearing up to issue the year‘s first commercial-
mortgage-bond deal, exciting investors and giving hope to a commercial real estate market reeling from
the economic downturn. According to a March 31 article in The Wall Street Journal, the Royal Bank of
Scotland Group, through its real-estate advisory business, will offer a $500 million security backed by
existing loans that were refinanced and underwritten to stricter guidelines.

The expected RBS offering awakens a commercial mortgage-backed securities market that has been in
hibernation since December – the last time a newly issued CMBS deal was marketed. While terms of the
RBS offering have not been announced, the Journal reported that market participants expect the deal to
attract strong demand as investors look for ways to pick up higher returns when safer investments are
trading at unusually low yields and interest rates appear poised to rise.

In speaking to GlobeSt.com regarding the rumored deal, Patrick Sargent, president of the Commercial
Real Estate Finance Council, said the RBS offering should bode well for the near term.

"It‘s a good harbinger for what we are expecting and hoping is a recovery in commercial real estate
lending," Sargent said.

The commercial sector has been particularly hard-hit by tenant delinquencies, high unemployment and
cautious investors wary of a complete market collapse. But even as caution has been high, there are
plenty of investors anxious to get in on deals, especially when the risk is relatively low due to stricter
underwriting standards and lender conservatism.

"Having been through the past two years, investors are demanding (more conservative underwriting), and
loan originators and others in the process realize that this is the only way that loans are going to get
made," Sargent told GlobeSt.

The RBS is expected to officially announce its newly issued CMBS deal in the coming weeks.

Class Action Updates on Rels, Landsafe
In providing his readers with an update on the status of class action appraiser respective lawsuits against
Rels Valuation and Landsafe, blogger and attorney Peter Christensen also has called on appraisers not
to let litigation shape the real estate valuation profession.

Christensen serves as the general counsel for LIA Administrators & Insurance Services, the same
company that sponsors his Appraiser Law Blog,

Christensen notes that since the Hagens Berman Sobol Shapiro LLP filed class actions with appraisers
as putative class members against two large lenders and their affiliated appraisal management
companies, there has been ―very little news on the status of the proceeding.‖




48 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
In October 2008, the first lawsuit was filed as Capitol West Appraisals v. Countrywide and Landsafe for
alleged appraiser blacklisting. Since that time things have moved slowly. According to Christensen, the
plaintiffs‘ law firm has filed two amended complaints while lawyers for defendants Countrywide and
Landsafe filed a motion to dismiss the second amended complaint on January 15, 2010. At present, the
motion to dismiss is currently awaiting a ruling by the court.

As for Sound Appraisal v. Wells Fargo Bank and Valuation Information Technology, Christensen reports
that since the case was filed in April 2009, little has happened.

―A class action like this has five main phases,‖ Christensen said. ―Almost one year after its filing, the class
action complaint filed by Sound Appraisal is at the very first of the five stages.‖

Like the Landsafe lawsuit, the Rels case is also under a motion to dismiss.

In his guidance to avoid letting litigation guide the profession, Christiansen referenced the fact that the
Home Valuation Code of Conduct ―was the result of litigation, not legislation, and demonstrates why I
think appraisers should be skeptical of letting litigation shape their profession.‖ He added, ―My lawyer
view is that appraisers should be skeptical that any benefit will come to the appraisal profession from the
pursuit of these class actions.‖

Addressing how appraisers can effectively change the appraisal profession, Christensen wrote, ―As a
non-appraiser, I think a better result may come to appraisers from devoting as much effort into their
professional organizations and coalitions, which support professionalism and advocate for legislation and
regulation favoring the use of qualified appraisers.‖

To access the Appraiser Law Blog, visit www.appraiserlawblog.com.

February Boasts More Home Loan Recoveries than New Defaults; First
Time in 4 Years
The number of homeowners with privately insured mortgages who got back on track from default
outpaced the number who fell into default in February, according to a March 31 Mortgage Companies of
America report. The last time recoveries exceeded defaults was March 2006, Bloomberg reported April 1.

According to the MCA, 68,675 homeowners fell into default compared with 80,758 who got back on track.
By comparison, MCA reported that 98,685 new defaults and 61,195 cures were recorded in January.

Matthew Howlett, an analyst with Macquarie Group, told Bloomberg that recoveries outpacing new
defaults ―signals a turning point‘‘ for mortgage insurers. MGIC Investment Corp., Radian Group and PMI
Mortgage Insurance Co. are facing fewer claims as the economy recovers and the Obama administration
works with the nation‘s biggest banks to prevent foreclosures. Radian, which has reported three straight
annual losses, said in February that delinquencies were slowing and may fall this year, Bloomberg
reported.

The Treasury Department said March 12 that lenders in the Home Affordable Modification Program led by
Bank of America Corp. and JPMorgan Chase & Co. successfully converted 168,708 trial loan modification




49 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
plans into permanent loan revisions through February, up from 116,297 a month earlier, Bloomberg
reported.

Pending Home Sales Spike in February
The National Association of Realtors‘ pending home sales index jumped 8.2 percent in February to 97.6
from January‘s downwardly revised figure of 90.2. The index remains up 17.3 percent from the same
period a year ago.

In an April 5 news release, Lawrence Yun, NAR‘s chief economist, noted that February‘s increase may
indicate a second surge in home sales in response to the home buyer tax credit. ―The rise in buyer
contract activity may signal the early stages of a second surge of home sales this spring. The healthy
gain hints home prices are continuing to flatten,‖ Yun said in the release. ―We need a second surge to
meaningfully draw down inventory and definitively stabilize home values.‖

By region, the pending home sales index in the Northeast increased 9 percent to 77.7 in February, up
18.9 percent from a year ago. The Midwest surged 21.8 percent to 97.9, up 18.7 percent from a year ago.
The South rose 9.2 percent to 107, up 17.5 percent from a year ago, while the West fell 4.8 percent to 98,
but remained up 14.6 percent from a year ago.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year
NAR examined as well as the first of five consecutive record years for existing-home sales, according to
NAR.

Apartment Vacancies at Record High, Rates Drop
According to Reis Inc., effective rents for apartments dropped 1.5 percent in the first quarter from a year
earlier, and asking rents fell 1.6 percent. Victor Calanog, director of research at Reis, said apartment
vacancies were unchanged at 8 percent, the highest level since 1980, when the property research firm
began tracking the number, Bloomberg reported April 6.

Reis credited the high vacancies and low rates on the 9.7 percent U.S. unemployment rate. Employers
have cut 8.4 million jobs since the start of the recession in December 2007, according to Bloomberg.
Calanog said that the bigger percentage drop in asking rents than effective rents in the first quarter
means that landlords are pricing their properties lower at the outset and minimizing concessions just to
get potential renters in the door, Bloomberg reported.

According to Reis, year over year, effective rents fell the most in Las Vegas; San Jose, Calif.; Phoenix;
Seattle; and San Francisco. Rents paid by tenants climbed the most in Colorado Springs, Colo.;
Washington, D.C.; San Antonio; and Dayton, Ohio, according to Bloomberg.

Realpoint: Total CMBS Delinquencies Could Reach $70 Billion by Mid-year
Realpoint LLC‘s Monthly Delinquency Report, released March 28, projected that delinquent unpaid
balances in commercial mortgage-backed securities could climb to between $60 billion and $70 billion by
mid-year and that the delinquency percentage will grow to between 8 percent and 9 percent through mid-
2010.




50 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Based on an updated trend analysis, the report forecasts that the percentage could surpass 11 percent to
12 percent under more heavily stressed scenarios through the year-end 2010.

According to the report, unpaid CMBS increased to $47.82 billion in February, up $1.87 billion from
January, MBA Newslink reported March 31. The report pointed out that CMBS delinquencies above 90
days increased to $25.86 billion in February, with nearly $6.8 billion in 30-day delinquencies, and
foreclosures and real-estate owned loans increased to nearly $10.5 billion from $9.64 billion in January.

The report showed that retail CMBS loans had the highest volume delinquent at $11.87 billion in
February, 40 basis points above multifamily at $11.47 billion delinquent. Office loans had more than $9.3
billion delinquent, followed by hotel CMBS loans at $7.3 billion. Fitch Ratings said loan defaults for United
States hotel CMBS showed no signs of slowing down as a large concentration of loans mature next year
and in 2012, MBA Newslink reported March 28.

Specially serviced CMBS increased $4.3 billion on a net basis in February, up to a net-basis high of
$76.13 billion from $71.83 billion in January. February's specially serviced CMBS assets consisted of 29.5
percent retail properties, 22.6 percent multifamily, 19.9 percent office, 14.6 percent hotel, 10.9 percent
other property types and 2.3 percent industrial, according to the report.

For the full Realpoint report, visit ―Research Reports‖ at www.realpoint.com/RPLogin.aspx.

Survey: CRE Values to Drop in 2010
An online survey by Deloitte of more than 325 executives found that 76 percent expect commercial
property values to fall and 73 percent expect commercial asking rents to drop in 2010.

"The commercial real estate market continues to be adversely affected by one of the deepest recessions
in decades. Increased unemployment has resulted in less demand for office space, reduced rents and an
overall decline in commercial property values," E.J. Huntley, principal of Deloitte, said in a March 31
Deloitte Financial Advisory Services news release. "Right now, commercial real estate executives are
weighing their options, determining if the time is right to invest while prices remain depressed and before
interest rates begin to rise."

The survey showed that 74 percent of respondents expect interest rates to increase in 2010, with 48
percent indicating a jump of at least 50 basis points. The survey also found that 59 percent of
respondents expect cap rates to increase, with 40 percent expecting a jump of at least 50 basis points.
Moreover, 57 percent indicated that discount rates will increase, with 35 percent indicating a jump of at
least 50 basis points.

According to the survey, 47 percent of respondents indicated that they are currently investigating potential
acquisitions, while 20 percent indicated that they will begin investigating within the next year. Of the
respondents, 51 percent of real estate company executives and 39 percent of commercial property
tenants indicated that they are actively investigating potential acquisitions.

When asked how long it will take the commercial real estate market to recover fully, only 8 percent
indicated that the market will recover within the next year. Nearly two thirds – 63 percent – of respondents
indicated two to three years and 29 percent indicated that it will take four years or more.



51 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
REITs Post Best First Quarter Since 2006
Fueled by aggressive investors seeking high yields, the Dow Jones Equity All REIT Index posted an 11
percent return at the end of March, outpacing the overall stock market, according to a March 30 Wall
Street Journal article. The activity positions the index for its strongest first quarter performance since
2006.

After bottoming out in March 2009, real estate investment trusts have been on the upswing as investors
count on the commercial real estate market making a strong recovery in 2011. People are looking past
the current financial difficulties, Paul Adornato, an analyst at BMO Capital Markets, told the Journal.

Dividends have historically been the strongest selling point for REITs because they pay out 90 percent of
their taxable income. However, several REITs changed their payout policies during the economic
downturn to strengthen their bottom lines. However, after raising large amounts of equity and refinancing
debt, many REITS have made a sharp turnaround and are returning to standard dividend payout policies.

In 2009, Simon Property Group and Vornado Realty Trust, two of the largest REITs, distributed both cash
and stock as dividends. However, both companies announced that they will be returning to all-cash
dividends in 2010. "That's definitely a positive (and) likely increases the confidence in the group,"
Adornato added.

According to Green Street Advisors, the average dividend yield for REITs was 3.4 percent as of mid-
March, while S&P 500 stocks only averaged 1.88 percent, as reported in the Journal. With an average
yield of 5.2 percent, health care REITs were among the highest performers.

Commercial mortgage REITs were up 6 percent in the first quarter after falling 8 percent in 2009, the
Journal reported. In comparison, mobile home REITs posted a 28 percent year-to-date increase as of
March, according to a March 30 Investors.com report. In March, Sun Communities, which focuses on the
ownership and operation of manufactured home communities, posted a 31 percent gain.

Hotel REITs, which tend to be the most sensitive to economic downturns, jumped 21 percent in the first
quarter on investor expectations that the sector will be one of the first to recover. As reported in a March
30 Forbes.com article, analysts at Citigroup expect the hotel sector to perform well in 2010 as business
travel increases. Citigroup analysts also expect the apartment sector to perform well this year, especially
American Campus Communities REITs, as they tend to be less costly than other REITs.

Trepp: More Bank Failures, Comparable Value Loss Predicted in 2010
Trepp LLC forecasts 200 banks failing in 2010, compared to 140 bank failures in 2009 and 25 bank
failures in 2008. The analytics firm predicts the total assets of the 200 banks to be $170 billion, similar to
the 2009 total. According to Trepp‘s April delinquency report, the bank failures are a result of weakening
commercial real estate and construction loans, MBA Newslink reported April 5.

Trepp found that the highest concentration of troubled banks is in Florida, Georgia, California, Illinois,
Wisconsin, Minnesota and Michigan with weakness recently extending to Washington and Oregon. Trepp
reported that other ―areas for concern‖ are the Carolinas and Colorado and, to a lesser extent, New York
and Pennsylvania, MBA Newslink reported.



52 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Trepp research indicates that 30-day or more delinquency rates on commercial mortgage-backed
securities loans continued to rise in March to 7.61 percent, up from 6.72 percent in February and 6.49
percent in January. The percentage of loans seriously delinquent – 60 days or more, in foreclosure, real-
estate owned or non-performing balloon – were up 69 basis points to 6.66 percent. The percentage of
loans 90 days or more delinquent and foreclosures accounted for 5.15 percent of CMBS delinquencies
and foreclosures, MBA Newslink reported.

As for delinquencies by property type, hotels remain on top: hotel delinquencies increased 1.24 percent in
March to 16.89 percent, multifamily rates increased 3.32 percent in March to 13.19 percent, retail rates
increased 0.29 percent to 6.03 percent, industrial increased 0.64 percent to 5.39 percent and office
increased 0.40 percent, but remained the lowest of the major property types at 4.73 percent.

Bankrupt Hotel Chain to Be Auctioned off in May
Debt-laden hotel chain Extended Stay Inc. will hold an open auction of its holdings in May as part of its
April 2 agreement with investment firms Centerbridge Partners LP and Paulson & Co. Bidders will need to
make a $150 million deposit, The Wall Street Journal reported.

With news of the auction comes a battle for the 680-property chain. Sources said creditors led by the
Centerbridge-Paulson group originally pledged to invest $450 million in the chain, and then matched a
$905 million offer by another creditor group led by Starwood Capital Group. Sources said that Extended
Stay previously endorsed both earlier bids but signed a commitment letter supporting the Centerbridge-
Paulson plan after the group matched the Starwood bid April 2. New bids from other parties are also
possible, the Journal reported.

In March, the Starwood group proposed to invest up to $905 million in Extended Stay as part of a
reorganization plan. It agreed to provide $650 million in new capital and committed $255 million to
creditors who wanted to swap debt for cash. That topped Centerbridge-Paulson‘s $450 million offer, and
set off the matching counterbid.

Both sides are likely to argue they would do a better job of increasing the chain's value. Extended Stay
will pick the winning bidder. Any reorganization plan would be subject to approval by creditors or
bankruptcy court, the Journal reported.

Fabled Texas Stadium Gets Leveled; Future Use Unknown
April 11 has been slated as demolition day for an iconic stadium once belonging to ―America‘s Team.‖
Texas Stadium, former home of the Dallas Cowboys, is to be packed with 1,900 pounds of explosives
and leveled on that Sunday.

Exactly how the city of Irvine plans to redevelop the 80-acre site at the intersection of Texas highways
183 and 114 remains to be seen as the community of 201,000 embarks on its second year of life after the
Cowboys.

Redevelopment, which also includes another 320 acres surrounding the site, most likely won‘t begin for
another one to two years, according to a March 31 story in The Wall Street Journal. In the meantime,




53 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Irvine officials are searching for the proper way to remake their city – a city that for nearly 40 years was
defined by a stadium that stood as the welcome sign to Irvine.

―(Texas Stadium) was what people saw as the main entryway to Irving," Maura Gast, executive director of
the convention and visitors bureau in Irving, told the Journal. "We're literally changing the face, the front
entry, of the city."

The structures ultimately replacing Texas Stadium are likely to be a mix of retail stores, restaurants,
entertainment facilities, condominium housing and possibly a medical campus or other educational
buildings, which is common for developable city land.

Adding to the draw for potential investors is that the Texas Department of Transportation plans to
complete an overhaul of the highway intersection abutting the land. Furthermore, the city of Dallas is
scheduled to add a new public rail line linking shoppers, diners and visitors with whatever businesses
may one day occupy the site once renowned as home to America‘s Team.

The Cowboys‘ new home – Cowboys Stadium, located 15 miles away in the suburb of Arlington – opened
in May 2009.

ASC Unveils New Web Site
The Appraisal Subcommittee launched a redesigned Web site March 24, including added content and
tabs, improved National Registry features and increased organization. The ASC has reorganized material
under the tabs: ―What‘s New,‖ ―Resources For,‖ ―About the ASC,‖ ―Resources and Records,‖ ―National
Registry,‖ ―Legal Framework,‖ ―State Appraiser Regulatory Programs,‖ ―Frequently Asked Questions‖ and
―About this Site.‖

According to the ASC, the new site has improved search functionality for both authenticated state
regulators and non-authenticated users. Authenticated users now have the ability to update an
appraiser‘s record on the ASC‘s National Registry in real-time. Historical views of an appraiser‘s
credentials provide financial institutions and other users of appraisal services with more complete
information for determining an appraiser‘s eligibility to perform an appraisal.

To explore the new Web site, visit www.asc.gov. For a tour of the site, visit
www.asc.gov/Pages/ViewWhatsNew.aspx?ID=3.

Appraiser Indicted in Texas Fraud Scheme
An appraiser was among eight defendants found guilty for participating in a million dollar mortgage fraud
scheme in Texas, according to an April 5 U.S. Department of Justice news release. The scheme, which
involved 11 properties in the Dallas area purchased between March 2002 and January 2006, used
inflated appraisals and straw buyers to obtain large home loans that would go unpaid.

For his role in the scheme, defendant Regis Lamont Williams, a certified real estate appraiser, was
convicted on one count of conspiracy to commit wire fraud, one count of bank fraud, nine counts of wire
fraud and five counts of engaging in monetary transaction with criminally derived property. He faces a
maximum sentence of 280 years in prison as well as $7 million in fines.




54 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The news release said that after negotiating sale prices with sellers, the defendants recruited straw
buyers to create surplus loan proceeds by substantially inflating the amount for the homes. The
defendants also prepared and submitted fraudulent loan documents in the names of the straw buyers to
obtain inflated loan amounts. To conceal the fraud, the defendants would use a portion of the proceeds to
pay kickbacks to the sellers. After making a few payments on the loans, the defendants would then allow
the properties to go into foreclosure.

The Financial Fraud Enforcement Task Force, which was established in November 2009 by President
Obama, has waged an aggressive campaign to investigate and prosecute financial crimes as well as
other abuses in the financial markets. The task force is composed of a broad range of federal agencies,
regulatory authorities, inspectors general and law enforcement committed to working together and
sharing resources.




55 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Inside the Institute
AI Offers Designated Members Free ExactBid Listing
Recognizing that consumers of appraisal services are increasingly looking online, the Appraisal Institute
announced April 19 that it has partnered with ExactBid to offer AI‘s Designated members a free new
business-generating service.

ExactBid is offering Designated members a free three-county listing in its Real-estate Information
Management System, or RIMSCentral, a web-based commercial real estate appraisal ordering and
management system.

Using RIMSCentral, MAI, SRA and SRPA members of the Appraisal Institute will become part of an
online community that connects lenders, brokers, property inspectors, environmental consultants,
government agencies and others with their customers, providing a secure, easy-to-use interface for
bidding, awarding and managing documents and workflow.

―We are excited to welcome Appraisal Institute members into the RIMS community,‖ said Andrew Maisel,
ExactBid‘s vice president of sales and marketing. ―These established and respected appraisers will join
the more than 12,000 professionals already using RIMSCentral to manage their engagements and grow
their businesses.‖

According to Maisal, last year more than 20 percent of all commercial real estate lender transactions in
the U.S. were ordered through RIMSCentral.

RIMSCentral‘s appraiser directory and search engine can be accessed at www.rimscentral.com. The
directory listing will augment the Appraisal Institute‘s free, online directory of its members, which is
available at www.appraisalinstitute.org/findappraiser.

AI in the News: Immediate Past President Featured on CNBC
Appraisal Institute Immediate Past President Jim Amorin, MAI, SRA, was featured April 22 on CNBC‘s
―Power Lunch,‖ which has more than 21 million viewers. Amorin addressed consumer and home builder
concerns regarding the valuation of ―green‖ building features.

Appraisal Institute President Leslie Sellers, MAI, SRA, was featured last week by several national media
outlets, including Valuation Review, National Mortgage Professional Magazine and CBS
MoneyWatch.com. In the April 19 MoneyWatch.com article, Sellers gave consumers advice on how to get
a fair appraisal.

Also appearing in national media coverage this past week were: Jonathan Miller, Associate member, The
Wall Street Journal, New York Post, Bloomberg.com and BusinessWeek.com; and John O‘Neill, MAI,
Lodging Hospitality.

Those stories are among the recent media coverage currently included in the ―AI in the News‖ feature on
the members-only section of the Appraisal Institute Web site.




56 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Other Appraisal Institute members featured in media coverage around the country last week included
Frank Gregoire, Associate member, St. Petersburg (Fla.) Times; Jeff McGregor, SRA, The Dallas
Morning News; Brian Kelly, MAI, SRA, Pittsburgh Post-Gazette; Michael Clapp, MAI, The Business
Journal of the Greater Triad Area (Greensboro, N.C); Donald Briggs, MAI, The Frederick (Md.) News-
Post; August Johnson, Associate member, Boise (Idaho) Weekly; and Siska Hutapea, MAI, Pacific Daily
News (Hagatna, Guam).

To see the latest media coverage about the real estate valuation profession, the Appraisal Institute and its
members, go to the members-only area of the Appraisal Institute website at
www.appraisalinstitute.org/myappraisalinstitute/Default.aspx and click any of the headlines under ―AI in
the News.‖ Media coverage is updated daily and also includes the latest news releases from the
Appraisal Institute.

In Memoriam
The Appraisal Institute regrets the passing of the following Designated members who were reported to
Appraiser News Online in April: Edward F. Burke, SRA, Auburn, Calif.; Wendell W. McCoy, SRA, Mt.
Vernon, Ohio; Loyd C. Shewey, MAI, Melba, Idaho; and Stephen Whittlesey, MAI, Pasadena, Calif.

This information is listed in Appraiser News Online on a monthly basis. For a list covering the past several
years, go to the ―In Memoriam‖ page of the Appraisal Institute Web site,
www.appraisalinstitute.org/findappraiser/memoriam.aspx, which is continually updated.

AI Board Votes to Give Members More Continuing Education Options
The Appraisal Institute Board of Directors voted at its April 18-19 meeting Naples, Fla., to provide
practicing Designated members and practicing Associate members with additional options to fulfill their
Appraisal Curriculum Overview continuing education requirements.

All practicing Designated members with continuing education cycles beginning Jan. 1, 2007, or later must
complete an ACO requirement. All practicing Associate members with continuing education cycles
beginning on July 1, 2010, or later must complete an ACO requirement. Previously, this has meant
completion of the appropriate ACO course.

With changes adopted by the board, all practicing general Designated and general Associate members
can satisfy the ACO requirement by completing the general ACO course; a Level II course; a litigation,
conservation easements or historic preservation easements certificate program; or other equivalent
continuing education approved by the Admissions and Designation Qualifications Committee

Practicing residential Designated members and residential Associate members now may satisfy the ACO
requirement by completing an ACO course; a Level II course; the Real Estate Finance, Statistics and
Valuation Modeling course; a litigation, conservation easements, or historic preservation easements
certificate program; or other equivalent continuing education approved by the Admissions and
Designation Qualifications Committee

At its meeting, the board also voted to require general Associate members to attend either the Report
Writing and Valuation Analysis course or the General Appraiser Report Writing and Case Studies course




57 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
for the MAI designation. The Appraisal Institute had required both courses for the MAI designation, which
meant that general Associate members were required to attend 70 hours of report writing education.

In other action, the board directed that the Appraisal Institute‘s online directory include a statement next
to each Designated member‘s listing indicating whether he or she has completed the standards and
ethics requirement of the AI continuing education program. The change will be effective Jan. 1, 2011.
The board already had decided to include such a statement for Associate Members beginning next year.
Beginning Jan. 1, 2012, a statement as to whether a Designated member holds the status ―continuing
education completed‖ will be included with his or her listing in the directory.

In additional action, the board voted to:
          Adopt recommendations from the Directory Project Team relating to the online directory,
             addressing Designated members‘ profiles regarding competency in areas of practice,
             geographic competency and other enhancements.
          Award AI continuing education credit for taking Uniform Standards of Professional Appraisal
             Practice courses as many as three times per five-year cycle.
          Adopt a decision-making model for use throughout the organization.
          Adopt revised admissions-related manuals.
          Reject a proposal to provide Affiliate members with print copies of The Appraisal Journal only
             if they purchase a subscription.

The board also approved the only item on the 45-Day Notice:
        To adopt changes to Regulation No. 1 regarding courses required for the MAI designation.

The board also voted to send the following items to 45-Day Notice:
        Proposed amendments to Regulation No. 1, Article III, Part F, Section 9, regarding three
           appraisal reports demo alternative.
        Proposed amendments to Regulation No. 10 to provide Designated members who did not
           complete 100 hours of creditable continuing education in their most recent cycle the means to
           become ―continuing education completed‖ by Jan. 1, 2012.

The board‘s next scheduled meeting is Aug. 12-13 in Chicago.

Rick Borges, MAI, SRA, Nominated for 2011 AI Vice President
Richard L. (Rick) Borges II, MAI, SRA, was nominated for 2011 Appraisal Institute vice president by the AI
National Nominating Committee at its April 17 meeting in Naples, Fla.

In announcing the committee‘s decision at the Board of Directors‘ April 18-19 meeting, National
Nominating Committee Chair Jim Amorin, MAI, SRA, noted that board members may file petitions for
additional nominees.

The Appraisal Institute bylaws say, in part: ―Beginning in 2010, additional nomination(s) for Vice President
or any other vacant Officer position(s) not filled by automatic succession may be received from the Board
of Directors, provided a written petition signed by at least twenty percent (20%) of the Directors is
delivered in writing to the Chief Executive Officer no later than forty-five (45) days after the Nominating
Committee‘s submission of its nomination(s) to the Board.‖



58 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The Board of Directors will elect the 2011 Appraisal Institute vice president at its Aug. 12-13 meeting in
Chicago.

Borges has been a member of the Appraisal Institute since 1978. He also has been a member of the
National and Indiana Associations of Realtors and the Jackson County Board of Realtors since 1974 and
the Columbus (Ind.) Board of Realtors since 1997.

Borges received the President‘s Award from the Appraisal Institute in 2009, the Richard E. Nichols, MAI,
SRA, Lifetime Achievement Award from the Hoosier State Chapter in 2008, the Edward L. White
Achievement Award from the Hoosier State Chapter in 2000, the Dick Snyder Service Award from the
Indiana Association of Realtors in 1984 and the Realtor of the Year Award from the Jackson County
Board of Realtors in 1982.

He is an Indiana certified general appraiser, an Indiana real estate broker, an Indiana Level I and Level II
assessor-appraiser, an Appraiser Qualifications Board-certified Uniform Standards of Professional
Appraisal Practice instructor and an Indiana certified tax representative.

Borges also worked at Ivy Tech State College from 1994 to 1997 as an adjunct faculty member; at Polley
Building Supply Inc. in 1977 and 1978 as a manager; at Anne Borges Real Estate Inc. from 1974 to1977
as a broker and office manager; and at the Indiana Department of Transportation from 1972 to 1974 as a
highway technician. He is a 1982 graduate of Indiana University with a bachelor‘s degree in general
studies and a 1972 graduate of Vincennes University, where he earned a highway technology certificate.

Borges, of Greenwood, Ind., who previously lived in Seymour, Ind., for more than 50 years, has been
principal of Rick Borges Real Estate Services since 1977. He is married to B. LaVonne Borges, SRA, and
has three adult daughters and two granddaughters.

AI Annual Membership Meeting: Improving Financials Reported
The annual Appraisal Institute membership meeting occurred April 19 in Naples, Fla. Members heard that
the Appraisal Institute had a significantly better year financially in 2009 than in 2008, despite the battered
economy. The Appraisal Institute had a 2009 deficit of approximately $ 286,000, or approximately just 1.5
percent of its budget.

AI in the News: Appraisal Institute President Discusses Need for Appraisal
Standards
Appraisal Institute President Leslie Sellers, MAI, SRA, was featured in a Real Estate Finance &
Investment article April 16 that focused on the organization‘s lobbying efforts in favor of federal
regulations mandating more robust standards for commercial real estate appraisals.

In an interview conducted during his April 6-8 New York City media tour, Sellers pointed out that faulty
and deficient appraisals not only are linked to an increase in troubled loans, but also are causing losses
to the Federal Deposit Insurance Corporation‘s deposit insurance fund.

Also appearing in national media coverage this past week was author Richard C. Sorenson, MAI, whose
new Appraisal Institute-published book ―Appraising the Appraisal: The Art of Appraisal Review,‖ second



59 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
edition, was featured in an April 14 National Mortgage Professional Magazine article. Jonathan Miller, an
Associate member from the New York Metro Chapter, also appeared in national media coverage on
Bloomberg.com and BusinessWeek.com.

Those stories are among the recent media coverage currently included in the ―AI in the News‖ feature on
the members-only section of the Appraisal Institute Web site.

Other Appraisal Institute members featured in media coverage around the country last week included
Steven Norris, MAI, The Los Angeles Times; Jonathan Brooks, MAI, The Times-Standard (Eureka, Calif.)
and Contra Costa (Calif.) Times; Robert Glenn, MAI, Greater Wilmington (N.C.) Business Journal;
Samuel Long, MAI, SRA, Blue Ridge Business Journal (Roanoke, Va.); Tom Cook MAI, The Advocate
(Baton Rouge, La.) and Baton Rouge (La.) Business Report; Michael Clapp, MAI, Winston-Salem (N.C.)
Journal; Chris Skalet, Associate member, Knoxville (Tenn.) News Sentinel; and Ralph Bowley, SRA, The
(Bridgeport) Connecticut Post.

To see the latest media coverage about the real estate valuation profession, the Appraisal Institute and its
members, go to the members-only area of the Appraisal Institute Web site at
www.appraisalinstitute.org/myappraisalinstitute/Default.aspx and click any of the headlines under ―AI in
the News.‖ Media coverage is updated daily and also includes the latest news releases from the
Appraisal Institute.

AI President Conducts New York Media Tour
Appraisal Institute President Leslie Sellers, MAI, SRA, completed a three-day tour of New York City last
week, meeting with reporters at some of the nation‘s largest media outlets, in addition to seeing AI
members.

―It‘s important that we aggressively share our message that competency counts,‖ Sellers said. ―By
communicating with representatives of the country‘s top media outlets, the Appraisal Institute can spread
the word that lenders and others should rely on competent, qualified real estate appraisers to perform
valuations for risk management.‖

During 15 meetings, Sellers and AI Communications Director Ken Chitester talked with 11 representatives
of nine media outlets, in addition to six Appraisal Institute members. Sellers‘ media opportunities included
national outlets such as The Wall Street Journal, Money magazine, CNNMoney.com and Smart Money
magazine and real estate publications such as Real Estate Forum, Real Estate Finance & Investment and
National Mortgage News.

Sellers and Chitester also met with AI Designated members at institutions such as TIAA-CREF, Cushman
& Wakefield, Capital One Bank, J.P. Morgan Asset Management and Citigroup, in addition to meeting
with Metropolitan New York Chapter President Kenneth Wong, MAI.

Sellers has maintained an aggressive pace in conducting media interviews during his first three-plus
months as Appraisal Institute president, helping to boost AI media coverage to levels that dwarf even last
year‘s enormous numbers. (See next story.)

Appraisal Institute News Coverage Reaches More Than Half Billion


60 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
The Appraisal Institute and its members appeared in media coverage potentially seen, read or heard
more than half a billion times during the first quarter of 2010, garnering a publicity value of more than
$417,000.

Among the more than 529 million media impressions, the organization and its members were included in
601 news stories that appeared in 489 media outlets in three months, according to an internal AI report.
The Appraisal Institute and its members appeared in four of the nation‘s five largest newspapers, in at
least 137 cities and in at least 43 states plus the District of Columbia in the first quarter of 2010.

Appraisal Institute President Leslie Sellers, MAI, SRA, is currently featured on Delta Air Lines‘ and US
Airways‘ in-flight talk radio show ―The Innovators,‖ which reaches a potential 5.25 million travelers
monthly. In the interview with former CNN anchor Dennis Michael, Sellers talks about the role appraisers
play in the sale of a home, appraisers‘ qualifications and what the Appraisal Institute is and does.

Sellers also was featured during the first quarter in Kiplinger‘s Personal Finance magazine, where he
provided consumer-related appraisal advice, and in USA Today, where he discussed whether new home-
appraisal rules are driving down values. Also featured in national media the first three months of the year
was Immediate Past President Jim Amorin, MAI, SRA, who appeared in a CNNMoney.com article
discussing valuation of green homes.

AI in the News: Appraisal Institute ―Volunteer of Distinction‖ Featured
The Appraisal Institute‘s Dennis Key, SRA, was featured in online versions of several business journals
across the country last week, including the Birmingham Business Journal, Washington (D.C.) Business
Journal, Wichita Business Journal, Tampa Bay Business Journal, Buffalo Business First, Pittsburgh
Business Times, Los Angeles Business, Triangle (N.C.) Business Journal and Sacramento Business
Journal.

The April 12 story spotlighted Key‘s recent recognition by the Appraisal Institute as the Volunteer of
Distinction in April for Region IX. Key is a member of the Appraisal Institute Alabama Chapter. Other
Volunteer of Distinction honorees for April are Region X‘s Sandra Adomatis, SRA, of the West Coast
Florida Chapter and Region VII‘s Pamela Kinkade, SRA, of the Las Vegas Chapter.

Other members recently in the news nationally included Appraisal Institute President Leslie Sellers, MAI,
SRA, in The Christian Science Monitor‘s April 7 article about valuing green buildings; Jonathan Miller,
Associate member, in BusinessWeek.com and Yahoo! News; Charlie Elliott Jr., MAI, SRA, in National
Mortgage Professional Magazine; and Jeremy McCarty, SRA, in Mortgage Technology.

Those stories are among the recent media coverage currently included in the ―AI in the News‖ feature on
the members-only section of the Appraisal Institute Web site.

Other Appraisal Institute members featured in media coverage around the country last week included
Susan King, MAI, in the Winston-Salem (N.C.) Journal; Sally Deichmann, SRA, in the St. Louis Post-
Dispatch; William LaChance, MAI, SRA, in the New England Real Estate Journal; Susan Shipman, MAI,
on AnnArbor.com; Gregory Allison, MAI, in The Free Lance-Star (Fredericksburg, Va.); Richard Hagar,
SRA, on KPLU-FM 88.5 (NPR) Seattle; and Richard Exton, Associate member, in The (Nashville)
Tennessean.



61 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
To see the latest media coverage about the real estate valuation profession, the Appraisal Institute and its
members, go to the members-only area of the Appraisal Institute Web site at
www.appraisalinstitute.org/myappraisalinstitute/Default.aspx and click any of the headlines under ―AI in
the News.‖ Media coverage is updated daily and also includes the latest news releases from the
Appraisal Institute.

Appraisal Institute Gains 700 Fans and Followers via Facebook, Twitter
Since the March 3 launch of the Appraisal Institute‘s Facebook and Twitter accounts, the AI has amassed
more than 700 fans and followers.

The Appraisal Institute is leveraging Facebook and Twitter to keep members and other appraisal
professionals apprised of ―real time‖ developments at the Appraisal Institute and around the profession,
empowering them with the information they need to compete successfully in today‘s ever-changing
market.

The Appraisal Institute posts five to seven updates per week on each social media site. Daily postings to
Facebook and Twitter highlight topics such as media coverage of the AI and its members, AI letters to
legislators and regulators, new AI Web site resources, education, publications and events and other
breaking news.

To stay abreast of all the latest news and offerings from the Appraisal Institute on Facebook, visit the
Appraisal Institute fans page at www.facebook.com/AppraisalInstitute or follow the AI on Twitter by
visiting www.twitter.com/AI_National.

Sandra Adomatis, Dennis Key, Pamela Kinkade Named AI ―Volunteer of
Distinction‖ for April
Region X‘s Sandra Adomatis, SRA, a member of the West Coast Florida Chapter; Region IX‘s Dennis
Key, SRA, a member of the Alabama Chapter; and Region VII‘s Pamela Kinkade, SRA, a member of the
Las Vegas Chapter, each have been named an Appraisal Institute ―Volunteer of Distinction‖ for April.

The Appraisal Institute‘s member recognition program honors one member in good standing in each
region each month for their service to the organization, the profession and their community.

Adomatis has been a member of the Appraisal Institute for 26 years. Her service to the Appraisal Institute
includes serving for three years as chair of AI‘s Residential Demonstration Report Writing Committee, as
current vice chair of the AI National Education Committee and as president of the West Coast Florida
Chapter. A former Region X representative, she has held numerous positions on the West Coast Florida
Chapter‘s Board of Directors, notably dedicating herself to its Education Committee. An instructor of three
online AI courses, she has helped develop several courses and seminars, including the AI‘s current
offering of its residential green building seminar.

Adomatis has been involved in the real estate valuation profession for 29 years. Her service to the
profession includes mentoring appraisal associates on the path to earning their SRA designation and
speaking to homebuilder associations across the country on the topic of high performance houses. She
has been certified as a general real estate appraiser by the states of Indiana and Florida, and has



62 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
formerly written weekly real estate appraisal articles for the Charlotte (Fla.) Sun Times. She has owned
her own firm, Adomatis Appraisal Service, since 1992.

In her community, Adomatis serves on the Board of Directors for the Charlotte Housing Corporation, a
not-for-profit corporation providing housing for low income families, and previously served for seven years
on the Affordable Housing Committee for Charlotte County. She has worked as a mentor with young
women in her community and has dedicated her time as a speaker at various ladies conferences through
local churches. She is a member of Grace Bible Church and is the club photographer for the Charlotte
Harbor Yacht Club.

Adomatis joined one of AI‘s predecessor organizations in 1984 and earned her SRA designation in 1985.

Key has been a member of the Appraisal Institute for 20 years. His service to the Appraisal Institute
includes serving as a member of AI‘s Leadership Development and Advisory Council, chair of the
Leadership Training Project Team, chair of the Alabama Chapter Government Relations Committee, and
as a member of the Region IX Nominating Committee. A former Admissions chair for the Alabama
Chapter, he has also served the Alabama Chapter over the years as its President, Treasurer, Secretary,
and Finance chair, during that time helping to grow the chapter‘s membership and increasing the number
of educational offerings available to its members throughout the state.

Key has been involved in the real estate valuation profession for more than 30 years. His service to the
profession includes teaching appraisal courses at Auburn University of behalf of the Alabama State
Revenue Department and serving as an appraiser mentor to new appraisers in the days before state
licensing. He has been certified as a general real estate appraiser by the state of Alabama and has also
received his Alabama broker‘s license. He has been president of his own firm, Key & Company, Inc since
1979.

In his community, Key is a past president and current board member of the Walker County Board of
Realtors, former member of the local Rotary Club, and remains active in local event and relief work. He is
active in his church and has been a member of its Praise Band since 2005.

Key, 56, joined one of AI‘s predecessor organizations and earned his SRA designation in 1991.

Kinkade has been a member of the Appraisal Institute for 23 years. Her service to the Appraisal Institute
includes serving as chair of the Las Vegas Chapter‘s Government Relations Committee and as her
chapter‘s representative to the Appraisal Institute‘s Leadership Development and Advisory Council. A
former member of her chapter‘s Board of Directors, she has also served as chair of the Las Vegas
Chapter‘s Bylaws and Public Relations committees.

Kinkade has been involved in the real estate valuation profession for nearly a quarter century. Her service
to the profession includes mentoring associate appraisers, working on draft bills of appraiser
independence legislation and serving as the treasurer for the Coalition of Appraisers in Nevada, of which
she is also the immediate past president. In addition, she had served as a member of the Real Estate
Division BPO Task Force and was formerly the commissioner of the State of Nevada Commission of
Appraisers of Real Estate. She has been certified as a general real estate appraiser by the state of
Nevada and owns the company, Kinkade Appraisal.



63 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
In her community, Kinkade serves as a board member for the Las Vegas Koi Club.

Kinkade joined one of AI‘s predecessor organizations in 1987 and earned her SRA designation in 2007.
She earned a Bachelor of Arts degree in sociology from the University of California – Berkeley. She
earned her Secondary Education Certification from Sacramento State College and a Masters of Arts in
psychology counseling and guidance from the University of Northern Colorado.

Appraisal Institute Designates 25 Members in March
The Appraisal Institute conferred the MAI designation on 11 members in March and the SRA designation
on 14 members, bringing to 88 the total number of designees during the first quarter of 2010.

Three members who were already SRA members became dual-designees by earning their MAI credential
in March. They are: Martin E. Corey, MAI, SRA, Rock Island, Ill.; Patrick D. Kirchner, MAI, SRA, St. Paul,
Minn.; and Adam J. Weber, MAI, SRA, Ossining, N.Y.

The rest of the newly designated MAI members for March are: Robert J. Brown, MAI, Salt Lake City;
Dianqing Cheng, MAI, Beijing, China; Michael J. Flak, MAI, Uniontown, Ohio; Amy Hovelin, MAI, Seattle;
Jae-Cheol Kim, MAI, Seoul, Korea; Allen D. McCravy, MAI, Greenville, S.C.; Yuko Tomizuka, MAI, Tokyo,
Japan; and John R. Yast, MAI, Chicago.

The newly designated SRA members for March are: Timothy D. Backer, SRA, Arcadia, Fla.; Mark C.
Bauman, SRA, Colorado Springs, Colo.; Julie E. Bjorklund, SRA, Minneapolis; Matthew T. Caffrey, SRA,
Berkeley Heights, N.J.; George K. Demopulos, SRA, North Providence, R.I.; Lisa K. Desmarais, SRA,
Boulder, Colo.; Carole A. Doyle, SRA, Dallas; Lamar H. Ellis, III, SRA, Atlanta; Clayton W. Haehl, SRA,
Pulaski, Tenn.; Rose M. Lysobey, SRA, Walton Hills, Ohio; Robert J. Olah, SRA, El Segundo, Calif.;
Douglas G. Smith, SRA, Missoula, Mont.; Joshua B. Tanner, SRA, Mobile, Ala.; and Jofre Valencia, SRA,
Miami.

Designated members make a commitment to advanced education and defined ethical requirements. The
MAI designation is held by appraisers who are experienced in the valuation and evaluation of commercial,
industrial, residential and other types of properties, and who advise clients on real estate investment
decisions. The SRA designation is held by appraisers who are experienced in the analysis and valuation
of residential real property. Visit www.appraisalinstitute.org/membership/designated_mem.aspx for more
information on designations.

For a full list of designees by month, visit www.appraisalinstitute.org/membership/NewlyDesignated.aspx .

AI in the News: New York MAI‘s Article Featured
An article written by Peter Brooks, MAI, from the New York Metro Chapter, is featured in the April 2010
issue of Distressed Assets Investor magazine. In the article, Brooks discusses how more appraisers are
being asked to step into the murky waters of loan valuation.

Also appearing in national media coverage this past week was Jonathan Miller, an Associate member
from the New York Metro Chapter, who was featured in an April 2 article on CNNMoney.com concerning




64 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
positive developments in Manhattan‘s housing market. Miller was also featured in three separate articles
appearing in The Real Deal (New York).

Those stories are among the recent media coverage currently included in the ―AI in the News‖ feature on
the members-only section of the Appraisal Institute Web site.

Other Appraisal Institute members featured in media coverage around the country last week included
Heather Barbour, MAI, SRA, Richmond (Va.) Times; Mike Slade, MAI, SRA, The Palm Beach (Fla.) Post;
Leigh Pattalochi, SRA, Inside Tucson (Ariz.) Business; Leroy Eide, Associate member, The Austin
(Texas) Chronicle; Brent Overholt, MAI, Fort Wayne (Ind.) News-Sentinel; Gary Crabtree, SRA, The
Bakersfield Californian; Tony Pistilli, Associate member, HousingWire.com; and Steven Albert, MAI, SRA,
and Leslie Sellers, MAI, SRA, The Chicago Tribune.

To see the latest media coverage about the real estate valuation profession, the Appraisal Institute and its
members, go to the members-only area of the Appraisal Institute Web site at
www.appraisalinstitute.org/myappraisalinstitute/Default.aspx and click any of the headlines under ―AI in
the News.‖ Media coverage is updated daily and also includes the latest news releases from the
Appraisal Institute.




65 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
ECONOMIC INDICATORS – February 2010
Market Rates and Bond Yields
                                                          Feb10          Aug09            Feb09            Aug08           Feb08         Feb07
 Reserve Bank Discount Rate                               0.59           0.50             0.50             2.25            3.50          6.25
 Prime Rate (monthly average)                             3.25           3.25             3.25             5.00            6.00          8.25
 Federal Funds Rate                                       0.13           0.16             0.22             2.00            2.98          5.26
 3-Month Treasury Bills                                   0.11           0.17             0.30             1.72            2.12          5.03
 6-Month Treasury Bills                                   0.18           0.26             0.45             1.92            2.04          4.96
 3-Month Certificates of Deposit                          0.19           0.30             1.16             2.79            3.06          5.31
 LIBOR-3 month rate                                       0.40           0.69             1.65             3.00            3.12          5.35
 U.S. 5-Year Bond                                         2.36           2.57             1.87             3.14            2.78          4.71
 U.S. 10-Year Bond                                        3.69           3.59             2.87             3.89            3.74          4.72
 U.S. 30-Year Bond*                                       4.62*          4.37*            3.59*            4.50*           4.52*         4.82*
                              †
 Municipal Tax Exempts (Aaa)                              3.91           4.17             4.56             4.44            4.44          3.93
                            †
 Municipal Tax Exempts (A)                                4.71           5.12             5.46             4.96            4.63          4.24
                         †
 Corporate Bonds (Aaa)                                    5.35           5.26             5.27             5.64            5.53          5.39
                      †
 Corporate Bonds (A)                                      5.84           5.78             6.47             6.46            6.26          5.88
                         †
 Corporate Bonds (Baa)                                    6.34           6.58             8.08             7.15            6.82          6.28

Stock Dividend Yields
 Common Stocks—500                                        2.00           2.12             3.07             2.23            2.10          1.82

Other Benchmarks
                            ¶
Industrial Production Index                               101.0**        98.1**           99.3**           109.2**          112.0** 110.8**
                    ¶
Unemployment (%)                                          9.7            9.7              8.1              6.1              4.8     4.5
                                ¶
Monetary Aggregates, daily avg.
                                                                    ††             ††               ††               ††
 M1, $-Billions                                         1,710.2 1,648.3   1,562.1   1,400.0   1,367.5                                    1,359.4
                                                               ††      ††        ††        ††
 M2, $-Billions                                         8,518.4 8,413.4   8,340.7   7,790.6   7,601.6                                    7,112.0
Member Bank Borrowed Reserves
            ^                                                   ^              ^                ^                ^
 $-Billions                                               n/a            n/a              n/a              n/a              0.157        0.030
Consumer Price Index
 All Urban Consumers                                      216.7          215.8            212.2            219.1            211.7        203.5

                                                          4Q09           3Q09           4Q08             3Q08        4Q07         3Q07     4Q06
Per Capita Personal
 Disposable Income                                        35,815         35,522         35,304           35,551      34,893 34,540 33,680
 Annual Rate in Current $s
Savings as % of DPI(††)                                   4.1            3.9            3.8              2.2         1.5          1.6      2.5


* 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.
^
   The Fed stopped releasing this figure in March 2008.




66 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010
Conventional Home Mortgage Terms


                                                          Feb10       Aug09          Feb09       Aug08         Feb08          Feb07
    New House Loans—U.S. Averages
    Interest rate (%)                                     5.08         5.32          5.09          6.33          5.96           6.31
    Term (years)                                          28.2         28.4          28.9          29.1          29.2           29.5
    Loan ratio (%)                                        74.0         73.5          74.2          75.2          78.1           76.3
    Price (thou. $)                                       314.9        330.1         340.1         358.1         373.1          361.9

    Used House Loans—U.S. Averages
    Interest rate (%)                                     5.13         5.33          5.12          6.53          5.94           6.46
    Term (years)                                          27.4         28.0          28.0          28.3          27.8           29.4
    Loan ratio (%)                                        74.9         74.8          74.4          76.6          76.0           78.3
    Price (thou. $)                                       288.3        308.3         290.3         296.7         298.1          291.0

Conventional Home Mortgage Rates by Metropolitan Area

                                                       4Q09       4Q08       4Q07       4Q06
Atlanta                                                5.04       6.14       6.42       6.50
                              #
Boston-Lawrence-NH-ME-CT                               4.78       5.78       6.27       6.32
                      #
Chicago-Gary-IN-WI                                     5.11       5.97       6.44       6.62
                 #
Cleveland-Akron                                        5.05       6.17       6.57       6.67
                   #
Dallas-Fort Worth                                      5.06       6.07       6.40       6.51
                         #
Denver-Boulder-Greely                                  5.12       5.85       6.39       6.51
                        #
Detroit-Ann Arbor-Flint                                4.98       6.34       6.53       6.56
                            #
Houston-Galveston-Brazoria                             5.03       5.91       6.40       6.61
Indianapolis                                           5.32       6.34       6.65       6.80
Kansas City, MO-KS                                     4.94       5.74       6.12       6.14
                        #
Los Angeles-Riverside                                  5.10       6.06       6.43       6.51
                        #
Miami-Fort Lauderdale                                  5.19       6.17       6.59       6.84
                    #
Milwaukee-Racine                                       5.09       6.09       6.38       6.48
Minneapolis-St. Paul-WI                                5.09       5.98       6.36       6.43
                                  #
New York-Long Island-N. NJ-CT                          5.06       6.00       6.44       6.52
                           #
Philadelphia-Wilmington-NJ                             5.14       6.06       6.41       6.63
Phoenix-Mesa                                           5.18       6.30       6.45       6.61
Pittsburgh                                             5.14       6.07       6.16       6.14
               #
Portland-Salem                                         5.03       5.83       6.35       6.44
St. Louis-IL                                           5.13       6.15       6.62       6.54
San Diego                                              5.08       6.03       6.43       6.26
                                    #
San Francisco-Oakland-San Jose                         5.03       6.09       6.46       6.52
Seattle-Tacoma-Bremerton                               5.00       5.88       6.36       6.56
Tampa-St. Petersburg-Clearwater                        5.13       6.08       6.49       6.62
                                #
Washington, DC-Baltimore-VA                            5.07       6.02       6.49       6.54

* As of the first quarter 2003, the Federal Housing Finance Board no longer reported on the markets of Greensboro, Honolulu and Louisville.
¶
     Seasonally adjusted
†
††
     Source: Moody's Bond Record
     Revised figures used
#
     Consolidated Metropolitan Statistical area



67 | Appraiser News Online Vol. 11, No. 7 & 8, April 2010

								
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