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					Appraiser News Online
Vol. 11, No. 13/14, July 2010

Government Update—Commercial/General
        Fed Will Act if Economic Outlook Worsens [Posted July 28, 2010]
        White House Voices Support for Warren [Posted July 28, 2010]
        John G. Walsh to Head OCC on Temporary Basis [Posted July 28, 2010]
        Fed Forecasts Economic Recovery Slowdown [Posted July 21, 2010]
        Fed Reserve Board Nearing Full Slate of Governors [Posted July 21, 2010]
        OCC Head Dugan to Resign [Posted July 14, 2010]
        FHA Makes Changes for Lenders, Underwriters [Posted July 14, 2010]

Government Update—Residential
        FHA Board Slaps Mortgage Lenders for Non-Compliance [Posted July 28, 2010]
        Treasury Takes Heat as Foreclosure Prevention Program Stutters [Posted July 28, 2010]
        PACE Pilot Program Proposed [Posted July 28, 2010]
        Agencies‘ Oil Spill Statement Offers Suggestions to Financial Institutions [Posted July 28, 2010]
        Mortgage Brokers to Undergo Criminal Checks under New Rules [Posted July 28, 2010]
        Analyst: GSE Subpoenas Could Force $30 Billion in Buybacks [Posted July 28, 2010]
        Obama Signs Financial Regulatory Reform Bill [Posted July 21, 2010]
        Fed Governor Calls for Change in Mortgage Data Reporting [Posted July 21, 2010]
        Fannie Mae Aims to End Strategic Mortgage Defaults [Posted July 21, 2010]
        New Fannie Guidance Concerns Lenders [Posted July 21, 2010]
        FHA Inviting Comment on Risk Proposal [Posted July 21, 2010]
        Financial Reform Bill Receives Republican Support in Senate [Posted July 14, 2010]
        Debate over Future of Fannie and Freddie Begins [Posted July 14, 2010]
        FHFA Taking Steps to Recoup Fannie, Freddie Losses [Posted July 14, 2010]
        Shift in FHA Policy Creates Demand for Brokers [Posted July 14, 2010]
        Fannie and Freddie Delist from NYSE, Announce OTC Symbols [Posted July 14, 2010]
        AI Praises New Fannie Mae Guidelines [Posted July 7, 2010]
        House Passes Financial Regulatory Reform Bill; Senate Vote to Come [Posted July 7, 2010]
        FHFA Imposes Energy Retrofit Restrictions to GSEs [Posted July 7, 2010]

Inside the States
        Appraisers Permitted to Value Florida Oil Spill-effected Properties [Posted July 28, 2010]
        Fannie/Freddie Overseer Sued by California Attorney General [Posted July 21, 2010]
        Missouri Governor Signs AMC Legislation into Law [Posted July 14, 2010]

Around the Industry
        Basel Committee Nears Completion of International Reforms [Posted July 28, 2010]
        Deutsche Bank Closing its CRE Adviser Group, Report Says [Posted July 28, 2010]
        Gulf Coast Oil Crisis Spilling into CMBS [Posted July 28, 2010]
        CMBS Showing Signs of Life [Posted July 28, 2010]
        Low Loan Volume Equals Higher Profits for Lenders [Posted July 28, 2010]
        Bank Failures Up to 103 for Year [Posted July 28, 2010]



550 W. Van Buren St., Suite 1000, Chicago, IL 60607 | T 312-335-4100 F 312-335-4400 | www.appraisalinstitute.org
         20 Percent of Americans Experienced Major Economic Loss [Posted July 28, 2010]
         GM Buys AmericaCredit; Relation with Ally Financial Questioned [Posted July 28, 2010]
         New Home Sales Up in June from Record Low [Posted July 28, 2010]
         Existing Home Sales Ease in June [Posted July 28, 2010]
         Case-Shiller: May Home Prices Slightly Increase [Posted July 28, 2010]
         Purchase Applications Up in Weekly MBA Survey [Posted July 28, 2010]
         Freddie Mac: Fixed-rate Mortgages at Record Low [Posted July 28, 2010]
         Rep. Kanjorski Tells AI Summit ―Hard Part of the Bill Occurs Now‖ [Posted July 21, 2010]
         Administration Needs Appraisers‘ Help, FHA‘s Stevens Says at AI Summit [Posted July 21, 2010]
         JPMorgan Chase Gets Tough on Short Sale Deficiencies [Posted July 21, 2010]
         44 Percent of Americans Expect Economy to Improve, Survey Says [Posted July 21, 2010]
         Foreclosure Filings Reach 1.65 Million in First Half of Year [Posted July 21, 2010]
         FASB Proposes Fair Value Reporting Change for Investment Properties [Posted July 21, 2010]
         Homebuilder Confidence Falls for Second Consecutive Month [Posted July 21, 2010]
         June Housing Starts Dip, Permit Activity Increases [Posted July 21, 2010]
         Freddie Mac: 30-Year Mortgage Rates Remain at Record Lows [Posted July 21, 2010]
         Recovery Rates Edge Up in RCA Second Quarter Survey [Posted July 21, 2010]
         Goldman Fined $550M in Civil Fraud Charges [Posted July 21, 2010]
         Randy Williams, MAI, SR/WA, Appointed IRWA President-Elect [Posted July 21, 2010]
         MBA Survey: Refinance Activity Picks Up as Fixed Rates Fall [Posted July 21, 2010]
         RICS Joins The Appraisal Foundation as International Sponsor [Posted July 21, 2010]
         Demand for Design Services Continues to Remain Low, AIA Says [Posted July 21, 2010]
         New AI Seminar: Advanced Spreadsheet Modeling [Posted July 21, 2010]
         25 Percent of Americans Hurt by Low Credit Scores [Posted July 14, 2010]
         Federal Bank Closures Mount to 87 [Posted July 14, 2010]
         Wells Fargo Downsizes, Cuts Nearly 4,000 Jobs [Posted July 14, 2010]
         Banks Re-establish ―No-doc‖ Loans [Posted July 14, 2010]
         Mortgage Rates Continue Falling to Record Lows: Bankrate [Posted July 14, 2010]
         Yahoo, Zillow Announce Real Estate Ad Partnership [Posted July 14, 2010]
         MBA Report: Commercial Real Estate Declines Easing [Posted July 14, 2010]
         Macquarie Enters U.S. Commercial Mortgage Market [Posted July 14, 2010]
         Mortgage Delinquencies Up after Months of Improvement [Posted July 14, 2010]
         CMBS Delinquencies Could Reach $90 Billion: Realpoint [Posted July 14, 2010]
         Appraisal Institute‘s Terry Dunkin Appointed to FIABCI Post [Posted July 14, 2010]
         Purchase Applications Lowest Since 1996, MBA Weekly Survey Shows [Posted July 14, 2010]
         Appraisal Institute Submits USPAP Comments to ASB [Posted July 14, 2010]
         The Appraisal Foundation Appoints Three New Trustees [Posted July 14, 2010]
         New AI Webinar Recording Available: Financial Reform Legislation [Posted July 14, 2010]
         Closing Date for Homebuyer Tax Credit Extended [Posted July 7, 2010]
         Mortgage Rates Sink to Lowest Level in 50 Years [Posted July 7, 2010]
         U.S. Office Vacancy Rate Highest in 17 Years: Reis [Posted July 7, 2010]
         Discounts on Foreclosures Averaged 27 Percent [Posted July 7, 2010]
         Distressed CRE at Nearly $167 Billion [Posted July 7, 2010]
         NAR: May Pending Home Sales Fall after Tax Credit Expires [Posted July 7, 2010]
         MBA: Mortgage Refinancing Activity Up in Latest Survey [Posted July 7, 2010]
         Online Lending Application Volume to Triple by 2013 [Posted July 7, 2010]



2 | Appraiser News Online Vol. 11, No. 13/14, July 2010
         Chinese Bank Infiltrates U.S. CRE Market [Posted July 7, 2010]
         AI‘s Valuation Magazine Wins National Design Award [Posted July 7, 2010]
         AQB Issues Exposure Draft on Validity of Exam Results [Posted July 7, 2010]

Inside the Institute
         AI in the News: AI President Praises Passage of Financial Reform Bill [Posted July 28, 2010]
         In Memoriam [Posted July 28, 2010]
         AI Media Coverage Potentially Seen 1.3 Billion Times [Posted July 21, 2010]
         AI in the News: AI Members Comment on Fannie Mae Appraisal Updates [Posted July 21, 2010]
         AI in the News: AI Committee Chair Hails New Guidelines [Posted July 14, 2010]
         Appraisal Institute Unveils Core Competency Model [Posted July 14, 2010]
         New CE Requirements Take Effect for Most AI Members [Posted July 14, 2010]
         AI in the News: AI President Hails Financial Reform Bill [Posted July 7, 2010]
         Four Members Named AI ―Volunteer of Distinction‖ for July [Posted July 7, 2010]
         Appraisal Institute Designates 23 Members in June [Posted July 7, 2010]

Economic Indicators – June 2010




3 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Government Update – Commercial/General
Fed Will Act if Economic Outlook Worsens
Federal Reserve Chairman Ben Bernanke told lawmakers July 21 that he is prepared to take further steps
to support the economy should the nation‘s economic outlook worsen. In presenting the Fed‘s semiannual
monetary policy report to Congress, Bernanke testified that his agency is ―considering all options,‖ The
New York Times reported.

―We are ready, and we will act if the economy does not continue to improve, if we don‘t see the kind of
improvements in the labor market that we are hoping for and expecting,‖ Bernanke told members of the
House Financial Services Committee.

Particularly worrisome to Bernanke is continued high unemployment, which has a residual effect on
consumer spending and spurs stimulus spending. Democrats especially are urging the Fed chief to move
more aggressively to kick-start job growth, according to the Times.

As it stands, the Fed has held its benchmark short-term interest rate at a record low, a range of zero to
0.25 percent, since the end of 2008. While many economists do not expect the Fed to begin to tighten
monetary policy until next year at the earliest, Bernanke intimated to lawmakers that his agency could
extend the historically low interest rate even longer, the Times reported.

To prop up the struggling economy, Bernanke also indicated that the Fed could lower the interest rates it
pays on excess reserves – the funds banks keep at the Fed above what they are required to, currently
about $1 trillion, according to the Times. As another option, Bernanke told lawmakers that the Fed could
also further expand its balance sheet, which nearly tripled as the central bank bought up mortgage bonds
and government debt to put downward pressure on long-term rates.

Bernanke‘s verbal commitment to support the economy if conditions worsen came one day after the Fed
chair had signaled in his first day of testimony that he had no immediate plans to take any further steps in
terms of monetary policy or regulatory action.

White House Voices Support for Warren
Though not a direct endorsement, White House press secretary Robert Gibbs called Elizabeth Warren
―very confirmable‖ when asked by reporters July 26 about her position as the leading candidate to run the
new Consumer Financial Protection Agency.

President Obama must select a nominee to head the newly created CFPA, an office that will be housed in
the Federal Reserve after it was created by the passage of the financial regulatory reform bill earlier in
July.

Warren, who is currently serving as chair of a congressional panel overseeing the 2008 Wall Street
bailout, is being touted by Democrats as the ideal candidate to lead the new office. But according to The
Hill newspaper and website, there are serious concerns about whether Warren – who Republicans view
as unqualified to head the CFPA – will be able to muster the votes necessary to be confirmed by the
Senate.



4 | Appraiser News Online Vol. 11, No. 13/14, July 2010
So far, Warren has gained valuable endorsements from a number of notable figures in Washington,
including House Financial Services Committee Chairman Barney Frank, D-Mass., and Treasury Secretary
Timothy Geithner, The Hill reported.

Obama has yet to put a specific date on when he will announce his nominee – although with the
establishment of the CFPA a high priority following the enactment of the reform bill, the President is
expected to make his selection in the coming weeks.

John G. Walsh to Head OCC on Temporary Basis
John G. Walsh, currently chief of staff for the Office of the Comptroller of the Currency, has been picked
by the Obama administration to head the OCC on a temporary basis following the planned departure of
current OCC Chairman John Dugan, The Associated Press reported July 23.

Walsh, who joined the OCC in Oct. 2005, currently serves as the OCC's senior advisor on all matters,
represents the comptroller in internal and external meetings and events, provides expert policy advice,
and oversees the agency's public affairs, congressional liaison, banking relations, and enterprise
governance functions, according to the OCC website.

Prior to joining the OCC, Walsh served on the Senate Banking Committee from 1986 to 1992 and as an
international economist for the Treasury Department from 1984 to 1986. He also worked for the Group of
30 before coming over to the OCC, serving as the company‘s director from 1995 to 2005.

Dugan, whose five-year term in office expires Aug. 14, announced in early July that he would be stepping
down from the position he has held since appointed by President George W. Bush in 2005. As
comptroller, he has been responsible for regulating 1,500 of the nation's banks including the largest
financial institutions.

His departure does not come without its critics. Dugan faced disapproval from industry analysts for
pushing policies that benefited the financial sector at the expense of consumers. According to The
Associated Press, he also faced criticism for blocking states' attempts to crack down on abusive lending
by national banks, during which time he claimed having separate sets of state rules governing banks
would be too costly and confusing for the banks operating across state lines to manage.

Fed Forecasts Economic Recovery Slowdown
In its latest economic forecast released July 14, the Fed predicted that economic growth will slow; high
unemployment will persist; and deflation will cause businesses to cut-back on spending, according to a
July 15 article on CNNMoney.com. Despite the Fed‘s pessimism, however, the central bank declined to
take any new policy actions, preferring to leave interest rates alone and not tinker with stimulus programs
that could prove risky.

Recent data released by the Fed shows that the economy grew at a rate of just over 2 percent in the April
through June quarter, not the 3 to 3.5 percent previously thought. The increase in gross domestic product
also lagged behind Fed expectations, growing at a rate of 3 to 3.5 percent this year, not the 3.2 to 3.7
percent predicted.




5 | Appraiser News Online Vol. 11, No. 13/14, July 2010
The Washington Post reported July 15 that the prospect of lower economic growth could translate into
prolonged unemployment. Fed leaders expect the jobless rate to be 9.2 to 9.5 percent in the fourth
quarter, and to still be 8.3 to 8.7 percent at the end of 2011, both slightly higher than in the Fed‘s April
forecasts.

On a positive note, the Fed revealed it sees little threat from inflation. The central bank forecasts that
prices will rise 1 to 1.1 percent this year, compared with the 1.2 to 1.5 percent rate forecast in April – and
well below the 1.7 to 2 percent inflation rate that the Fed targets over the longer term.

In addition, the Fed also sees signs of improvement in the business sector, which saw investment in
equipment and software rise rapidly last quarter and household spending continue to advance, despite
the weak job market.

But the Post also reported that Fed officials are being cautious about the near- and short-term futures of
the economy. While no immediate policy actions have been taken, Fed leaders agreed to explore options
for supporting the economy further in case conditions worsen. Potential actions the Fed could take to
stabilize the economy would include prolonging the timeframe for near-zero interest rates, cutting the
interest rate on banks' reserves and buying some additional mortgage securities.

According to the Post‘s report, the Fed could also consider taking more aggressive steps, such as large-
scale purchases of Treasury bonds or mortgage backed securities and implementing strategies to
increase the money supply and reduce long-term interest rates.

Fed Reserve Board Nearing Full Slate of Governors
With President Obama‘s three picks to fill vacant seats on the Federal Reserve Board of Governors
meeting with lawmakers on July 15, the Fed is moving closer to its first full slate of governors in nearly
four years.

According to CNNMoney.com, Peter Diamond, a professor at the Massachusetts Institute of Technology;
Sarah Bloom Raskin, the Maryland commissioner of financial regulation; and Janet Yellen, the president
of the San Francisco Federal Reserve Bank, told Senators that they are ready to help the central bank
with its vastly expanded duties to ensure financial stability and would use the lessons learned during the
financial crisis to better handle their responsibilities.

If Diamond, Raskin and Yellen are confirmed by the Senate, Obama will have nominated five of the seven
members on the Fed's Board of Governors and will have filled the Board for the first time since before
President Bush left office.

CNNMoney reported that all the nominees promised to be strong bank regulators and to promote
economic growth – which remains a vital concern for the nation after the Fed lowered its expectations on
economic recovery earlier this month, predicting unemployment to stay between 8.3 and 8.7 percent next
year. Yellen, who has been tapped by Obama to serve as vice chairperson of the Federal Reserve, also
downplayed any notion that she and her fellow nominees would put immediate economic growth over the
threat of inflation by saying that she is "wholeheartedly committed" to the goal of price stability.




6 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Referring to the Fed's current policy of low interest rates, Yellen also said that "when the appropriate time
comes, we must withdraw the extraordinary monetary accommodation now in place in a careful and
deliberate fashion," CNNMoney reported. Currently, the central bank has kept its fed funds rate near zero
since December 2008, in an effort to spur economic activity and a recovery.

The Senate‘s first confirmation hearing was largely a disjointed affair, according to CNNMoney‘s report,
due to the pending vote on the financial regulatory reform bill. Now that President has signed the reform
legislation, there should be more focus at future hearings into how the nominees intend to fulfill their
duties to the Fed.

OCC Head Dugan to Resign
Comptroller of the Currency John Dugan said in a July 8 letter to President Obama that he will resign in
August when his five-year term in office expires. Originally appointed by President George W. Bush,
Dugan he said he will depart the job Aug. 14.

―Through two administrations and under three secretaries of the Treasury, I have had the great honor of
serving as the 29th Comptroller of the Currency,‖ Dugan said in the letter posted on the Office of the
Comptroller of the Currency‘s website. ―In sum, it has been the very highest privilege to serve our nation.‖

The OCC oversees national banks and U.S. divisions of foreign banks. It regulates the largest Wall Street
retail banks, as well as 1,500 smaller institutions. Financial institutions that are overseen by the OCC
control more than half the banking assets in the industry.

The Associated Press reported that during the financial crisis, the OCC helped run "stress tests" on the
nation‘s largest banks to see if they could survive a deeper recession. The agency is also widely credited
for crafting and implementing rescue efforts including the $700 billion Troubled Asset Relief Program.

FHA Makes Changes for Lenders, Underwriters
In response to changes in real estate and financing markets, the Federal Housing Administration made
revisions July 6 to its Multifamily Housing programs that are intended to mitigate the Department of
Housing and Urban Development‘s risk while ensuring the continued availability of FHA insurance.

The FHA‘s policy changes in HUD Mortgagee Letter 2010-21, will take effect in September. Included in
the FHA‘s changes are updates to the agency‘s underwriting policies, plans to increase lender and
underwriter quality, and new policies to align loan application, submission and approval standards.

―The core program underwriting standards have not been adjusted since the inception of the program,
and it is appropriate to do so at this time,‖ the Mortgagee Letter stated. ―FHA is committed to playing a
critical role in restoring health to the multifamily housing market.‖

Among the new requirements, the FHA is raising debt service coverage ratios and lowering loan-to-value
and loan-to-cost ratios. The FHA is also requiring additional verification of a property's financial
performance, an expanded review of the borrower's credit and the prescreening of certain applications to
identify loans that may fail to make it to closing.




7 | Appraiser News Online Vol. 11, No. 13/14, July 2010
―These are the first updates to our underwriting standards since the inception of FHA‘s multifamily
programs – some of which are over 40 years old,‖ U.S. Department of Housing and Urban Development
Deputy Assistant Secretary Carol Galante said in a news release. ―These policy changes reflect many of
the lending industry‘s best practices and standards that have evolved in the multifamily market.‖

Within the announced changes to the FHA‘s underwriting guidelines is specific appraisal language. The
FHA noted that pre-application exhibits for new construction must include preliminary appraisal work with
a narrative rental and expense analysis, and an estimate of land value for new construction projects by
comparable analysis.

In addition, there is the directive that the appraisal and market studies for all new construction and
substantial rehabilitation projects with significant tenant displacement should be completed by different
firms. This requirement can be waived on a case-by-case basis, however, if it is deemed that the
appraiser or appraisal firm is capable of performing both the appraisal analysis and a macro-economic
market analysis, and if the strength of the market is not in question, according to the Mortgagee Letter.

―Today‘s changes are a much needed step to insure that FHA multifamily programs are sound,‖ FHA
Commissioner David H. Stevens said in a news release. ―These program updates will help us to continue
serving our mission of providing liquidity to the multifamily market and decent, affordable rental housing to
our nation‘s communities.‖

To view the complete set of policy changes introduced by the FHA, visit
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-21ml.pdf.




8 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Government Update – Residential
FHA Board Slaps Mortgage Lenders for Non-Compliance
The Federal Housing Administration‘s Mortgagee Review Board announced dozens of administrative
actions against FHA-approved lenders on July 26 for failing to meet its requirements. The recent
sanctions bring to nearly 1,500 the number of administrative actions taken against lenders this year.

"Lenders should know by now that FHA will not tolerate fraudulent or predatory lending practices," FHA
Commissioner David Stevens said in a news release. "Any FHA-approved lender that does business with
us must follow our standards. If we determine that our partners are not playing by the rules, we will take
action – it's that simple."

This year‘s actions against lenders have included reprimands, probations, suspensions, withdrawals of
approval and civil money penalties. The Board‘s recent actions were part of an effort to further protect
homeowners from abusive or unfair lending practices, Credit.com reported.

FHA's Mortgagee Review Board sanctions FHA-approved lenders for violations of the agency's program
requirements. For serious violations, the Board can withdraw a lender's FHA approval so that the lender
cannot participate in FHA programs. In less serious cases, the Board enters into settlement agreements
with lenders to bring them into compliance. The Board can also impose civil money penalties, probation,
suspension, and issue letters of reprimand, the FHA‘s release said.

The FHA has been instrumental in a number of programs aimed at preventing foreclosure, including the
Hardest-Hit program, recently launched to provide more than $1.5 billion to states most heavily affected
by the housing crisis. Nevada, Michigan, California, Florida and Arizona are among the states that have
received funding to help create programs for homeowners defaulting on their mortgage loans, Credit.com
reported.

For a full listing of the actions taken by the Board, see the Federal Register notice at
http://frwebgate1.access.gpo.gov/cgi-bin/PDFgate.cgi?WAISdocID=Rsc0ui/5/2/0&WAISaction=retrieve.

Treasury Takes Heat as Foreclosure Prevention Program Stutters
The Treasury Department took criticism from Congressional overseers at a July 21 hearing over its failure
to meet its goals of keeping struggling borrowers in their homes under the government‘s foreclosure
prevention program.

Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program, told members of
the Senate Finance Committee that the Obama administration‘s program to help homeowners avoid
foreclosure has fallen far short of its goals, in part because the Treasury has failed to spell out what its
objectives should be, according to a July 21 New York Times report.

Barofsky‘s sentiments were echoed by two other prominent government watchdogs: Elizabeth Warren,
chairwoman of the Congressional Oversight Panel for the bailout, and Richard Hillman, managing director
for financial markets and community investment at the Government Accountability Office.




9 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Warren told lawmakers that the bailout program had been successful in averting an economic collapse,
but that it was ―behind the curve‖ regarding the rate at which struggling homeowners are being helped.

Hillman disclosed that a recent GAO report had found that the program ―made limited progress in
preserving homeownership, has suffered from inconsistent program implementation, and continues to
confront additional challenges,‖ the Times reported.

The Obama administration‘s loan modification program, formally known as the Home Affordable
Modification Program, was established last year to help 3 to 4 million struggling homeowners at risk of
foreclosure by working with their lenders to lower monthly mortgage payments. Under the program,
mortgage servicers are offered incentive payments to complete mortgage modifications, which typically
involve reductions in principal or in the interest rate.

But watchdogs have noted that qualifying for a permanent modification is complex and requires several
steps. Borrowers must document economic hardship, demonstrate a certain debt-to-income ratio and
then prove that they live in the home. Since the $50 billion program was implemented in March 2009, only
390,000 homeowners have seen their mortgage terms permanently modified, according to the Times.
Conversely, the number of program trial modifications cancelled since the program began has reached
520,814, according to data released by the Treasury on July 20.

The silver lining for the Obama administration may be that loan modifications are on the rise. More than
51,200 troubled homeowners received long-term mortgage modifications in June. On top of that,
delinquency rates have remained low since late last year, with only 5.8 percent of those who received
permanent modifications at the end of 2009 being 60 days or more delinquent after six months in the
program, according to the Treasury.

PACE Pilot Program Proposed
Lawmakers have come to the aide of controversial Property Assessed Clean Energy bond programs by
allowing the Federal Housing Finance Agency to issue a pilot study to gather data on how the programs
affect home loans – a move intended to evaluate a major FHFA concern, The Bond Buyer website
reported July 23.

Earlier in July, the FHFA effectively shut down PACE bond programs by telling Fannie Mae and Freddie
Mac, which are overseen by the agency, to no longer purchase mortgages with PACE bonds attached.
PACE bond programs allow homeowners to finance solar panels and other energy-saving improvements
through their property tax bills. Currently 21 states and the District of Columbia have implemented such
programs.

But the FHFA is worried that these programs pose too much risk, Bond Buyer reported. The regulator‘s
main concern relates to how the programs are structured, with special focus on how available funds will
be used if a homeowner fails to make their mortgage payments. The FHFA fears that any funds available
would first be used to pay off property taxes rather than the mortgage, according to Bond Buyer.

Under the proposal lawmakers suggested to the FHFA, the government would run a 30-month, 300,000-
home pilot program to assess the risk of default among qualifying participants, with Fannie and Freddie
again purchasing mortgages with PACE bonds attached.



10 | Appraiser News Online Vol. 11, No. 13/14, July 2010
The FHFA has yet to publicly respond, though if it chooses not to voluntarily accept the lawmakers‘
proposal, it could be forced to do so by an act of Congress. Thirty lawmakers have joined together to
introduce the PACE Assessment Protection Act, which would require GSEs to adopt underwriting
standards that would accommodate the programs, Bond Buyer reported. The bill also would prohibit
Fannie and Freddie from discriminating against communities pursuing PACE programs.

Agencies’ Oil Spill Statement Offers Suggestions to Financial Institutions
A joint statement from six financial regulatory agencies issued July 14 lists four ways that financial
institutions may consider assisting customers impacted by the Gulf Coast oil spill. The deepwater offshore
spill is the largest in U.S. history and has wrecked havoc on the coastal residents of Alabama, Florida,
Louisiana and Mississippi for months.

―The regulators encourage financial institutions to work with their customers and consider measures to
assist borrowers affected by this situation and its subsequent impact on local communities,‖ read the joint
statement, which was signed by the Federal Reserve, the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union
Administration and the Conference of State Bank Supervisors.

Options available to financial institutions include:
     Temporarily waiving late payment charges, ATM fees and penalties for early withdrawal of
        savings.
     Expediting lending decisions when possible, consistent with safety and soundness.
     Extending or restructuring borrower debt obligations in anticipation of the receipt of funds based
        on claims the borrower may have filed with BP.
     Easing credit terms or fees for loans to certain borrowers, consistent with prudent banking
        practice.

―These measures could help customers recover financially and be better positioned to honor their
obligations,‖ the joint statement read. ―In the affected areas, these efforts can contribute to the health of
the local community and the long-term interests of the institution and its customers.‖

But while urging financial institutions to recognize problems faced by residents, the regulators‘ statement
also reminded lenders of their obligation to maintain current risk assessment programs.

Financial institutions dealing with Gulf Coast oil spill victims were reminded to ―expect institutions to
appropriately recognize credit losses as soon as a loss can be reasonably estimated,‖ before adopting a
workout agreement with the borrower.

Lenders were also reminded that the regulators will expect a financial institution working with oil spill
victims to ―preserve the integrity of its internal loan grading methodology and maintain appropriate accrual
status and reserves on affected credits.‖

To read the joint statement issued by the federal regulators, visit
www.fdic.gov/news/news/press/2010/pr10155a.html.




11 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Mortgage Brokers to Undergo Criminal Checks under New Rules
Mortgage brokers in all 50 states will be required to undergo criminal background and credit checks, as
well as licensing exams, by Jan. 1, 2010. The new rules will assign brokers identification numbers to
enable regulators and borrowers to track their lending histories, according to a July 21 Bloomberg story.

Some states, such as California, are getting a head start on enacting the legislation. Other states,
including Illinois, New Jersey and Virginia, already have adopted the rules.

Previous to the passage of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or
SAFE Act, about a third of states didn‘t require mortgage sellers to have individual licenses. But after
record mortgage defaults and foreclosures triggered the financial crisis, Congress adopted new rules to
embed accountability into a sector of the market that lacked it.

By next year, states must have established systems in place to monitor and enforce broker rules.
California‘s rules take effect July 31. The only exception to the testing requirements is for mortgage
brokers at federally regulated lenders, who have been exempted because they are ―already regulated and
overseen by a number of federal agencies,‖ Sen. Dianne Feinstein, D-Calif., co-sponsor of the law, told
Bloomberg.

Under the provisions of the SAFE Act, the Conference of State Bank Supervisors has been assigned
responsibility to maintain the licensing system and national registry for brokers. Pete Marks, vice
president for mortgage-testing programs at the CSBS, told Bloomberg that so far about 71 percent of
people who have taken the national broker exams have passed on the first try.

Brokers impacted by the SAFE Act also face new regulations from the recently passed financial
regulatory reform bill. Under provisions of the financial overhaul bill, brokers‘ fees will be capped at 3
percent for most loans to eliminate incentives to issue costlier and riskier mortgages. Also, adjustable-rate
mortgages won‘t be allowed for borrowers who can‘t afford to repay the maximum cost of the ARM based
on current income, according to Bloomberg.

Analyst: GSE Subpoenas Could Force $30 Billion in Buybacks
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, could force sellers
to repurchase as much as $30 billion in mortgage-backed securities debt as a result of 64 subpoenas the
federal agency issued July 12, according to a leading industry analyst.

Joshua Rosner, a New York-based analyst at independent research firm Graham Fisher & Co., said
Bloomberg News story July 21 that the government subpoenas will unveil bad loans and identify bank
misstatements that may allow the FHFA to force some of Wall Street‘s biggest firms to repurchase debt
that is impacting the GSEs‘ balance sheets and draining taxpayer money.

The FHFA‘s subpoenas sought documents related to private-label mortgage-backed securities in which
Fannie and Freddie invested. ANO reported July 14 that the FHFA wants to take a closer look at whether
the issuers of these so-called non-agency mortgage securities are liable to the GSEs for certain losses
the enterprises have suffered on such investments. The names of the companies subpoenaed have not
been released.




12 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Any money recovered by the government as a result of the FHFA‘s inquest would go toward offsetting
taxpayer losses as a result of the government‘s investment in the GSEs. In the first quarter alone, Fannie
and Freddie forced repurchases of loans they insure or hold directly to the tune of $3.1 billion, according
to Bloomberg. That‘s a 63 percent increase in forced buy backs from a year earlier.

Lawyers representing banks and mortgage servicers have predicted that mortgage buy back requests
have yet to peak and will remain at their elevated level for at least three years, according to a July 20
American Banker report. Among the two most common justifications for forced buy backs by investors are
the discovery that the borrower had debts that were not disclosed to the buyer at the time of purchase
and problems with the appraisal report, American Banker reported.

Undisclosed debt can range as anything from previously existing co-signed loans to items purchased
between the loan origination and closing dates. Industry analysts have observed that this has become the
single biggest reason for buy back requests today, according to American Banker.

Brian Coester, president of Coester Appraisal Group, a Rockville, Md., appraisal management company,
told American Banker that at least 15 percent of buybacks are related to appraisal problems. He cited
examples from outright fraud in comparable sales to the appraiser picking the highest possible value
during the peak years of the market as reasons appraisals are causing buy backs.

Coester also said that in certain instances he is seeing loans being pushed back to individual appraisers
because the mortgage lender has gone out of business.

To date, rescuing the two mortgage finance companies has cost taxpayers $145 billion. Companies
subpoenaed by the FHFA have until early August to comply with the requested documents. The FHFA
has not ruled out issuing additional subpoenas.

Obama Signs Financial Regulatory Reform Bill
President Obama signed the historic financial regulatory reform bill into law July 21, ushering in a
dramatic rewrite of the rules governing financial service providers and products and ending a nearly year-
long struggle to enact meaningful reforms.

"These reforms represent the strongest consumer financial protections in history," Obama said in his
prepared remarks, released by the White House before the signing ceremony. "These protections will be
enforced by a new consumer watchdog with just one job: looking out for people – not big banks, not
lenders, not investment houses – in the financial system. Now, that's not just good for consumers; that's
good for the economy."

Federal regulators will now implement the 2,300-page bill, which passed the House on June 30 and the
Senate on July 15. The new rules will regulate complex derivatives, set up controls to identify and shut
down troubled financial companies, and establish an independent consumer bureau within the Federal
Reserve to protect borrowers against abuses in mortgage, credit card and other types of lending.

While the Dodd-Frank Wall Street Reform and Consumer Protection Act is notable for its reforms to Wall
Street and government regulatory oversight, the Appraisal Institute applauded the legislation‘s inclusion of
the first modernization of real estate appraisal regulations in more than 20 years.



13 | Appraiser News Online Vol. 11, No. 13/14, July 2010
―This bill will mean good news for consumers because they should see more reliable home appraisals,‖
said Appraisal Institute President Leslie Sellers, MAI, SRA. ―It will encourage the use of highly trained and
competent real estate appraisers and will provide much-needed resources for oversight and
enforcement.‖

Sellers noted that in addition to authorizing grant funding for state oversight and enforcement, H.R. 4173
will require that ―reasonable and customary‖ fees be paid to appraisers to reflect what an appraiser would
typically earn for an assignment absent the involvement of an appraisal management company. AMCs
that violate ―customary and reasonable‖ requirements will be subject to severe penalties under the Truth
in Lending Act.

H.R. 4173 also provides provisions to sunset the controversial Home Valuation Code of Conduct by
directing for the establishment of a federal appraisal independence standard. The HVCC, which took
effect in May 2009, has been largely criticized by many real estate professionals.

Among its other key appraisal provisions, H.R. 4173 also will do the following:

        Require AMCs to register with state agencies.
        Enhance appraiser competency provisions, including clarification regarding consideration of
         professional appraisal designations.
        Provide financial resources for oversight and enforcement of appraisal rules.
        Separate AMC and appraisal fees on the HUD-1 Statement.

The Washington Post reported July 15 that federal agencies have been hard at work for weeks in
anticipation of the reform bill‘s passage. The Treasury Department has already assigned dozens of
employees to carry out various provisions, such as the creation of the consumer protection bureau, while
agencies such as the Securities and Exchange Commission, the Federal Deposit Insurance Corp., and
the Federal Reserve, have been holding daily meetings to plan how they will carry out their new
responsibilities.

Due to the legislation‘s size, H.R. 4173 will be rolled out in stages. As noted by the Post, the first step will
be to set up a new Federal Insurance Office to allow the government the authority to seize large-scale
failing financial firms. Within three months of that, the new Financial Services Oversight Council must hold
its first meeting and within three months of that, new rules providing shareholders with more of a say on
executive pay must have taken effect.

Within the first year of its enactment, the Post has reported that the legislation calls for the Fed to have
the consumer protection bureau up and running while the Office of Thrift Supervision -- one of several
bank regulators that failed to preempt the financial meltdown -- must be abolished.

The Post has also detailed that 18 months after taking effect, the reform bill requires that new rules be
issued to restrict the proprietary trading that financial companies can do with their own accounts while
within two years, regulators must have simpler mortgage disclosure forms proposed as an alternative to
the current versions.




14 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Fed Governor Calls for Change in Mortgage Data Reporting
Federal Reserve Governor Elizabeth Duke has called for a reconsideration of the mortgage data reporting
formats used by federal regulators to determine policy, The Wall Street Journal reported. At a July 15
hearing in Atlanta on proposed revisions to the Home Mortgage Disclosure Act, Duke questioned current
data collection efforts and their impact on understanding the state of the economy.

"Data do not create the market, but they do help us understand what is happening in the market,‖ Duke
said at the hearing. ―HMDA data cannot solve all market problems, but the time is ripe for reviewing and
revising the data elements, standards and reporting formats."

She added that the lessons of the current crisis could be applied to future data collection and review.
"With the benefit of hindsight, we can now answer the question,‖ Duke said, according to the Journal. ―Do
policymakers have adequate and reliable data sufficient to assess market conditions and craft policy
responses?"

Duke also noted that under the financial regulatory reform legislation expected to be signed into law,
authority for HMDA rulemaking will be transferred from the Federal Reserve to a new consumer financial
protection bureau.

Fannie Mae Aims to End Strategic Mortgage Defaults
Taking a stand against "strategic defaulters" – borrowers who default on a mortgage they can afford –
Fannie Mae has announced a new policy set for this October in which strategic defaulters will be taken to
court and disqualified for new Fannie-backed loans, according to a July 19 story in USA Today.

Under the policy, a borrower who defaults intentionally on their mortgage will be barred from selling a
future loan to Fannie on the secondary market for seven years after their foreclosure. Fannie also will
take strategic defaulters to court to recoup outstanding mortgage debt.

Fannie is not alone in its efforts to stem the tide of unnecessary foreclosures. USA Today reported that
legislation that has cleared the House and awaits Senate action would bar the Federal Housing
Administration from insuring mortgages for borrowers who previously abandoned a mortgage when they
had the ability to pay. Fannie‘s fellow government-sponsored enterprise, Freddie Mac, is also reviewing
Fannie‘s new policy and may choose to enact one that‘s similar.

Fannie says it will target strategic defaulters by examining whether a homeowner still has access to credit
and is making regular payments on their mortgage and other debt. Fannie‘s crackdown comes at the
same time that about a quarter of mortgage borrowers in the U.S. owe more than their homes are worth,
according to USA Today.

Fannie, which currently buys about 40 percent of all mortgages and packages them for resale to
investors, has been hit especially hard by the financial crisis. In September 2008, after facing mounting
losses on loans it backed, the mortgage giant was placed into conservatorship along with Freddie. To
date, rescuing the two GSEs has cost taxpayers $145 billion.

New Fannie Guidance Concerns Lenders



15 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Under new Fannie Mae guidelines rolled out this summer, lenders are being encouraged to retrieve a
borrower's latest credit report just before a loan closes. But according to a July 16 story in The
Washington Post, lenders say the new policy is causing more confusion and slowdowns than necessary.

The goal is to check whether a borrower has taken on additional debt or opened new lines of credit since
applying for the home loan, with the intention of mitigating a bank‘s risk. The Fannie policy change, which
impacts borrowers who applied for a loan on or after June 1, asks lenders to be extra cautious before
closing a loan. Specifically, the government-sponsored enterprise wants lenders to look into any new
personal or second mortgage loans a borrower has potentially taken. The idea is to uncover any evidence
that could undermine the borrower‘s ability to repay the loan.

But as the Post reported, the policy change is not sitting well with lenders wary of additional logistical
nightmares and who are worried that borrowers with even short-term new debt could derail a pre-
approved deal. The concern from the lending sector has been enough for Fannie to agree to review the
policy based on industry feedback, according to the Post. More guidance from Fannie is expected by the
end of July.

In the meantime, Fannie has removed from its online documents any reference to refreshing credit
reports. The GSE has also updated its website to clarify that additional credit reports are not required but
rather encouraged.

Typically, a borrower‘s credit report is valid for 90 days. Fannie wants to cut down on the $1.8 billion in
bad loans it forced lenders to repurchase in the first quarter. Under Fannie policy, lenders are responsible
for all loans they sell to the GSE. Therefore, if a borrower defaults due to debts that were not adequately
disclosed up to the time of closing, the lender could be forced to repurchase the loan or loans it has
made.

FHA Inviting Comment on Risk Proposal
The Department of Housing and Urban Development has introduced policy changes intended to reduce
the risk of loans insured by the Federal Housing Administration and is soliciting public comment through
Aug. 15, according to HUD‘s July15 notice in the Federal Register.

The FHA is proposing policy alternations that would update credit and down payment requirements for
new borrowers as well as limit seller concessions and tighten underwriting standards for manually
underwritten mortgage loans, Under the FHA policy proposal, borrowers with credit scores of less than
580 will be required to make a minimum 10 percent down payment on a loan, while those with scores of
less than 500 will no longer qualify for an FHA-insured mortgage. Borrowers with scores over 580 will
continue to qualify for the FHA‘s signature 3.5 percent down-payment program.

As for seller concessions, the FHA is looking to reduce the maximum percentage of concessions it allows
a seller to contribute from 6 percent down to 3 percent – with the idea that this will bring the agency‘s
policy more in line with industry standards, according to HUD‘s notice in the Federal Register.

In addition, the FHA also wants to ensure it mitigates risk in regard to manually underwritten loans. Under
the FHA‘s proposed policy changes, when using compensating factors in the underwriting process,




16 | Appraiser News Online Vol. 11, No. 13/14, July 2010
lenders will be required to consider a borrower's credit history, loan-to-value percentage, debt-to-income
ratio and cash reserves as a tool to gauge future loan performance for any such mortgages.

Financial Reform Bill Receives Republican Support in Senate
Two Republican senators have signaled they will support the pending financial regulatory reform bill,
giving Senate Democrats a near filibuster-proof majority. According to a July 13 article in MarketWatch,
Sens. Olympia Snowe, R-Maine, and Scott Brown, R-Mass., have announced they will vote in favor of the
legislation.

There have been lingering concerns by Senate Democrats that without the 60 votes needed to cut off
debate and send the legislation to a final vote, Senate Republicans could have been able to filibuster the
bill.

Though Sens. Snowe and Brown announced their support of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (H.R. 4173), both said the legislation has shortcomings.

"While not perfect, the legislation takes necessary steps to implement meaningful regulatory reforms,
create strong consumer protections and restore confidence in the American financial system," Snowe told
MarketWatch. "I intend to support passage of the legislation when it's brought before the Senate."

Brown echoed similar sentiments. As reported by MarketWatch, he noted in a statement that the
legislation "isn't perfect," but that it's a "better bill than it was when this whole process started," citing
safeguards designed to forestall another financial meltdown as well as consumer protections. He also
added his satisfaction that the bill is paid for ―without new taxes.‖

The House approved H.R. 4173 on June 30. Once debate closes on the Senate floor, the legislation will
go to a final vote. President Obama is expected to receive the measure in the coming days.

Debate over Future of Fannie and Freddie Begins
Lawmakers returning to Capitol Hill July 12 had a new financial issue to tackle: what to do with struggling
government-sponsored enterprises Fannie Mae and Freddie Mac, which have combined to cost U.S.
taxpayers more than $145 billion in bailout relief, according to a Bloomberg News article.

Democrats and Republicans are at odds over how to handle the secondary mortgage giants, which
currently control more than half of the nation‘s $11 trillion in residential mortgages. Some Republicans are
seeking for the Obama administration to kill the GSEs, thus eliminating a money pit in the government‘s
budget. But Obama and fellow Democrats are reluctant to break ties with the companies that are
essentially propping up the housing industry. They‘re joined by banking, consumer and real estate
groups, who also are lobbying Washington to make more moderate reforms to Fannie and Freddie.

Fannie and Freddie have jointly served as GSEs since 1970 (the year Freddie was created to compete
with Fannie). Their role is to promote residential lending by buying mortgages and bundling them into
securities for sale to investors. At the height of the financial crisis in September 2008, both companies
failed and were seized by the Treasury, which has an 80 percent controlling share as a result. The
government‘s controlling share is funded by taxpayers.




17 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Sen. John McCain, R-Ariz., has been leading the Republican fight to abolish Fannie and Freddie.
According to Bloomberg, he and many fellow Republicans want the government to abandon any role in
housing finance. They say the GSEs – the companies created to promote home-ownership – are the
same companies that drove many financial institutions to ruin.

But Democrats have rebuffed Republican attempts to introduce legislation that would sever government
ties with the GSEs. According to Bloomberg‘s July 8 article, Democrats pointedly left Fannie and Freddie
reforms out of H.R. 4173, the financial regulatory reform bill. That is in large part because the Obama
administration views Fannie and Freddie as necessary components to the recovery of America‘s
economy.

As Paul Leonard, a lobbyist for the Financial Services Roundtable, told Bloomberg, ―To have long-term
investment in a 30-year fixed mortgage, you have to have some confidence that there is government
backing.‖

The Obama administration wants that confidence maintained. Bloomberg reported that the government
wants a properly functioning mortgage-backed securities market because it will ultimately generate the
cash that can be channeled back into additional affordable loans.

The challenge facing Democrats now is to figure out how to do that without maintaining its open-ended
federal commitment. They also have to address Republican concerns and avoid angering the taxpayers
who are funding the GSEs.

FHFA Taking Steps to Recoup Fannie, Freddie Losses
The federal regulator in charge of overseeing Fannie Mae and Freddie Mac has issued 64 subpoenas
seeking documents related to private-label mortgage-backed securities in which the government-
sponsored enterprises invested, according to a July 12 news release issued by the Federal Housing
Finance Agency, conservator of Fannie and Freddie.

The FHFA is looking to get back money that Fannie and Freddie lost on mortgage securities packaged
and sold by Wall Street firms that the GSEs bought as investments. The FHFA wants to take a closer look
at whether private-label securities issuers and others are liable to the GSEs for certain losses they have
suffered on such securities. The names of the companies subpoenaed have not been released.

―No entity is ‗targeted,‘‖ Acting FHFA Director James DeMarco said in an agency news release. ―This is a
financial inquiry, not an investigation or a lawsuit. The Conservator seeks the information to determine
whether losses sustained by the Enterprises are the legal responsibility of others and to ensure that the
obligations of the various parties involved have been met.‖

The FHFA is seeking the contents of various loan files and transaction documents securing private-label
securities to trustees and servicers controlling or holding the documentation, including documents used in
the underwriting process, such as loan applications and property appraisals. Companies subpoenaed
have 30 days to comply with the requested documents.




18 | Appraiser News Online Vol. 11, No. 13/14, July 2010
The FHFA has the power to subpoena under The Housing and Economic Recovery Act of 2008. If a
company fails to comply with the FHFA‘s subpoena request, the Conservator could take further legal
action against such company.

The FHFA also did not rule out that more subpoenas could be issued.

―These subpoenas are part of an ongoing inquiry by the Conservator, which may continue beyond the
scope of the present subpoenas,‖ read the FHFA news release. ―Based upon developments in connection
with information obtained with these subpoenas, other subpoenas may be issued.‖

Any money recovered by the government as a result of the FHFA‘s inquest would go toward offsetting
taxpayer losses as a result of the government‘s investment in the GSEs, according to a related
Associated Press story. To date, rescuing the two mortgage finance companies has cost taxpayers $145
billion.

To read the complete FHFA news release, visit
www.fhfa.gov/webfiles/15935/PLS_subpoena_final__7_12_10.pdf.

Shift in FHA Policy Creates Demand for Brokers
Demand for mortgage brokers has been on the upswing since the Federal Housing Administration shifted
broker supervisory responsibilities to lenders, American Banker reported July 13. While some critics
argue that the shift may drive brokers away from the lending process, several lenders have actively
increased broker recruitment efforts.

American Banker reported that FHA Commissioner David Stevens justified the agency‘s decision to
transfer oversight responsibilities at a recent conference in San Francisco. "We don't have the breadth
and ability to manage mortgage brokers independently so lenders will have to manage that," Stevens told
attendees.

The Department of Housing and Urban Development stopped accepting applications in May from brokers
seeking FHA approval. However, the agency began allowing brokers associated with FHA-approved
lenders to originate loans. To help ensure that potential losses are covered, HUD also increased the
minimum net worth requirement for most FHA lenders from $250,000 to $1 million.

―We've been flooded with applications [from brokers] since the start of the year and we haven't seen a
slowdown yet," Andrew WeissMalik, chief operating officer and vice president of 360 Mortgage Group
LLC, told American Banker. "(HUD) is doing it right by putting the liability on those that have the money.‖

WeissMalik said he is considering that new broker recruits have a minimum of three to five years of FHA
loan experience. WeissMalik also noted that he plans to monitor industry watch lists to determine whether
a potential recruit has been cited in addition to conducting background checks.

However, some lenders are remaining cautious and are waiting for additional guidance from HUD before
adding new brokers to their rosters. William McCue, president of McCue Mortgage Co., has been
reluctant to increase his company‘s broker requirements because he expects that larger lenders will




19 | Appraiser News Online Vol. 11, No. 13/14, July 2010
implement their own standards. "We're kind of waiting for them because they are going to dictate what
criteria to use," McCue told American Banker.

According to Greg Schroeder, president of Comergence Compliance Monitoring, some lenders have not
increased broker recruitment efforts over concerns that it might jeopardize their own FHA status."It has
paralyzed some of our lenders," Schroeder said. "They don't want to jeopardize their mortgagee approval
because, if they get audited, the lender does not know what FHA is going to look for. So they are not
taking any applications from new brokers."

Fannie and Freddie Delist from NYSE, Announce OTC Symbols
Shares of Fannie Mae's and Freddie Mac's common stocks began trading July 8 on the over-the-counter
market, three weeks after the Federal Housing Finance Agency directed the government-sponsored
enterprises to delist from the New York Stock Exchange, according to MortgageOrb.com.

July 7 marked the GSEs official delisting from the NYSE, a move widely anticipated as both Fannie and
Freddie‘s common stock price had been hovering near the NYSE minimum average closing price
requirement of $1 more than 30 trading days.

"FHFA's determination to direct each company to delist does not constitute any reflection on either
enterprise‘s current performance or future direction, nor does delisting imply any other findings or
determination on the part of FHFA as regulator or conservator," FHFA Acting Director Edward J. DeMarco
said when the delisting request was announced. ―The determination to direct delisting is related to stock-
exchange requirements for maintaining price levels and curing deficiencies."

With their voluntary withdrawal from the NYSE, Fannie and Freddie transitioned to the OTC Bulletin
Board, a regulated quotation service that electronically transmits real-time quote, price and volume
information in over-the-counter securities. MortgageOrb reported that shares of Freddie's common stock,
which previously traded on the NYSE under the symbol "FRE," will trade under the ticker symbol "FMCC."
Fannie's common stock will commence trading on the OTC Bulletin Board under the symbol "FNMA."

AI Praises New Fannie Mae Guidelines
The Appraisal Institute applauded June 30 guidelines from Fannie Mae aimed at improving the quality of
residential appraisals, including a requirement that lenders cannot use inexperienced or incompetent
appraisers. A July 2 American Banker story said Fannie wants lenders to explain any changes made to a
property‘s appraised value and that Fannie provided further guidance on how to determine comparable
sales.

The changes are part of a wider effort within the lending industry to promote appraiser independence and
help loans get completed. The new guidelines, widely seen as attempting to correct some of the
unintended consequences of the Home Valuation Code of Conduct, take effect on all new loans
originated on or after Sept. 1.

Appraisal Institute Government Relations Committee Chair Richard Maloy, MAI, SRPA, SRA, said the
new requirements may result in lenders rethinking their use of third-party vendors such as appraisal
management companies. "The buck now stops at the lender," Maloy told American Banker. "Fannie is




20 | Appraiser News Online Vol. 11, No. 13/14, July 2010
saying the lender is held responsible for the appraiser's selection even if they were selected by an AMC."

Fannie will require that appraisals include interior photos. Borrowers have vandalized homes, which
lowers the value of other homes in foreclosure. Fannie also clarified that lenders are not required to use
an AMC. Lenders may speak with an appraiser, and that appraiser must respond to the request. As is
currently the case under the HVCC, loan production staff may not speak with the appraiser.

According to American Banker, Fannie said that a minimum of three comparable sales must be reported.
If a lender makes an adjustment to an appraised value, the dollar amount of the net adjustments should
not exceed 15 percent of the sale price of the comparable sale.

Freddie Mac has not issued any recent changes to its guidelines.

House Passes Financial Regulatory Reform Bill; Senate Vote to Come
The federal financial regulatory reform bill, including appraisal provisions supported by the Appraisal
Institute, cleared the House by a 237-192 vote June 30, setting the stage for a Senate vote some time
after senators reconvene July 12.

Title XIV of H.R. 4173 includes a federal appraisal independence standard that intends to replace the
Home Valuation Code of Conduct and also includes major changes to Title XI of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA), including funding for state oversight,
administration and enforcement. It also would require payment of customary and reasonable fees to
appraisers. (For more on the appraisal provisions, see the June 30, 2010, issue of Appraiser News
Online.)

The Dodd-Frank Wall Street Reform and Consumer Protection Act is designed to give government
regulators the authority to liquidate failing financial companies by breaking them apart, selling assets and
forcing creditors and shareholders to take losses so that taxpayers do not bear the burden, according to a
New York Times article June 30. The bill would create a powerful new consumer financial protection
bureau and widen the purview of the Securities and Exchange Commission to broaden regulation of
hedge funds and credit rating agencies.

The Times reported that the bill also would vastly expand the regulatory powers of the Federal Reserve
and establish a systemic risk council of high-ranking officials, led by the Treasury secretary, to detect
potential threats to the overall financial system.

The reform bill also takes aim at the complex financial instruments known as derivatives. Seen to be at
the heart of the 2008 financial crisis, the Times has reported that a measure included in the reform
legislation would restrict the ability of banks to invest and trade for their own accounts – a measure
originally championed by former Fed Chairman Paul A. Volcker and known as the Volcker Rule.

While the Dodd-Frank bill – named for Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-
Mass., who jointly have shepherded the legislation through Congress – addresses many aspects of
reform, the notable exception is a lack of provisions pertaining to the futures of government-sponsored
enterprises Fannie Mae and Freddie Mac. Currently, U.S. taxpayers own 80 percent of the secondary
mortgage market giants.



21 | Appraiser News Online Vol. 11, No. 13/14, July 2010
The Senate, which is expected to pass the bill, could vote as early as the week of July 12. President
Obama has said he will sign the bill into law.

FHFA Imposes Energy Retrofit Restrictions to GSEs
The Federal Housing Finance Agency has imposed new restrictions on the Property Assessed Clean
Energy program, which allows homeowners to repay costs associated energy improvement retrofits
through annual property tax surcharges, according to a July 6 blog on The New York Times‘ website.

 In issuing the guidance, the FHFA was critical of the government program that has generated $150
million in stimulus funding from the Obama administration. ―They present significant risk to lenders and
secondary market entities, may alter valuations for mortgage-backed securities and are not essential for
successful programs to spur energy conservation,‖ the FHFA noted.

The directive could also make it more difficult for homebuyers to obtain mortgages in areas where PACE
loans are available even if they do not participate in the program, according to the Times‘ blog.

Under the program, when a municipality pays for a homeowner‘s energy efficient retrofit, a lien is placed
on the property. If the homeowner defaults on a loan, the lien takes priority over the mortgage. However,
Fannie Mae and Freddie Mac argue that energy liens should not take precedence over a mortgage but
offered no guidance on how to handle PACE loans.

The FHFA said that lenders could waive the ban against PACE liens for homeowners with existing energy
loans, but directed Fannie Mae and Freddie Mac to implement measures to narrow borrower debt-to-
income rations to account for future PACE loans.

Representative Steve Israel, D-N.Y., said the Department of Energy is willing to insure the FHFA against
any PACE-related mortgage losses. ―D.O.E. told me that they offered a two-year reserve fund to
guarantee against any losses and FHFA rejected it,‖ Israel told the Times, noting that he plans to
introduce legislation to extend government loan guarantees to PACE programs.




22 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Inside the States
Appraisers Permitted to Value Florida Oil Spill-effected Properties
Gov. Charlie Crist authorized property appraisers July 21 to calculate lost real estate values caused by
the Gulf oil spill so that homeowners and businesses can make damage claims to BP, the Pensacola
News Journal reported July 22.

Property owners will still have to pay taxes, but the 26 Gulf counties under Crist‘s previously declared
state of emergency will be able to make damage claims to BP. Because appraisals are based on values
as of Jan. 1, the governor said "an interim assessment will give homeowners the documentation they
need to hold BP accountable," the News Journal reported.

Escambia County Property Appraiser Chris Jones, an Associate member of the Appraisal Institute, and
Santa Rosa County Appraiser Gregory Brown wrote Crist in early June urging that he advance some kind
of tax-relief plan. They said that while property owners are likely to endure a loss in value because of the
spill, tax payments this fall will be based on assessments that were in place pre-spill, at the start of 2010,
NorthEscambia.com reported July 23.

Jones said July 20 that he expected coastal homeowners and business owners to be angry when tax
notices are mailed out in August. He told NorthEscambia.com that motels and vacation rental properties
in his county are experiencing business losses of as much as 50 percent because of the spill.

Jones and Brown agree that Crist is headed in the right direction. Brown said, "I take it as a positive sign."
The reassessment ―gives property owners a down-and-dirty value that they can send to BP for a claim,"
Jones told the Pensacola News Journal.

But according to a July 21 story in The Palm Beach Post, the Property Appraisers Association of Florida
will not be too thrilled. The statewide group gave legislative leaders a list of reasons why they don‘t want
to make mid-year assessments, saying mid-year assessments are arbitrary and could lead to tax
increases for the few properties that were not built when the initial assessments were completed.

When asked if BP was brought into the discussion before the order was issued, Crist told The Miami
Herald: ―I have not asked BP's permission to do this. We got it from the Constitution.‖ BP spokeswoman
Paula Barnett told the Herald that the company was unaware of the governor‘s executive order and had
no immediate reaction. BP has paid $201 million to residents and businesses of the Gulf Coast on claims
related to the spill, NorthEscambia.com reported.

Fannie/Freddie Overseer Sued by California Attorney General
The regulatory agency responsible for overseeing mortgage giants Fannie Mae and Freddie Mac has
been sued by the California Attorney General over its role in effectively shutting down a program that
allows homeowners to finance solar panels and other energy-saving improvements through their property
tax bills.

The Federal Housing Finance Agency on July 6 said that the Property Assessed Clean Energy program,
known as PACE, presented "unusual and difficult risk management challenges" for lenders, servicers and



23 | Appraiser News Online Vol. 11, No. 13/14, July 2010
mortgage securities investors in a "fragile housing finance market," according to The Los Angeles Times.
Since then the market for loans with PACE assessments has essentially frozen as Fannie and Freddie
either own or guarantee about half of all U.S. mortgages and have stopped accepting loans tied to PACE.

The subsequent shutdown of the PACE program after the FHFA‘s position was released prompted
California Attorney General Jerry Brown to file suit. Calling the FHFA‘s move a "regulatory strangulation
of the state's grass-roots program," Brown alleges in the suit that the federal government had
mischaracterized PACE funds as "loans" instead of "assessments" and improperly portrayed the program
as violating Fannie and Freddie's standard lending procedures, according to the Times.

According to Brown, the state of California could stand to lose more than $100 million in federal stimulus
money if the PACE program isn‘t revived. That‘s because the Obama administration has devoted more
than $150 million in stimulus funds to PACE nationwide. California, the state in which PACE has its roots,
is particularly active in promoting the program.

Missouri Governor Signs AMC Legislation into Law
Missouri became the 19th state to enact a framework for the regulation and oversight of appraisal
management companies when Gov. Jay Nixon signed House Bill 1692 into law on July 12. The measure
will require appraisal management companies operating in the state to register with the Missouri Real
Estate Appraisers Commission.

Any individual who owns 10 percent or more of an AMC will be required to register, and each AMC must
post with the commission and maintain on renewal a surety bond in the amount of $20,000.

Missouri joins 18 other states with similar AMC laws on their books: Arkansas, Arizona, California,
Connecticut, Florida, Georgia, Indiana, Louisiana, Minnesota, New Mexico, Nevada, Oklahoma, Oregon,
Tennessee, Utah, Washington, Virginia and Vermont.

A similar measure awaits North Carolina Gov. Bev Perdue‘s signature. In addition, AMC legislation is
currently pending Massachusetts, New Jersey, Ohio and Pennsylvania.

Other states are in the early process of drafting AMC legislation, including South Carolina, South Dakota,
Texas and Wisconsin. To view a copy of the new Missouri law, go to
www.house.mo.gov/billtracking/bills101/biltxt/truly/HB1692T.HTM.




24 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Around the Industry
Basel Committee Nears Completion of International Reforms
The Basel Committee on Banking Supervision said it is on track in the development of an international
package of capital and liquidity reforms after softening some of its proposals while introducing new
restriction, Bloomberg reported July 27. The committee is expected to announce the reforms at the
November 2010 Group of 20 summit in Seoul, South Korea.

At its July 14-15 meeting in Basel, Switzerland, the group of policymakers from 27 countries developed
recommendations for a set of global banking rules designed to strengthen banking systems worldwide to
avoid a repeat of the recent financial meltdown.

In its original set of recommendations, the committee proposed to exclude certain assets when
calculating capital requirements, including the exclusion of minority interest banks held in other financial
institutions, which European banks have voiced concerns against; the elimination of tax assets, which
Japan has lobbied against; and the removal of mortgage-servicing rights, which the U.S. has risen
concerns over.

Steffen Kampeter, Germany‘s deputy finance minister expressed concerns that tougher capital
requirements may hurt credit availability, which could negatively affect smaller bankers. ―We‘re studying
to see how Basel III might impact these banks,‖ Kampeter told Bloomberg. ―If we destroy these two pillars
of our financial system, we‘ll destroy economic growth. That‘s our concern.‖

Prior to submitting its recommendations to its governing board for consideration July 26, the committee
agreed through compromise to including minority stakes, tax assets and mortgage-serving rights to count
as capital up to a predetermined limit not to exceed 15 percent of a lender‘s common equity. The
committee also announced modifications to the definition of liquid assets, including reclassifying
government deposits as corporate cash.

―They‘re definitely making concessions on the definition of capital and the liquidity ratios,‖ said Barbara
Matthews, managing director of BCM International Regulatory Analytics. ―Those were necessary to
convince the Germans to accept the leverage ratio. But even though we see a lot of concessions, there
are also limits to the concessions. So this isn‘t fully caving in.‖

The committee also issued a proposal that would help regulators determine the need for, as well as the
size of, a buffer above the minimum capital requirement. Under the proposal, banks would be forced to
reduce dividends if capital falls below a certain level.

While the committee‘s comprises resolved several outstanding issues, many areas remain to be resolved,
which may not be finalized by the end of the year.

Deutsche Bank Closing its CRE Adviser Group, Report Says
Germany‘s largest lender is dismantling a group that advises companies on commercial real estate
transactions, Bloomberg reported July 28. According to Bloomberg‘s unnamed sources, Deutsche Bank is
pulling back from advising clients on real estate financing as it grapples with losses on transactions struck
before the credit crisis.



25 | Appraiser News Online Vol. 11, No. 13/14, July 2010
The Frankfurt-based bank said it took a 124 million euro ($161 million) impairment charge for the second
quarter on Las Vegas‘ Cosmopolitan Resort & Casino. Sales of commercial mortgage bonds tumbled 95
percent to $11.2 billion in 2008 from a record $234 billion in 2007, according to data compiled by
Bloomberg. Banks arranged $3.4 billion of the securities last year, and about $1.7 billion has been issued
in 2010.

While closing the division, Deutsche Bank will continue to originate commercial mortgages for sale as
Wall Street attempts to revive the $700 billion market, sources told Bloomberg. The bank is seeking to
find positions for affected employees, including Warren Friend, a managing director who ran the New
York-based division, one of Bloomberg‘s sources said.

Gulf Coast Oil Crisis Spilling into CMBS
Commercial mortgage-backed securities exposed to the oil spill in the Gulf of Mexico "could cause longer-
term effects that reverberate for months and perhaps years to come," an industry analyst with Standard &
Poor's Ratings Services told MBA NewsLink on July 26.

James Digney, credit analyst at S&P, told the daily publication of the Mortgage Bankers Association that
his company has identified 252 CMBS loans secured by 302 properties with an outstanding allocated loan
balance of approximately $1.61 billion in areas currently affected by the oil spill.

Though not anticipated to have an immediate impact on CMBS, the residual effects of the oil spill could
hang around, thus affecting credit on U.S. CMBS ratings down the road, Digney told NewsLink.

Digney believes the lodging sector of the Gulf Coast could be particularly hard hit, with lodging currently
accounting for more than 10 percent of the $1.61 billion CMBS exposure in the region, according to
Digney.

CMBS Showing Signs of Life
The struggling commercial mortgage-backed securities market has been given a shot of life with recent
reports that major banks will be releasing two offerings of CMBS totaling $1.4 billion in the coming weeks,
The Wall Street Journal reported July 21.

The Journal quoted sources familiar with the situation as saying that J.P. Morgan Chase & Co. is leading
a $650 million offering backed by properties owned by real-estate investment trust Vornado Realty Trust
– the proceeds of which Vornado will use to pay existing debt.

Meanwhile, Goldman Sachs Group Inc. and Citigroup Inc. are leading a $750 million CMBS issue that
includes a $100 million loan Citigroup is making to Flagship Partners LLC to refinance debt on the portion
of the Manhattan property that houses the Barneys New York retail department store, according to the
Journal.

As the real-estate industry braces for more than $1 trillion of maturing CMBS debt over the next five
years, strong owners are turning to CMBS offerings to take advantage of distressed prices. There have
been six CMBS offerings this year, a small sign that commercial markets may be stabilizing after three
years of decline, according to the Journal.



26 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Despite the weakened economy, CMBS remains an attractive offer to investors because of its potential
returns. A recent CMBS offering by JP Morgan could get a return of about 3.6 percent, according to
sources who spoke with the Journal. That compares to a return of about 2.5 percent on shorter-term
securities backed by credit cards and some 2 percent on those collateralized by auto loans, the Journal
reported.

But even with the uptick in CMBS offerings, not all is looking good for the commercial sector. More than 8
percent of $578.6 billion of loans packaged into CMBS are at least 60 days past due and credit-rater
Standard & Poor's expects that rate to reach as high as 11.5 percent by year's end, according to the
Journal. While Wall Street in 2007 sold $230 billion of CMBS, this year that number may not reach $10
billion, the Journal reported.

Low Loan Volume Equals Higher Profits for Lenders
Historically low interest rates and reduced competition are increasing home lenders' profit margins,
American Banker reported July 26.

Although purchase loan applications hit a 14-year low in July, according to the Mortgage Bankers
Association, lenders are making more money on each loan they originate. The reason: a loan with an
above-market rate holds a higher price in the secondary market, American Banker reported.

The profits from new loan sales also are counteracting the increased costs of origination. Tougher
regulation has added origination expenses like licensing fees, while tighter underwriting standards have
forced lenders to spend more on marketing to find qualified borrowers and staff. Lenders must hire more
processors and underwriters to review loans, American Banker reported.

The future for most lenders differs significantly from early 2010. Initially, they thought interest rates would
rise because the Federal Reserve said it would not buy mortgage-backed securities. Instead, rates fell,
igniting a spark in refinancing in early April. The increase in refinancing and the first-time homebuyer tax
credit helped inflate volumes, American Banker reported.

Bank Failures Up to 103 for Year
State and federal regulators shut down seven community banks July 23, bringing the total of failed
federally insured banks to 103 in 2010 and costing the deposit insurance fund $431 million, BNA Banking
reported. Banks were closed in Florida, Georgia, South Carolina, Kansas, Minnesota, Nevada and
Oregon.

In the South, the Florida Office of Financial Regulation closed Sterling Bank in Lantana marking the 18th
Florida bank to fail in 2010. The failure will cost the deposit insurance fund $45.5 million. The Georgia
Department of Banking & Finance closed Crescent Bank and Trust Company in Jasper making it the
10th Georgia failure this year, and costing the federal insurance fund $242.4 million, BNA Banking
reported. And the Office of the Comptroller of the Currency shut down Williamsburg First National Bank,
Kingstree, S.C. Williamsburg was the only bank closed by federal regulators on July 23 and marks the
fourth South Carolina bank to fail in 2010. The FDIC estimated its failure would cost the insurance fund
$8.8 million, BNA Banking reported.




27 | Appraiser News Online Vol. 11, No. 13/14, July 2010
In the Midwest, Kansas experienced its first bank failure of the year. The Kansas Office of the State Bank
Commissioner closed Thunder Bank in Sylvan Grove costing the insurance fund $4.5 million. The
Minnesota Department of Commerce closed Community Security Bank, New Prague marking the seventh
Minnesota bank to fail in 2010 and costing the insurance fund $18.6 million, BNA Banking reported.

In the West, the Nevada Financial Institutions Division shut down SouthwestUSA Bank in Las Vegas,
marking the fourth Nevada failure this year. It will cost the insurance fund $74.1 million, BNA Banking
reported.

In the Northwest, the Oregon Department of Consumer and Business Services closed Home Valley Bank
in Cave Junction costing the insurance fund $37.1 million. Home Valley was the second Oregon bank to
fail in 2010, BNA Banking reported.

The Federal Deposit Insurance Corporation, named receiver of all seven, had purchasing agreements in
place for all the failed institutions. For more information on all the July 23 failures, visit
www.fdic.gov/bank/individual/failed/banklist.html.

20 Percent of Americans Experienced Major Economic Loss
One-fifth of Americans suffered a significant economic loss in 2009, the highest level in the past 25 years,
the Economic Security Index found July 21. The Economic Security Index shows that economic insecurity
has risen across all groups, not just among low-income families and those without much education,
CNNMoney.com reported.

According to the index, 12.2 percent of Americans were economically insecure in 1985. By 2009, Yale
political scientist Jacob Hacker and his team of researchers estimated that 20.4 percent of Americans
could be classified that way. The actual number of people affected increased by more than half, from 28
million in 1985 to roughly 46 million by 2007, the last year for which hard numbers were available,
CNNMoney.com reported.

The road to economic recovery is long. Hacker said that it can typically take between six to eight years to
restore one's available income to its previous level. In a survey cited by Hacker, 48 percent of Americans
in 2009 said they only had enough resources to carry them for two months before experiencing any
economic hardship.

The ESI defines people as economically insecure when their situation meets two criteria. First, within a
year's time they have lost 25 percent or more of their available gross income – the money they have left
over after paying for medical costs and debt. Second, they don't have enough in an emergency fund or
other liquid reserves to make up the difference, CNNMoney.com reported.

GM Buys AmericaCredit; Relation with Ally Financial Questioned
General Motors said that it will purchase AmeriCredit Corp. in an all-cash transaction valued at about $3.5
billion, according to a company news release dated July 22. The acquisition will give GM a new captive
finance unit that will allow it more flexibility to offer lease and finance deals.

The announcement comes four years after the automaker sold its majority interest in General Motors
Acceptance Corp., now called Ally Financial Inc. "Adding AmeriCredit to our team will improve our



28 | Appraiser News Online Vol. 11, No. 13/14, July 2010
competitiveness in auto financing offerings, and I am very pleased to have them on board," GM Chief
Executive Edward Whitacre Jr. said in the news release.

Because it continues to hold a 16.6 percent stake in Ally, the purchase of AmeriCredit raises questions
about the automaker‘s relationship with Ally, which GM stresses is highly important, American Banker
reported July 23.

"They are a very strong partner, particularly in the wholesale and prime area," Chris Liddell, GM's chief
financial officer, told American Banker. "We don't see that changing whatsoever. It's important that they're
successful from our point of view. It's important that they are strong. It's important that they continue to be
in partnership with us, in particular in those areas."

Kirk Ludtke, a senior vice president at CRT Capital Group LLC, agreed, saying that it is unlikely that the
White House would allow either GM or Ally to pursue strategies that would be harmful to the other.

The deal also drew concerns from critics that GM will be fueling risky subprime lending. "Making
questionable loans, with taxpayer money, in order to buttress sales during a recession is not a
sustainable business model and is an abuse of the government bailout," Peter Schiff, president of Euro
Pacific Capital, added. "GM should focus on selling cars to consumers who can afford the vehicles."

New Home Sales Up in June from Record Low
New home sales in June jumped 23.6 percent from the previous month‘s record low pace, according to
data released by the Commerce Department on July 26.

June‘s sales topped May‘s downwardly revised rate of 267,000 units to a seasonally adjusted annual
pace of 330,000, down 16.7 percent from a year ago. Despite the increase, June‘s pace was the second-
weakest month on record.

By region, sales in the Northeast surged 46.4 percent in June from the previous month, the South gained
33.1 percent, the Midwest rose 20.5 percent, while the West fell 6.6 percent.

Median new home prices fell to $213,400 in June from May‘s upwardly revised figure of $216,400,
according to a July 26 Hanley Wood Market Intelligence report. That marks a 1.4 percent drop from the
previous month and a 0.6 percent drop from a year ago.

New home inventory dropped in June from the previous month on a non-seasonally adjusted basis to
210,000 units, marking 34 consecutive months of declines, Hanley Wood reported. On a seasonally
adjusted basis, new home inventory fell to 210,000 units.

New home inventory levels are now at a record low. Based on the current sales pace, there is now a 7.6-
month supply of new homes on the market on a seasonally adjusted basis, down from May‘s supply of
9.6 months.

Existing Home Sales Ease in June




29 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Sales of existing homes fell 5.1 percent in June to a seasonally adjusted annual rate of 5.37 million units
from May‘s rate of 5.66 million units, according to a July 22 National Association of Realtors news
release. The pace remains 9.8 percent above the June 2009 rate of 4.89 million units.

―June home sales still reflect a tax credit impact with some sales not closed due to delays, which will
show up in the next two months,‖ Lawrence Yun, NAR‘s chief economist, said in the release. ―Broadly
speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-
induced spring surge. Only when jobs are created at a sufficient pace will home sales return to
sustainable healthy levels.‖

Single-family existing home sales fell 5.6 percent in June to a seasonally adjusted annual rate of 4.7
million units from May‘s figure of 4.98 million units, NAR reported. That marked an 8.5 percent increase
from the 4.33 million units recorded a year ago. Existing condominium and co-op sales inched down 1.5
percent in June to a seasonally adjusted annual rate of 670,000 units from May‘s figure of 680,000 units,
up 20.5 percent from the 556,000 units reported a year earlier.

By region, existing home sales in the Northeast increased 7.9 percent in June to an annual rate of
960,000 units, up 17.1 percent from a year ago. The Midwest fell 7.5 percent to an annual rate of 1.23
million units, up 11.8 percent from a year ago. The South dropped 6.5 percent to an annual pace of 2.01
million units, up 11 percent from a year ago, while the West decreased 9.3 percent to an annual rate of
1.17 million units, up 0.9 percent from a year ago, according to NAR figures.

First-time buyers accounted for 43 percent of home purchases in June, down 3 percent from May, while
investors accounted for 13 percent, down 1 percent from the previous month. Repeat buyers accounted
for the remaining transactions. All-cash sales accounted for 24 percent of all purchases, down 1 percent
from the previous month, while distressed homes accounted for 32 percent, up 1 percent from the
previous month.

NAR reported that the median existing home price for all home types logged in at $183,700 in June, up 1
percent from a year ago. The median existing single-family home price came in at $184,200, up 1.3
percent from a year ago, while the median existing condominium price was $180,100, down 1.4 percent
from a year ago.

By region, the median price in the Northeast was $244,300, down 1.2 percent from a year ago. The
Midwest came in at $155,900, down 0.1 percent from a year ago. The South logged in at $163,600,
unchanged from a year ago, while the West came in at $221,800, up 1.5 percent from a year ago.

Existing home inventory increased 2.5 percent in June to 3.99 million units, NAR said. Based on the
current sales pace, there is now an 8.9-month supply of existing homes on the market, up from the
previous month‘s 8.3-month supply. Although inventory is up, the pace remains 12.7 percent down from
the record 4.58 million units reached in July 2008.

Case-Shiller: May Home Prices Slightly Increase
Home prices in May improved in 15 of the 20 metropolitan statistical areas compared to the previous
year, according to the latest Standard & Poor‘s/Case-Shiller Home Price indices released July 27. The
10-city composite was up 5.4 percent from a year ago and the 20-city composite was up 4.6 percent.



30 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Home prices across the country were at autumn 2003 levels, according to the report. From peak levels,
the 10-city was down 29.6 percent as of May and the 20-city composite was down 29.1 percent.

―While May‘s report on its own looks somewhat positive, a broader look at home price levels over the past
year still do not indicate that the housing market is in any form of sustained recovery,‖ David Blitzer, chair
of Standard & Poor‘s Index Committee, said in the report. ―Since reaching its recent trough in April 2009,
the housing market has really only stabilized at this lower level. The last seven months have basically
been flat.‖

Both composites and 19 of the MSAs logged in month-over-month improvements in May. On a seasonally
adjusted basis, the 10-city inched up 1.2 percent in May compared to the previous month and the 20-city
composite increased 1.3 percent. Atlanta and Minneapolis had the biggest gains in May, with home prices
increasing 2 percent and 2.8 percent, respectively. Down 0.5 percent compared to the previous month,
Las Vegas was the only MSA to register a decline in May.

Purchase Applications Up in Weekly MBA Survey
The purchase share of mortgage activity reached its highest level since the end of June as refinancing
activity fell in the week ending July 23, according to the Mortgage Bankers Association‘s weekly Mortgage
Application Survey.

The July 28 survey showed that the Market Composite Index, which measures mortgage loan application
activity, fell 4.4 percent on a seasonally adjusted basis from the previous week and 4.2 percent on an
unadjusted basis. The four-week moving average for the Market Index increased 1.6 percent on a
seasonally adjusted basis.

The Refinance Index dropped 5.9 percent from the previous week. Refinancing made up 78 percent of
applications, down from 79.4 percent the previous week, while adjustable-rate loan activity rose 0.5
percent to 5.7 percent. The four-week moving average for the Refinance Index increased 2 percent on a
seasonally adjusted basis.

The MBA‘s Purchase Index increased 2 percent from the previous week on a seasonally adjusted basis.
On a non-adjusted basis, the index rose 2.4 percent from the previous week, down 34.3 percent from a
year ago. The four-week moving average for the Purchase Index remained steady from the previous
week.

The average rate on a 30-year fixed loan inched up to 4.69 percent from the prior week‘s 4.59 percent,
while points, including origination fees, decreased from 1.04 to 0.88 for 80 percent loan-to-value ratio
loans, the MBA reported. The average rate on a 15-year fixed loan increased from 4.05 percent to 4.12
percent, while points, including origination fees, decreased from 0.88 to 0.83. The average rate on a one-
year adjustable rate mortgage decreased from 7.17 to 7.15, while points, including origination fees,
inched down from 0.24 to 0.23.

Freddie Mac: Fixed-rate Mortgages at Record Low
Interest rates on 30-year fixed-rate home loans fell to a record low for the fourth time in five weeks to 4.56
percent, down from 4.57 percent last week and 5.2 percent a year ago, as concerns about the economic



31 | Appraiser News Online Vol. 11, No. 13/14, July 2010
recovery drove down Treasury bond yields, according to Freddie Mac's July 22 Weekly Primary Mortgage
Market Survey.

On 15-year fixed mortgages, rates averaged 4.03 percent, down from 4.06 percent last week and 4.68
percent a year ago. Five-year adjustable-rate mortgages averaged 3.79 percent, down from 3.85 percent
from last week and 4.74 percent a year ago, while one-year adjustable-rate mortgages averaged 3.7
percent, down from 3.74 percent last week and 4.77 percent a year ago.

Upfront fees lender fees averaged 0.7 percent of the amount borrowed for fixed-rate and one-year
adjustable-rate mortgages, while five-year adjustable-rate mortgages required 0.6 percent.

"The decline in mortgage rates over the past few weeks echoes the recent signs of weakening confidence
in the strength of the economy, particularly the housing and consumer sectors," Frank Nothaft, vice
president and chief economist of Freddie Mac, said in a news release. "For example, homebuilder
confidence declined in July to lows not seen since April 2009, as measured by the NAHB/Wells Fargo
Housing Market Index, following the large drop in housing starts reported for June."

Rep. Kanjorski Tells AI Summit ―Hard Part of the Bill Occurs Now‖
Greeted with a standing ovation for his work on behalf of appraisers, Rep. Paul Kanjorski, D-Pa., told
about 200 Appraisal Institute Washington Appraisal Summit attendees that ―the hard part of the (recently
passed financial regulatory reform) bill occurs now.‖

Speaking during a July 19 luncheon address at the Hyatt Regency on Capitol Hill, Kanjorski said, ―It‘s got
to be implemented. It‘s got to be carried out. Your section of the bill is going to take years. Take on the
responsibility an American citizen has. Let‘s make a concerted effort.‖

Kanjorski played a key role in the inclusion of appraisal provisions in the Dodd-Frank Wall Street Reform
and Consumer Protection Act (H.R. 4173), which President Obama signed into law July 21. The
provisions include the first modernization of real estate appraisal regulations in more than 20 years.

Kanjorski serves as chairman of the House Financial Services Committee‘s Subcommittee on Capital
Markets, Insurance, and Government Sponsored Enterprises, which has jurisdiction over securities,
exchanges and most insurance matters, except for health insurance. He has been a strong leader on
appraisal issues for years.

―If we could have passed this bill seven years ago, we would have prevented subprime lending,‖ he said.
―We probably wouldn‘t have gotten to the edge of the disease we all suffer from. We can‘t keep learning
lessons on that expensive of a tuition bill.‖

Of the bill‘s appraisal provisions, Kanjorski said: ―You have to get regulators to actually implement them. If
you do that, suddenly the Appraisal Institute and the appraisers of America could grow values that can
carry the country back to confidence and faith in the whole banking system and in the economy.‖

Administration Needs Appraisers’ Help, FHA’s Stevens Says at AI Summit
The Obama administration is doing what it takes to provide responsible homeowners with opportunities to
prevent avoidable foreclosures, but it needs the appraisal profession‘s help, said Federal Housing



32 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Administration Commissioner David Stevens. He was the opening speaker July 19 at the Appraisal
Institute‘s Washington Appraisal Summit in the nation‘s capital.

―I‘m confident that the vast changes we have experienced in the housing market will result in a changed
industry once we come through the crisis,‖ Stevens said in his prepared remarks. ―But it requires you to
be more accountable and responsible – an industry with more integrity, more transparency and more of a
commitment to looking out for the consumer.‖

Stevens told about 200 Summit attendees at the Hyatt Regency on Capitol Hill that the administration‘s
first step was to ―stop the bleeding.‖ He recalled that the administration first stabilized banks, ―which was
as unpopular as it was necessary,‖ Stevens said. He noted that low interest rates have helped more than
6 million families refinance, resulting in $11 billion in total borrower savings.

The administration‘s second step, Stevens said, was to address the housing crisis – both the supply and
demand sides. He highlighted the first-time homebuyer tax credit that has helped more than 2.5 million
Americans purchase a home and the Making Home Affordable program, known as HAMP, which remains
on pace to help 3 to 4 million Americans by 2012.

And third, Stevens said, the administration is laying a foundation for the future. ―This is a new FHA,‖ he
said, ―and a new FHA means protecting the homeowner and the taxpayer alike.‖ He highlighted the hiring
of a chief risk officer, a new FHA position, and noted that FHA shut down 1,100 lenders in Steven‘s first
year, more than in the previous two decades combined.

―We‘re clearly a long way from where we were a year ago,‖ Stevens told AI Summit attendees. ―I‘m very
bullish on the future of the housing industry … You guys are an absolutely critical industry.‖

Stevens also noted the leading role the Appraisal Institute has played in green valuation. ―I want to
commend the Institute for its efforts to educate and train appraisers in evaluating energy efficiency and
other green features in homes,‖ Stevens said in his written remarks. ―All of us in the mortgage industry
have an interest in providing consumers with the best information available about homes, including
features that may make them less costly to occupy and more valuable over time.‖

JPMorgan Chase Gets Tough on Short Sale Deficiencies
To recoup as much as possible on losses, JPMorgan Chase & Co. began notifying certain borrowers in a
pre-approval letter that they will remain responsible for debt not covered in short sale transactions,
according to a July 16 American Banker report. The new policy illustrates an additional obstacle to short
sales, which the government and mortgage industry have been advocating as a less costly alternative to
foreclosure.

Although roughly 20 states bar lenders from seeking deficiency judgments, the letter likely will not
supersede state laws. "They've probably been directed to put this language in all states, even those that
have anti-deficiency statutes," Sam Ehler, a managing attorney at Cooper Castle Law Firm LLP, told
American Banker.

Prior to the collapse of the housing market, banks typically waived their right to collect deficiencies related
to short sales, American Banker reported. "It was always pretty explicit that for the short sale to close,



33 | Appraiser News Online Vol. 11, No. 13/14, July 2010
they were waiving the debt," said Jim Satterwhite, executive vice president and chief operating officer at
Infusion Technologies LLC.

Although some lender are requiring borrowers to sign documents outlining their obligations in a short
sale, JPMorgan has gone a step further by spelling out the borrowers obligations early in the process. "If
you're not explicit, you run the risk that the borrower could challenge it and they assumed they were
released from any liability," said Steven Horne, president of Wingspan Portfolio Advisors.

While the federal government‘s Home Affordable Foreclosure Alternative program provides lenders with
incentives to allow short sales under the condition that they cannot purse deficiencies, American Banker
said that some mortgage insurance companies are requiring borrowers to sign promissory notes
preventing them from taking advance of the federal program.

To prevent borrowers who have the ability to pay their mortgages from strategically defaulting on their
obligations, Fannie Mae issued guidelines prohibiting borrowers with "substantial unencumbered assets
or significant cash reserves equal to or exceeding three times the borrower's total monthly mortgage
payment, or $5,000, whichever is greater," from its short-sale program.

44 Percent of Americans Expect Economy to Improve, Survey Says
According to a Certified Financial Planner Board of Standards Inc. survey, more Americans think the U.S.
economy will improve rather than decline in the next six months, Bloomberg reported July 13. The survey
found that 44 percent of respondents said the economy will get better compared with 28 percent who
believe it will get worse.

While Americans are more optimistic about the economy, they remain less optimistic about their own
finances. The CFP Board survey showed about 37 percent of Americans said they expect their finances
to improve in the next six months and are more worried about their finances today than they were two
years ago. Sixty-five percent said they have financial concerns that are ―much‖ or ―somewhat‖ greater
than they were at the beginning of the recession. The survey said the top three financial issues for
respondents were retirement goals and planning, education funding and savings targets, Bloomberg
reported.

The U.S. is struggling to recover from the worst recession since the 1930s, with 83,000 private jobs
added in June. Unemployment was 9.5 percent in June, compared with 9.7 percent in May. According to
the Thomson Reuters/University of Michigan preliminary index of consumer sentiment, confidence among
U.S. consumers rose in June to the highest level in more than two years, Bloomberg reported.

Foreclosure Filings Reach 1.65 Million in First Half of Year
Foreclosure activity is on track to rise to a new historic level by the end of 2010, according to a June 15
RealtyTrac news release. In the first half of the year, 1.65 million properties — or one in every 78 homes
— received a foreclosure filing, down 5 percent from the previous six months but up 8 percent from the
same period a year ago.

In June, nearly 314,000 properties received a foreclosure filing, down 3 percent from the previous month
and 7 percent from a year ago, according to RealtyTrac‘s Midyear 2010 U.S. Foreclosure Market Report.




34 | Appraiser News Online Vol. 11, No. 13/14, July 2010
During the second quarter of 2010, nearly 900,000 homes received a foreclosure filing, down 4 percent
from the previous quarter but up nearly 1 percent from a year ago.

Meanwhile, bank repossessions in the U.S. increased in the second quarter to nearly 269,000 homes, up
5 percent from the previous quarter and 38 percent from a year ago.

 ―The second quarter was a tale of two trends. The pace of properties entering foreclosure slowed as
lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive
short sale and loan modification initiatives,‖ James Saccacio, chief executive officer of RealtyTrac, said in
the news release. ―The midyear numbers put us on pace to exceed 3 million properties with foreclosure
filings by the end of the year, and more than 1 million bank repossessions.‖

Nevada had the highest foreclosure rate in the first half of the year with one in 17 homes receiving a filing.
Nearly 65,000 homes in Nevada, or 6 percent, received a filing, down 13 percent from the previous six
months and 6 percent from a year ago. Arizona came in second with one in 30 homes followed by Florida
with one in 32 homes.

California had the highest foreclosure totals in the first half of the year with slightly more than 340,000
properties receiving a filing, down 15 percent from the previous six months and 13 percent from a year
ago. Florida came in second with more than 277,000 homes, down 9 percent from the previous six
months but up 3 percent from a year ago. Arizona followed with more than 91,000 homes, down 2
percent from the previous six months but up nearly 2 percent from a year ago.

FASB Proposes Fair Value Reporting Change for Investment Properties
The Financial Accounting Standards Board announced July 14 that it will develop a proposal requiring
investment properties be entered at fair value in accounting ledgers, BNA Tax and Accounting reported.
Although the proposal may only affect real estate investment properties, it also may affect other types of
assets that have similar traits.

Under current U.S. accounting practices, investment properties are accounted for as ―held for use‖ or
―held for sale.‖ However, under IAS 40, investment properties are separately defined as an asset held for
collection of rent or for capital appreciation, or both.

To aid with its convergence efforts with international standards, the FASB voted to draft an accounting
standard update on investment property that reflects the International Accounting Standards Board‘s IAS
40 rule. However, while IAS 40 allows organizations to use either a fair value model or an amortized cost
model, the FASB would require that investment properties be entered at fair value only.

The FASB also discussed the possibility of including a question in its proposal on whether the switch to
fair value accounting should be entered as ―income‖ or as ―other comprehensive income.‖

While a timeframe has not been released, the FASB plans to issue a draft standard in the third quarter of
2010, with a final accounting standard update to be released before July 2011.

Homebuilder Confidence Falls for Second Consecutive Month



35 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Homebuilder confidence declined in July for the second consecutive month to its lowest level since April
2009, according to the National Association of Home Builders/Wells Fargo Housing Market Index
released July 19. The index fell to 14, two points from the previous month, the NAHB reported.

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

"This month's lower HMI reflects a number of underlying market conditions that builders are seeing,
including hesitant home buyers, tight consumer credit and continuing competition from foreclosed and
distressed properties that are priced below the cost of construction," NAHB Chief Economist David Crowe
said in a NAHB news release. "The pause in sales following expiration of the home buyer tax credits is
turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the
economy."

By region, the homebuilder confidence index in the Northeast increased 7 points to 23, the Midwest
inched up one point to 15, while the South and West both dropped five points to 14 and 9, respectively.

June Housing Starts Dip, Permit Activity Increases
Overall housing starts dipped 5 percent in June from the previous month to 549,000 units, according to
U.S. Commerce Department data released July 20. Single-family housing starts fell 0.7 percent to
454,000 units while multi-family starts plunged 21.5 percent to a seasonally adjusted annual rate of
95,000 units.

By region, overall housing starts fell 11.3 percent in the Northeast, 6.9 percent in the Midwest, 2.4 percent
in the South and 5.9 percent in the West.

―The government‘s figures suggest that single-family housing production may be finding a bottom
following the tax credits,‖ Bernard Markstein, National Association of Home Builders vice president and
senior economist, said in a news release. ―Over the next several months, we expect to see some
improvement in both housing starts and sales activity as buyers come forward to take advantage of the
very attractive home prices, historically low mortgage rates and excellent selection that characterize
today‘s new-home marketplace.‖

Meanwhile, overall permit activity increased 2.1 percent in June to a seasonally adjusted annual rate of
586,000 units. Single-family permit activity fell 3.4 percent from the previous month to a seasonally
adjusted annual rate of 421,000 units while multi-family permits jumped 19.6 percent to 165,000 units.

By region, overall permit activity in the Northeast and West increased 32.3 percent and 9.7 percent,
respectively, while the Midwest and South fell 10.8 percent and 3.1 percent, respectively, according to
Commerce Department data.

Freddie Mac: 30-Year Mortgage Rates Remain at Record Lows
The 30-year fixed rate mortgage averaged 4.57 percent for the week ending July 15, unchanged from last
week when it drop to a record low, according to Freddie Mac's July 15 Weekly Primary Mortgage Market
Survey. Reuters reported that the rate averaged 5.14 percent a year ago.




36 | Appraiser News Online Vol. 11, No. 13/14, July 2010
At the current rates, which includes an additional 0.7 percentage point increase on average in fees and
points, a homeowner with a mortgage of $200,000 would save roughly $1,500 each year compared to a
year ago.

While home purchases have remained down because of high unemployment, refinance applications have
been making up the largest share of total mortgage application activity. "Over the past month, about four
out of five conventional loan applications and more than one-half of FHA and VA loan applications were
for refinance," said Freddie Mac Chief Economist Frank Nothaft.

Recovery Rates Edge Up in RCA Second Quarter Survey
The average recovery rate for troubled commercial real estate mortgages, before costs and fees,
increased from 63 percent in 2009 to 67 percent in 2010 year-to-date, according to a recent Real Capital
Analytics report. In the second quarter, the average recovery rate was 68 percent.

The analysis was based on a sample of 586 first mortgage resolutions, totaling $9.9 billion, recorded
since the first quarter of 2009. This was up from 401 first mortgage resolutions, totaling $7.7 billion, in
RCA‘s April report. The increase in the recovery rate from 2009 to 2010 year-to date reflects a growing
share of resolutions where lenders can now boast full recoveries on their first mortgage exposures.

Appraisal Institute members may view the full report in the members-only section of the AI website at
www.appraisalinstitute.org/myappraisalinstitute/real_capital_analytics_reports.aspx.

Goldman Fined $550M in Civil Fraud Charges
Goldman Sachs & Co. has agreed to pay $550 million to settle civil fraud charges that it misled buyers of
mortgage-related investments, The Associated Press reported July 15. The settlement requires Goldman
to pay the Securities and Exchange Commission fines of $300 million. The remaining money will
compensate those who lost money on their investments.

Even though the fine was the largest against a financial company in SEC history, it amounts to less than
5 percent of Goldman's 2009 net income of $12.2 billion after payment of dividends to preferred
shareholders — or a little more than two weeks of net income, the AP reported.

The settlement involves charges that Goldman sold mortgage investments without telling buyers that the
securities were crafted with input from a client that was betting on them to fail. All told, the securities cost
investors close to $1 billion while helping Goldman client Paulson & Co. capitalize on the housing bust,
the SEC said in the charges filed on April 16. It was the most significant legal action related to the
mortgage meltdown that pushed the country into recession, the AP reported.

Despite the settlement, Goldman's legal troubles may not be over. Investors who lost money on the
transactions could still sue Goldman for civil damages, Thomas Ajamie, a defense lawyer who specializes
in financial fraud cases, told the AP.

Randy Williams, MAI, SR/WA, Appointed IRWA President-Elect
The International Right of Way Association recently announced the appointment of Randy A. Williams,
MAI, SR/WA, as international president-elect for the association. The announcement was made during
          th
IRWA‘s 56 Annual International Education Conference held June 27-30 in Calgary, Alberta, Canada.



37 | Appraiser News Online Vol. 11, No. 13/14, July 2010
A former president of the Appraisal Institute‘s Austin Chapter, Williams has been an approved IRWA
course facilitator since 1990 and has taught numerous IRWA appraisal courses, including partial
acquisitions, easement valuation and income capitalization. Having been involved in IRWA at the local,
region and international levels, he also served as chair of the 2009 Federal Agency Update Task Force
and co-chair in 2010. The Appraisal Institute has co-hosted FAU in Las Vegas with IRWA.

Actively engaged in real estate valuation and consulting since 1977, Williams currently serves as
managing director for Integra Realty Resources-Austin (Texas). With a background in appraisal and
management in the real estate banking industry, he also has expertise in appraisal, testimony and
appraisal review in private practice. Clients served include accountants, investment firms, law firms and
lenders for private and public agencies.

The position of international president-elect is held for a one-year term. As a member of the Executive
Committee and Board of Directors, the international president-elect performs the duties of the
international president should the international president be absent or unable to perform the duties of the
office. In conjunction with the executive vice president, the international president elect serves as an ex-
officio member of the IRWA International committees, acting as the liaison between the international
president and committees.

Torrance, Calif.-based IRWA describes itself as the central authority for right of way educational programs
and professional services worldwide. The association has nearly 10,000 professional members, including
engineers, appraisers, property managers, acquisition agents, lawyers, surveyors, title experts,
environmentalists and relocation assistance agents. Since its inception as a not-for-profit association in
1934, IRWA says it has united the efforts of its members toward professional development, improved
service to employers and the public, and advancements within the right of way profession.

MBA Survey: Refinance Activity Picks Up as Fixed Rates Fall
The refinance share of mortgage activity reached its highest level since April 2009 in the week ending
July 16 as homeowners took advantage of historically low mortgage rates, according to the Mortgage
Bankers Association‘s weekly Mortgage Application Survey.

The July 21 survey showed that the Market Composite Index, which measures mortgage loan application
activity, increased 7.6 percent on a seasonally adjusted basis from the previous week and 19.5 percent
on an unadjusted basis. The four-week moving average for the Market Index increased 4.9 percent on a
seasonally adjusted basis.

The Refinance Index rose 8.6 percent from the previous week. Refinancing made up 79.4 percent of
applications, up from 78.7 percent the previous week, while adjustable-rate loan activity fell 0.3 percent to
5.2 percent. The four-week moving average for the Refinance Index increased 6.5 percent on a
seasonally adjusted basis.

The MBA‘s Purchase Index increased 3.4 percent from the previous week on a seasonally adjusted
basis. On a non-adjusted basis, the index jumped 15.3 percent from the previous week, down 35.7
percent from a year ago. The four-week moving average for the Purchase Index fell 1.3 percent on a
seasonally adjusted basis.



38 | Appraiser News Online Vol. 11, No. 13/14, July 2010
―As rates on 30- and 15-year fixed-rate mortgages declined to the lowest levels recorded in the survey,
refinance activity increased last week. The refinance index is up almost 30 percent over the past four
weeks, but is still well below the peak seen last spring,‖ Michael Fratantoni, MBA‘s vice president of
research and economics, said in a news release. ―Refinance borrowers, aiming for the lowest possible
rate, are getting conventional loans. The strength in purchase applications comes from government loans,
likely indicating that prospective buyers are drawn by the lower down payment requirements.‖

The average rate on a 30-year fixed loan dipped to 4.59 percent from the prior week‘s 4.69 percent, while
points, including origination fees, increased from 0.96 to 1.04 for 80 percent loan-to-value ratio loans, the
MBA reported. The average rate on a 15-year fixed loan fell from 4.12 percent to 4.05 percent, while
points, including origination fees, decreased from 1.04 to 0.88. The average rate on a one-year adjustable
rate mortgage decreased from 7.2 to 7.17, while points, including origination fees, inched up from 0.22 to
0.24.

RICS Joins The Appraisal Foundation as International Sponsor
The Appraisal Foundation announced July 19 that it has approved the Royal Institution of Chartered
Surveyors as an international sponsor of the Foundation, effective immediately.

In February 2010, The Appraisal Foundation Board of Trustees adopted criteria for international appraisal
sponsorship that requires organizations to be not-for-profit or non-stock under the laws of its jurisdiction
and includes adoption of the Uniform Standards of Professional Appraisal Practice or an equivalent
document. In addition, organizations must demonstrate meaningful requirements in the areas of qualifying
education, academic education, continuing education, experience and examination for those seeking an
appraisal designation.

―We are very pleased to have RICS join the Foundation family. With a rich 140-year history and a global
presence, it is truly a world class organization,‖ said David Bunton, president of The Appraisal
Foundation. ―What intrigues us most is how well the missions of both organizations complement one
another. We look forward to a very productive working relationship.‖

"This is a major step toward closer collaboration among the world's leading valuation standards
organizations,‖ RICS President Robert Peto FRICS said. ―Together, we continue to demonstrate that
valuation is a robust profession, capable of speaking to issues with one voice, enforcing professional
standards and providing consistent quality reports and services to clients."

He added, "This recognition by The Appraisal Foundation in the United States recognizes RICS' important
global contribution to valuation standards. The valuation profession, like the accounting profession, is
moving toward international standards. We are strong supporters of the International Valuation Standards
Council, The Appraisal Foundation and other bodies that support these international standards."

Demand for Design Services Continues to Remain Low, AIA Says
June‘s Architecture Billings Index inched up slightly to 46 from the previous month‘s reading of 45.8, the
American Institute of Architects reported July 21. The June ABI continues to reflect a decline in demand
for design services. Scores lower than 50 represent declining conditions, while those greater than 50
indicate an industry-wide increase in billings.



39 | Appraiser News Online Vol. 11, No. 13/14, July 2010
―The steep decline in nonresidential property values has slowed investment in new facilities,‖ AIA Chief
Economist Kermit Baker, Ph.D., said in a news release. ―Conditions at architecture firms continue to
remain very soft, but we‘re optimistic that they will improve before the end of the year.‖

The regional averages in June were 46.3 for the Midwest, 47.7 for the Northeast, 43.6 for the West and
46.7 for the South. The sector index breakdown in June included multifamily residential at 46.5,
institutional at 45, mixed practice at 44.7 and commercial/industrial at 50.6. New project inquiries in June
came in at 57.7.

The index 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.

New AI Seminar: Advanced Spreadsheet Modeling
The Appraisal Institute announced July 21 that its newest seminar, ―Advanced Spreadsheet Modeling for
Valuation Applications,‖ is scheduled to premiere in September. The seminar exposes participants to
spreadsheet program tools that will strengthen their analyses, increase their productivity and help them
meet the expectations of demanding clients.

Participants will learn key spreadsheet program features; best practices in financial model development;
complex highest and best use analysis; key inputs in maximum building-size calculations, land residual
analysis and feasibility rent analysis; and how to maximize useful Excel features such as sorting, the
outlining function and pivot tables.

Seminar content is infused with real-world problems that will help participants develop best practices in
modeling that can be applied across a variety of assignments. The spreadsheet applications are
especially helpful in the areas of market analysis, feasibility analysis and highest and best use.

The two-day seminar premieres Sept. 13-14 in Greensboro, N.C.; Sept. 22-23 in Baltimore, Md.; and
Sept. 27-28 in Phoenix, Ariz. The seminar is approved for 14 hours of AI continuing education credit. The
registration fee is $275 for members, $375 for nonmembers. For more information and to register, visit
www.appraisalinstitute.org/education/SummerSeminars2010.aspx.

25 Percent of Americans Hurt by Low Credit Scores
Based on consumer credit reports as of April, Fair Isaac Corp. said that 25.5 percent of consumers —
nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for
lenders, The Associated Press reported July 12.

It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending
standards banks now use.

FICO‘s findings represent an increase of about 2.4 million people in the lowest credit score categories in
the past two years. According to data posted on Myfico.com, historically just 15 percent of the 170 million




40 | Appraiser News Online Vol. 11, No. 13/14, July 2010
consumers with active credit accounts, or 25.5 million people, fell below 599, The Associated Press
reported.

On a brighter note, FICO said the number of consumers who have a top score of 800 or above has
increased in recent years to 17.9 percent. This is notably above the historical average of 13 percent,
though down from 18.7 percent in April 2008 before the market meltdown. This reflects that more
individuals have cut spending and paid down debt in response to the recession, according to The
Associated Press.

There's been a significant shift in the range of people with moderate credit, those with scores between
650 and 699. The new FICO data shows that this group comprised 11.9 percent of scores. This is down
slightly from 12 percent in 2008, but reflects a drop of roughly 5.3 million people from its historical
average of 15 percent. This group may feel the effects of lenders' tighter credit standards the most,
Andrew Jennings, chief research officer for FICO, told The Associated Press.

Federal Bank Closures Mount to 87
Federal regulators on July 9 shut down Bay National Bank, based in Baltimore, marking the second
failure in Maryland and the 87th failure of a federally insured bank this year. The bank had $282.2 million
in assets and $276.1 million in deposits as of March 31. Its failure is expected to cost the deposit
insurance fund $17.4 million, The Associated Press reported July 9.

The pace of bank failures this year far surpasses that of 2009, which was a brisk year for shutdowns. By
this time last year, regulators had closed 45 banks. The number of bank failures is expected to peak this
year and be slightly higher than the 140 that fell in 2009. The reason for the accelerated pace: banks'
losses are building up on loans made for commercial property and development, according to The
Associated Press.

As more banks fail, the deposit insurance fund is falling deeper into the red – its deficit stood at $20.7
billion as of March 31. The number of banks on the FDIC's confidential "problem" list jumped to 775 in the
first quarter from 702 three months earlier. The FDIC expects the cost of resolving failed banks to total
around $60 billion from 2010 through 2014, the Associated Press reported.

In related news, Rep. Paul C. Broun, R-Ga., complained that federal regulators were being overzealous in
closing banks, particularly Georgia‘s McIntosh Commercial Bank, which closed in spring of 2009, The
Atlanta Journal-Constitution reported July 11.

But regulators and banking experts told the Journal-Constitution the reasons behind bank closures boiled
down to too much lending to developers and homebuilders who got into trouble when the real estate
market crashed. ―The mistake McIntosh made – and a lot of other banks made – is they probably pursued
some types of loans too aggressively, particularly a lot of development type loans,‖ said Robert Johnson,
chairman of Charter Financial Corp.

Foresight Analytics agrees that commercial real estate and construction loans are a prime problem in
bank failures. Five banks seized May 28 by the Federal Deposit Insurance Corp. – three in Florida, one in
California, one in Nevada – averaged 80 percent in non-performing commercial real estate loans,




41 | Appraiser News Online Vol. 11, No. 13/14, July 2010
including 40 percent in non-performing commercial mortgages and nearly 41 percent in construction and
land loans, MBA NewsLink reported June 7.

Still, Broun blames the bank‘s troubles, and that of others, on bank examiners who he said have
shuttered institutions that shouldn‘t have closed. ―The federal government is closing these banks down
when there is absolutely no reason to do so,‖ he told the Journal-Constitution.

Wells Fargo Downsizes, Cuts Nearly 4,000 Jobs
Wells Fargo & Co., the fourth-largest U.S. bank by assets, plans to eliminate 3,800 jobs, or about 1.4
percent of its total workforce, and close its consumer-finance branch network of 638 independent
consumer-finance branches, Bloomberg reported July 8.

Wells Fargo purchased Wachovia Corp. for $12.7 billion in 2008 and is restructuring as it merges the two
franchises. Credit card, auto and home loans will continue to be made through 6,600 retail branches and
2,200 mortgage offices, the company told Bloomberg.

Wells Fargo Financial is the division that sold consumer loans and mortgages to borrowers with flawed
credit. The bank will stop making nonprime home loans because the business had ―become so small that
we decided we would no longer devote resources to maintaining‖ it, David Kvamme, president of the unit,
told Bloomberg. Wells Fargo ―will stay focused on serving the nonprime segment with direct-to-consumer
auto lending and credit-card lending,‖ Kvamme said.

Of the job cuts announced July 7, about 2,500 are branch employees while 1,000 are support staff based
in Iowa, where the consumer-finance and home-lending businesses are located, Kvamme said. The bank
will look to move employees into other roles, he told Bloomberg.

Banks Re-establish ―No-doc‖ Loans
No-doc and low-doc loans – loans in which no or minimum documentation of income is required –
disappeared in 2009, but according to FirstAmerican Corelogic, these loans resurfaced to account for 8
percent of newly originated loan pools as of February 2010, Forbes reported July 8.

FirstAmerican Corelogic said that at the height of the housing boom in 2006 and 2007, low-doc loans
accounted for roughly 40 percent of newly issued mortgages in the U.S.

Wall Street Funding of America is no stranger to low-doc loans. The mortgage lender recently circulated
offers to make low-doc loans to borrowers with credit scores as low as 660 on the Fair Isaac Corp. scale,
as long as the borrower was self-employed, seeking no more than 60 percent of the value of a home and
had six months of mortgage payments in reserve. The lender was offering interest rates 1.5 to 2
percentage points over the going rate on conventional mortgages, according to Forbes.

Another mortgage broker, GuardHill Financial, told Forbes that it is making no-doc loans on behalf of four
of the 50 lending mortgage lenders it represents. It‘s possible that $100 million of the $2 billion in loans
GuardHill handles in 2010 will be low-doc, Dave Dessner, its sales director, told Forbes.com. The banks
extending these loans are small community and regional outfits attracted to their relatively high interest
rates. The lenders intend to keep the loans in their portfolios rather than securitize them.




42 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Low-doc loans are highly discouraged in the financial reform package passed by the House of
Representatives on June 25. It requires lenders who offer mortgages to borrowers without full
documentation to post a reserve equal to 5 percent of the loan's value before they are securitized, Forbes
reported.

Mortgage Rates Continue Falling to Record Lows: Bankrate
National mortgage rates fell again to record low levels, according to Bankrate.com‘s weekly national
mortgage survey released July 7. Mortgage rates have dropped over concerns of the economic recovery
as investors move funds into safer investment vehicles, including Treasury securities, Bankrate said.

According to the weekly survey, the average 30-year fixed mortgage rate inched down to 4.74 percent
while the larger jumbo 30-year fixed rate fell to 5.48 percent. The average five-year adjustable rate
mortgage dropped to 4.06 percent while the average seven-year ARM fell to 4.46 percent.

The last time rates were above 6 percent was in November 2008 when the average rate was 6.33
percent. At that rate, a $200,000 loan would require a monthly payment of slightly more than $1,241. At
the current rate, the average monthly payment for the same loan would only be slightly more than $1,042.

Yahoo, Zillow Announce Real Estate Ad Partnership
Yahoo and Zillow, the operators of the second and third most-trafficked home-sales websites, have
agreed to a joint venture that would create an Internet real estate adverting network, according to a July 9
report in The Wall Street Journal.

Under the partnership Zillow will oversee a network that will combine home listings and ads from local real
estate brokers on Yahoo‘s website as well as its own, the Journal reported.

Spencer Rascoff, Zillow‘s chief operating officer, told the Journal that the partnership ―creates the
opportunity for agents and brokers to reach one of the largest audiences of homebuyers online when they
list a home or purchase an ad.‖

The relationship between the two companies began in 2006 when Yahoo introduced Zillow‘s home
valuation estimates into its real estate website. Although financial terms of the multi-year partnership have
not been made public, Zillow and Yahoo plan to immediately begin coordinating ad sales efforts.

MBA Report: Commercial Real Estate Declines Easing
Declines in commercial real estate fundamentals eased in the first quarter of 2010 as the economy
showed signs of improvements, according to the Mortgage Bankers Association‘s recently released first
quarter 2010 Commercial Real Estate/Multifamily Finance Quarterly Data Book.

In a July 1 article, MBA NewsLink reported that the gross domestic product grew 2.7 percent during the
first three months of this year compared to the previous quarter, which translated into some stability for
the commercial real estate market. However, MBA said this stabilization has not yet flowed through to
mortgage performance.




43 | Appraiser News Online Vol. 11, No. 13/14, July 2010
―Despite what appears to be significant competition to lend, borrowing remained light,‖ the report said. ―As
economic growth continues to gain traction, one would expect the impact on commercial real estate
markets to broaden and reach through property performance to mortgage performance as well.‖

The report noted that vacancy rates increased during the first quarter at the slowest pace since 2007.
During the first three months of 2010, the vacancy rate for apartments came in at 8.4 percent, industrial
logged in at 13.3 percent, retail registered at 19.4 percent and office came in at 19.6 percent.

Despite drops in average asking rents in the first quarter, the report showed that decline rates for all
major property types were the lowest since mid-2008.

Although new construction activity fell, the reported noted that multifamily permitting and starts increased
from record low levels in the first quarter. Moreover, while the number of commercial and multifamily
properties changing hands remained low during the first quarter, total dollar volume of major property sold
reached $14 billion, up 45 percent from a year ago.

MBA said that property performance and valuations continued to have an impact on the performance of
mortgages backed by commercial and multifamily properties. The delinquency rate on CMBS loans 30
days or more delinquent in the first quarter of 2010 increased 1.54 percentage points from the fourth
quarter of 2009 to 7.24 percent, while loans held by FDIC-insured banks and thrifts 90 days or more
delinquent increased 0.32 percentage points to 4.24 percent.

The rate for loans held in life company portfolios 60 or more days delinquent increased 0.12 percentage
points to 0.31 percent. Multifamily loans held or insured by Fannie Mae rose 0.16 percentage points to
0.79 percent while those held by Freddie Mac increased 0.05 percentage point to 0.24 percent.

―Market conditions make it likely borrowing will remain subdued in the near-term, although the low base
levels may produce reports of large percentage increases,‖ MBA said.

Macquarie Enters U.S. Commercial Mortgage Market
Australia‘s largest investment bank, Macquarie Group LTD, announced that it is expanding its commercial
mortgage presences in the U.S. by forming a credit trading division, Bloomberg.com reported July 8. The
bank added a commercial mortgage finance and commercial mortgage-backed securities team to the
credit trading division of its fixed income, currencies and commodities group.

With more than $60 billion in loans bundled into bonds scheduled to mature in 2011, Macquarie said it is
positioning itself to take part in restructuring and refinancing the debt as it comes due. ―We want to be in a
position to capture that in whatever format it takes,‖ Michael McLaughlin, head of Macquarie‘s New York-
based credit trading unit, told Bloomberg.

According to McLaughlin, Macquarie plans to start originating commercial mortgages, which may be
pooled with others to create newly issued commercial mortgage-backed bonds. ―A lot of commercial real
estate risk is on the books of banks and insurance companies,‖ McLaughlin said. ―The market has been
waiting for the big cleansing.‖

Mortgage Delinquencies Up after Months of Improvement

44 | Appraiser News Online Vol. 11, No. 13/14, July 2010
After several months of improving conditions, the number of mortgage loans 90 days or more delinquent
increased 2.3 percent in May from the previous month to 9.2 percent, according to a July 6 LPS Applied
Analytics news release. The number of loans that were 30 days or 60 days delinquent also increased.

Although the percentage of delinquent loans increased, overall delinquency and foreclosure rates
continue to remain relatively stable at historically high levels, LPS said. However, the average number of
days it takes for a loan to move from 30 days delinquent to foreclosure sale reached a record high at 449
days.

The volume of loans in foreclosure that banks took ownership of fell in May from April‘s record-high level,
according to LPS.

The deterioration ratio, which compares the number of loans that went into delinquency against those that
recover, worsened. In May, nearly 2.5 loans went into delinquency for each loan that improved.

As of May, there were more than 7.3 million loans in some state of delinquency or REO. Florida and
Nevada continue to have the heaviest concentration of troubled loans in May with more than one in five in
some stage of delinquency or foreclosure.

CMBS Delinquencies Could Reach $90 Billion: Realpoint
Realpoint LLC‘s Monthly Delinquency Report, released June 26, projected that delinquent unpaid
balances in commercial mortgage-backed securities could climb to between $80 billion and $90 billion by
the end of 2010 and that the delinquency percentage could grow to between 11 percent and 12 percent.

"We expect delinquencies to continue to increase for the remainder of this year based on the continued
transfer of loans to special servicing on a monthly basis, especially regarding those for which borrowers
are asking for debt relief and, in many cases, may not be able to reach an amicable agreement for
forbearance or workout between borrowers and special servicers," Frank Innaurato, managing director at
Realpoint, said in the report.

According to the report, retail and multifamily delinquencies remained highest among all property types. In
May retail properties represented 24.3 percent of CMBS delinquencies, followed by multifamily at 23.5
percent, office at 21.4 percent and hotel at 12.5 percent.

The report pointed out that CMBS delinquencies above 90 days increased to $32.18 billion in May, up 5
percent from the previous month and 205 percent from a year ago. Specially serviced CMBS increased
$2 billion on a net basis in May to $83.38 billion from April‘s total of $81.38 billion. Unpaid CMBS
increased to $57.34 billion, up $2.9 billion from April, the report said.

"Both the volume and unpaid balance of CMBS loans transferred to special servicing on a monthly basis
continues to raise questions about underlying credit stability in today‘s market climate for these more
recent vintage CMBS deals," the report said.

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

Appraisal Institute’s Terry Dunkin Appointed to FIABCI Post

45 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Terry Dunkin, MAI, SRPA, SRA, has been named to the board of The International Real Estate
Federation (FIABCI) and as president of the organization‘s Principal Members Committee. FIABCI World
President Enrico Campagnoli of Italy made the announcement July 8.

Currently chair of the Appraisal Institute‘s International Relations Committee, Dunkin has been an
appraiser for more than 30 years and an AI member since 1984. His service to the Appraisal Institute
includes: national president (2007), International Committee (2008 to present), national Executive
Committee (2004 to 2008), national Board of Directors (2000 to 2008) and president of the Maryland
Chapter (1990). He is senior vice president and principal of Cassidy Turley, a full-service commercial real
estate company based in Baltimore, Md.

Others also appointed to one-year terms on the board were: Wayne Carroll (United States), Felipe Correa
(Colombia), Fabrice Levet (France), Karen Pikielny (Italy), Steve Podolsky (United States, principal
member representative) and Francesco Valletta (Italy).

In addition to Dunkin, those appointed as committee presidents were: Mike Vassiliou (Greece),
Conference Committee; Martin Von Hauff (Germany), Finance; Karen Pikielny (Italy), Nominations; Flavio
Nunes (Brazil), Legislation & Environment; Wayne Carroll (United States), Membership; Laszlo Gonczi
(Hungary), Prix d‘Excellence; Danielle Grossenbacher (United States), Professional Division; Teguh
Satria (Indonesia), Strategic Planning; Michael Von Hauff (Germany), Exchanges; Felipe Correa
(Colombia), Young Members; Luke Romero (United States), Marketing & Networking. Alexander Roos
(Netherlands) was appointed vice president of the Finance Committee.

―I look forward to working with each of these volunteers, as well as the rest of the elected board members
and committee officers,‖ Campagnoli said in FIABCI‘s announcement.

According to its website (www.FIABCI.org), FIABCI is a business organization of real estate professionals
in 65 countries that represents about 100 national real estate associations and holds a special
"consultative" status to the Economic and Social Council of the United Nations Organization. FIABCI is a
non-political entity whose objective is to help its members add an international dimension to their
businesses and helps members acquire knowledge, develop networks and optimize business
opportunities throughout the world.

Purchase Applications Lowest Since 1996, MBA Weekly Survey Shows
Mortgage application activity, including refinance and purchase applications, fell in the week ending July
9, according to the Mortgage Bankers Association‘s weekly Mortgage Application Survey. Purchase
application activity reached its lowest level since December 1996.

The July 14 survey showed that the Market Composite Index, which measures mortgage loan application
activity, fell 2.9 percent on a seasonally adjusted basis from the previous week and 12.6 percent on an
unadjusted basis. The four-week moving average for the Market Index increased 1.5 percent on a
seasonally adjusted basis.

The Refinance Index fell 2.9 percent from the previous week. Refinancing made up 78.7 percent of
applications, unchanged from the previous week, while adjustable-rate loan activity inched up 0.1 percent




46 | Appraiser News Online Vol. 11, No. 13/14, July 2010
to 5.5 percent. The four-week moving average for the Refinance Index increased 2.6 percent on a
seasonally adjusted basis.

The MBA‘s Purchase Index dropped 3.1 percent from the previous week on a seasonally adjusted basis.
On a non-adjusted basis, the index fell 12.7 percent from the previous week, down 43 percent from a year
ago. The four-week moving average for the Purchase Index fell 2.4 percent on a seasonally adjusted
basis.

The average rate on a 30-year fixed loan inched up to 4.69 percent from the prior week‘s 4.68 percent,
while points, including origination fees, increased from 0.86 to 0.96 for 80 percent loan-to-value ratio
loans, the MBA reported. The average rate on a 15-year fixed loan increased from 4.11 percent to 4.12
percent, while points, including origination fees, increased from 0.93 to 1.04. The average rate on a one-
year adjustable rate mortgage remained steady from the previous week at 7.2 percent, while points,
including origination fees, fell from 0.24 to 0.22.

Appraisal Institute Submits USPAP Comments to ASB
The Appraisal Institute submitted comments July 13 to the Appraisal Standards Board regarding ASB‘s
Second Exposure Draft of proposed changes for the 2012-2013 Uniform Standards of Professional
Appraisal Practice. The comments can be found on the Appraisal Institute web site at
http://www.appraisalinstitute.org/membership/downloads/AI_CommentsOnMay2010ASB_ExposureDraft.
pdf.

The ASB Exposure Draft includes many proposed significant changes and covers the following subjects:
proposed revisions to definitions; proposed changes related to reporting – revisions to the scope of work
rule to include reporting elements; proposed changes related to reporting – addition of communication
rule; proposed changes related to reporting – revisions to Standards 2 and 8; proposed changes related
to reporting – consideration of applicability of two reporting options in Standards 3, 5 or 6; request for
comments on Standards 4 and 5; proposed removal of record keeping section of ethics rule and creation
of new record keeping rule (with revisions); and proposed relocation of preamble (with revisions).

The ASB Exposure Draft can be found on The Appraisal Foundation‘s website at
https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=taf&WebCode=ASBDrafts.

Appraisal Institute members and others may submit comments on the Exposure Draft to the ASB before
July 20. The ASB will meet to discuss the Exposure Draft in public session from 9 a.m. to noon EDT July
30 at The Westin Indianapolis, 50 S. Capitol Ave.

The Appraisal Foundation Appoints Three New Trustees
The Appraisal Foundation announced July 12 the appointment of three new members to its Board of
Trustees: Anthony (Tony) Aaron of Los Angeles, Thomas (Tom) V. Boyer of Coalville, Utah, and Elizabeth
von Habsburg of New York City. They each will serve a three-year term beginning Jan. 1, 2011.

A Congressionally authorized non-profit organization established in 1987, The Appraisal Foundation
promulgates professional appraisal standards and qualifications.




47 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Aaron is a principal with the Ernst & Young LLP valuation and business modeling practice. He recently
chaired The Appraisal Foundation‘s first working group on valuations for financial reporting, and he co-
chairs the American Institute of CPA‘s task force on best practices for valuing in-process research and
development. He is also on the Business Valuation Committee and the Business Valuation Standards
Subcommittee of the American Society of Appraisers .

Boyer is the owner of Boyer Land & Livestock and TVF Management Company, a management,
appraisal and consulting firm specializing in agriculture. He is also a consultant and appraiser instructor
for the American Society of Farm Managers and Rural Appraisers and serves as a principal consultant for
Altima Financial Partners based in London, England.

Von Habsburg is managing director of Winston Art Group, an independent full service art consulting and
appraisal firm. She is a board member of the Appraiser‘s Association of America, a member of ArtTable,
Inc., on the Advisory Committee of the Museum of Art and Design in New York, a fellow of the Morgan
Library, and an associate member of the Inland Marine Underwriters Association.

The Appraisal Foundation Board of Trustees is the governing body of the organization and is responsible
for securing funding for the Foundation‘s activities, as well as selecting members to and providing
oversight of the Appraisal Practices Board, the Appraiser Qualifications Board and the Appraisal
Standards Board.

New AI Webinar Recording Available: Financial Reform Legislation
The recording for the Appraisal Institute webinar ―Financial Reform Legislation: Appraisal and Real Estate
Impacts,‖ conducted July 1, is now available to AI members at no cost. The cost for nonmembers is $75.

This webinar recording provides the details of the Conference Report on H.R. 4173, the Dodd-Frank Wall
Street Reform and Consumer Protection Act. This legislation, if enacted, would mark the first
modernization of Title XI of the Financial Institutions Reform Recovery and Enforcement Act since 1989,
addressing several issues of concern to the appraisal community.

Items in the Conference Report include: establishment of a federal appraisal independence standard,
provisions to separate appraisal management company and appraisal fees on the HUD-1 Statement,
state AMC registration requirements, enhanced appraiser competency provisions and financial resources
for oversight and enforcement.

For more information and to order, visit www.appraisalinstitute.org/store/p-224-financial-reform-
legislation-appraisal-and-real-estate-impacts-webinar-recording.aspx.

Closing Date for Homebuyer Tax Credit Extended
President Obama signed into law July 2 an extension to the homebuyer tax credit program, ensuring that
homebuyers who entered into a binding contract before April 30 would be given until Sept. 30 to close the
sale of their home, Reuters reported.

The homebuyer tax credit program was slated to expire at the end of June. The program gives first-time
homebuyers a tax credit of up to $8,000 and provides a $6,500 credit for others purchasing a new primary




48 | Appraiser News Online Vol. 11, No. 13/14, July 2010
residence. According to Reuters, the extension is meant to support the battered housing market, which is
still struggling due to weak job markets and despite low mortgage interest rates.

The Senate approved the extension June 30 in a unanimous voice vote following House passage.

The extension of the popular program was strongly pushed for by housing groups, consumer advocates
and lawmakers. According to Reuters, real estate agents said as many as 180,000 homebuyers would
miss the June 30 deadline because banks and settlement offices were struggling to deal with the volume
of people rushing to close on their deals signed before April 30. The three-month extension should
provide time to close all deals, although critics are concerned such a lengthy extension could invite fraud.

The homebuyer tax credit extension pertains only to deals that were signed prior to April 30. Any new
contracts signed are ineligible to receive the tax credit, even if they close before Sept. 30.

Mortgage Rates Sink to Lowest Level in 50 Years
Rates for 30-year fixed loans sank from 4.69 percent to 4.58 percent — the lowest since the 1950s — in
Freddie Mac‘s July 1 Primary Mortgage Market Survey, The Associated Press reported July 1. Although
mortgage application volume rose nearly 9 percent the week ending June 25, the Mortgage Bankers
Association said that activity remains roughly half the level reported in early 2009.

Of the estimated 15 million homeowners who are underwater on their mortgages, only about 291,000
have participated in government programs designed to help struggling borrowers refinance loan terms.

Scott Buchta, a chief mortgage strategist with Braver Stern Securities, said that refinancing activity may
increase if rates fall below 4.5 percent. "I expect to see pockets of re-fi activity versus an overall wave,"
Buchta told AP. "The problem is, for many borrowers, they don't have the equity in their homes."

Meanwhile, the average rate on a 15-year fixed loan fell from 4.13 percent to 4.04 percent, the lowest on
record since September 1991, AP reported. The average rate on a five-year adjustable rate loan fell from
3.84 percent to 3.79 percent, the lowest since January 2005, and the average rate on a one-year
adjustment loan inched up from 3.77 percent to 3.8 percent.

U.S. Office Vacancy Rate Highest in 17 Years: Reis
A Reis Inc. report found that second-quarter U.S. office vacancies rose to the highest level since 1993,
according to a July 6 Bloomberg article, citing a sluggish economic recovery that continues to soften
corporate tenants‘ demand.

The vacancy rate reached 17.4 percent, compared to 17.3 percent in the first quarter and 16 percent one
year ago. The amount tenants actually pay landlords, known as effective rents, fell 0.9 percent from the
first quarter and 5.7 percent from a year ago, Reis‘ report said.

―Although occupancy continues to deteriorate, the rate of decline has clearly slowed,‖ Reis Economist
Ryan Severino said in the firm‘s report. He noted that rents may turn positive later this year if the
economy were to stabilize.




49 | Appraiser News Online Vol. 11, No. 13/14, July 2010
The Reis report said that in the second quarter, 7.7 million square feet of office space was completed.
This marks one of the lowest addition levels since Reis began publishing quarterly data in 1999,
Bloomberg reported.

Office vacancies increased in 49 of 82 cities tracked by Reis, while effective rents fell in 60 markets.
Washington, D.C., had the lowest office vacancy rate (10 percent), according to Reis‘ report, while Detroit
had the highest rate (26.3 percent).

Discounts on Foreclosures Averaged 27 Percent
Homes in the foreclosure process sold at a 27 percent discount on average compared to non-distressed
properties in the first quarter, CNNMoney.com reported June 30. During the first quarter, REO home
sales averaged a 34 percent discount while pre-foreclosure sales averaged a 15 percent discount.

During 2009, more than 1.2 million home sales involved foreclosures, up 25 percent from a year ago and
2,500 percent from 2005. "That number boggled my mind," Rick Sharga, a spokesman for RealtyTrac,
told CNNMoney. "A 2,500 percent increase over a four-year period surprised even us." According to
RealtyTrac, 31 percent of all home sales in the first quarter involved properties in some stage of mortgage
distress.

Sharga said that foreclosure sales can have a negative effect on overall home prices in a region. To
prevent prices from falling further, lenders have been managing foreclosure inventories to prevent them
from flooding the market.

Foreclosures sales were highest in Nevada, where 64 percent of all transactions consisted of distressed
properties, followed by Massachusetts and Rhode Island, where such transactions represented roughly
42 percent of all sales in each state. "Massachusetts and Rhode Island were two of the only Northeastern
states that racked up unsustainable price increases during the boom," Sharga noted.

"It will be interesting to watch how they will manage the inventory levels of distressed properties on the
market in order to prevent more dramatic price deterioration," James Saccacio, chief executive officer of
RealtyTrac, added.

Distressed CRE at Nearly $167 Billion
According to an analysis from Delta Associates, the total value of distressed commercial real estate
nationwide has reached $166.8 billion in the second quarter, MBA NewsLink report June 25. The figure,
compiled with data from Real Capital Analytics, represents an 11 percent decrease from the previous
quarter when the total value of distressed commercial real estate was $187.4 billion.

―We believe that the declining growth of distressed real estate reflects the fact that in many markets
commercial property values are no longer falling,‖ Delta told NewsLink. ―In addition, many lenders
continue to be willing to extend debt obligations to traditionally qualified borrowers, with or without credit
enhancement.‖

The report showed that distressed retail properties fell to $25.7 billion in the second quarter, down 38
percent from the first quarter, while distressed industrial properties rose to $7.3 billion, up 23.8 percent.




50 | Appraiser News Online Vol. 11, No. 13/14, July 2010
With a total of $34.9 billion in the second quarter, the office sector ranked the largest market with
distressed properties.

Meanwhile, the Federal Deposit Insurance Corp. said that the default rate for bank-held commercial
mortgages increased to 4.2 percent, up 1.9 percent from a year ago, while multi-family defaults increased
to 4.6 percent, up 2.2 percent. Delta Associates noted that the ―real test of velocity of distress‖ will occur
later this year and in 2011 as $600 billion in commercial mortgages mature, which may result in an
additional 350 banks failing.

NAR: May Pending Home Sales Fall after Tax Credit Expires
The National Association of Realtors‘ pending home sales index plunged 30 percent in May to 77.6 from
April‘s figure of 110.9, down 15.9 percent from the same period a year ago. The drop, reported July 1,
follows three consecutive monthly increases as homebuyers took advantage of the federal tax credit.

The dip in sales did not surprise NAR Chief Economist Lawrence Yun. ―Consumers are rational, and they
rushed to meet the tax credit eligibility deadline in April,‖ Yun said in a news release. ―The sharp decline
in contract signings in May is a natural result with similar low levels of sales activity anticipated in June.‖

The pending home sales index in the Northeast tumbled 31.6 percent to 67 in May, down 14.8 percent
from a year ago; the Midwest fell 32.1 percent to 70.8, down 20.2 percent from a year ago; the West
dropped 20.9 percent to 85.3, down 15.1 percent from a year ago; and the South declined 33.3 percent to
82.5, down 14.4 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 existing-home sales data, according to NAR.

MBA: Mortgage Refinancing Activity Up in Latest Survey
Mortgage application refinance activity jumped to its highest level since May 2009 in the week ending July
2, according to the Mortgage Bankers Association‘s weekly Mortgage Application Survey. Purchase
application activity fell for the eighth time in the last nine weeks.

The July 7 survey showed that the Market Composite Index, which measures mortgage loan application
activity, increased 6.7 percent on a seasonally adjusted basis from the previous week and 6.5 percent on
an unadjusted basis. The four-week moving average for the Market Index increased 6.4 percent on a
seasonally adjusted basis.

The Refinance Index rose 9.2 percent from the previous week. Refinancing made up 78.7 percent of
applications, up from 76.8 percent the previous week, while adjustable-rate loan activity inched up 0.7
percent to 5.4 percent. The four-week moving average for the Refinance Index increased 8.3 percent on
a seasonally adjusted basis.

The MBA‘s Purchase Index fell 2 percent from the previous week on a seasonally adjusted basis. On a
non-adjusted basis, the index fell 2.3 percent from the previous week, down 34.7 percent from a year
ago. The four-week moving average for the Purchase Index increased 0.1 percent on a seasonally
adjusted basis.




51 | Appraiser News Online Vol. 11, No. 13/14, July 2010
―Mortgage rates remained near record lows last week, as incoming data on the job and housing markets
were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance
applications increased to a new 13-month high,‖ Michael Fratantoni, MBA‘s vice president of research
and economics, said in a news release. ―For the month of June, purchase applications declined almost 15
percent relative to the prior month, and were down more than 30 percent compared to April, the last
month in which buyers were eligible for the tax credit.‖

The average rate on a 30-year fixed loan increased to 4.68 percent from the prior week‘s 4.67 percent,
while points, including origination fees, decreased from 0.96 to 0.86 for 80 percent loan-to-value ratio
loans, the MBA reported. The average rate on a 15-year fixed loan increased from 4.06 percent to 4.11
percent, while points, including origination fees, decreased from 0.97 to 0.93. The average rate on a one-
year adjustable rate mortgage inched up from 7.05 to 7.2 percent, while points, including origination fees,
fell from 0.27 to 0.24.

Online Lending Application Volume to Triple by 2013
Although few banks have adopted online lending systems, online application volume is expected to triple
by 2013 with volume growing from just 4 percent in 2010 to 13 percent of total volume, according to a
Mortgagebot survey, American Banker reported June 30.

The survey found that lenders still expect loan officers to be the dominant channel, accepting 57 percent
of all mortgage applications by 2013, down from 67 percent in 2010.

Even though most bankers agree that online lending applications can attract customers and drive up
volume, only 18 percent of banks and credit unions currently accept mortgage applications online. Forty
percent of banks and credit unions currently have no capability to accept online mortgage applications at
all, and another 42 percent offer only a basic form that borrowers must download and print. After the form
is submitted, lenders must reenter the data manually, American Banker reported.

Reasons why banks and credit unions have not adopted online lending technology: concerns about
protecting the security of borrowers, the fact that they are wrestling with other regulatory issues and the
cost of adopting such technology, the survey found.

According to the survey, 71 percent of bank executives said they will have to offer some kind of
interactive, online mortgage application at some point in the future; half said they are evaluating whether
to adopt some type of interactive application system by 2012, American Banker reported.

Chinese Bank Infiltrates U.S. CRE Market
Industrial & Commercial Bank of China is targeting U.S. commercial real estate owners in need of loans
that exceed $100 million with the launch of its ―large loan‖ program. Most U.S. banks avoid this category
because of the risk involved, The Wall Street Journal reported June 29.

The move by ICBC, which is 70 percent owned by the Chinese government, is part of a broader push into
the U.S. market and comes as China's regulators are encouraging domestic financial institutions to
expand overseas. Analysts believe that ICBC, China‘s largest bank, could help fill a void left by the retreat
of U.S.-based financial institutions, according to the Journal.




52 | Appraiser News Online Vol. 11, No. 13/14, July 2010
ICBC is offering to lend no more than 65 percent of a property's value. During the boom, U.S. banks had
lent more than 80 percent of a building's value. ICBC said it could consider loans that are even higher
than $500 million, and it intends to hold loans on its books. Wu Bin, general manager of the U.S. branch
of ICBC, said the bank will limit its risk by financing buildings with stable existing cash flows and lending
to developers and investors with a solid track record, the Journal reported.

The entrance of ICBC is proof that foreign capital is funneling into U.S. real estate, lured by spoiled
property values and signs that the U.S. economy is emerging from the recession faster than those of
other developed countries. China Investment Corp., the $300 billion sovereign-wealth fund, also is looking
to pile cash into U.S. real estate through investing with U.S. property-fund managers, the Journal
reported.

AI’s Valuation Magazine Wins National Design Award
Valuation, the Appraisal Institute‘s quarterly magazine, recently received an Award of Excellence in the
  nd
22 annual Awards for Publication Excellence, recognizing excellence in publications work by
professional communicators. Valuation magazine was among 15 winners honored in the best redesign
category, which received 343 submissions.

Overall, this year‘s competition received more than 3,700 entries. Valuation was judged to be among the
top 5 percent of entries in its category.

APEX awards are based on excellence in graphic design, editorial content and the ability to achieve
overall communications excellence. APEX Grand Awards honor the outstanding works in each main
category, while APEX Awards of Excellence recognize exceptional entries in each of the individual
categories. This year, 100 Grand Awards were presented to honor outstanding work in 11 major
categories, with 1,132 Awards of Excellence recognizing exceptional entries in 127 subcategories.

The panel of judges for APEX 2010 included John De Lellis, concepts editor and publisher; Carolyn
Mulford, senior evaluator for the publication evaluation program and senior writer & editor of Writing That
Works; Christine Turner, contributing editor of Writing That Works; and Bill Londino, consulting editor of
Writing That Works.

―The Valuation staff is honored to receive this recognition on behalf of the Appraisal Institute,‖ AI Director
of Communications Ken Chitester said. ―Members of the Appraisal Institute deserve the best magazine
we can deliver to them, and our staff will continue striving to provide them the highest quality product
possible.‖

Valuation‘s executive editor is Adam Webster. The Appraisal Institute‘s publication management
consultant is GLC of Northbrook, Ill.

AQB Issues Exposure Draft on Validity of Exam Results
The Appraisal Qualifications Board of The Appraisal Foundation is seeking comments on an exposure
draft regarding the validity of exam results for credentialing. Written comments are due Sept. 24, and oral
comments may be made at the AQB‘s Oct. 1 meeting.




53 | Appraiser News Online Vol. 11, No. 13/14, July 2010
According to the AQB, examination results are valid for 24 months. However, there have been instances
where candidates submit completed applications within the specified 24-month timeframe but have been
denied a credential because their application could not be reviewed and approved by the state appraiser
regulatory agency before the 24 months expired.

The AQB says that applicants remain eligible to receive the credential if they submit a complete
application (one that documents satisfaction of all educational, experience and examination requirements,
including submission of all fees and any other items required by the state appraiser regulatory agency)
within 24 months of the date of successfully passing the exam, but their examination results expire prior
to the issuance of a real property appraiser credential by a state appraiser regulatory agency.

According to the AQB, applicants who fail to submit a complete application to their state appraiser
regulatory agency within 24 months of the date of successfully passing the examination will be required to
re-take and successfully pass a new examination prior to being issued a credential.

The deadline for written comments on this issue is Sept. 24. Comments may be submitted via fax to 202-
347-7727, via e-mail to aqbcomments@appraisalfoundation.org or via mail to: AQB Comments, The
Appraisal Foundation, 1155 15th Street NW, Suite 1111, Washington, D.C. 20005. Oral comments will be
accepted at the AQB‘s public meeting in Washington, D.C., on Oct. 1. For the full draft, visit
https://appraisalfoundation.sharefile.com/d/se8d96af87354e89b.




54 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Inside the Institute
AI in the News: AI President Praises Passage of Financial Reform Bill
Appraisal Institute President Leslie Sellers, MAI, SRA, was featured in various media outlets the week of
July 19 in coverage concerning the sweeping financial reform legislation signed into law, including Real
Estate Economy Watch, United Press International, Valuation Review and Inman News. In the articles,
Sellers praised the new law, which includes the first modernization of real estate appraisal regulations in
more than 20 years.

―This bill will mean good news for consumers because they should see more reliable home appraisals,‖
Sellers told Valuation Review in a July 20 article. ―It will encourage the use of highly trained and
competent real estate appraisers and will provide much-needed resources for oversight and
enforcement.‖

Also appearing in national media coverage this past week were Rob Ranney, Associate member, on
CNNMoney.com and Fortune.com, and Jonathan Miller, Associate member, in The New York Times.
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 website.

Appraisal Institute members featured in local media coverage around the country last week included
Michael Hall, SRA, Sarasota (Fla.) Herald Tribune; John Rynne, MAI, SRA, The Daily Record (Rochester,
N.Y.); and Chris Jones, Associate member, WRUF-AM 850 Gainesville (Fla.), The Palm Beach (Fla.)
Post, Northescambia.com (Escambia County, Fla.), Pensacola (Fla.) News Journal, St. Petersburg (Fla.)
Times and The Miami Herald. Appearing on local television last week was Pam Dubov, Associate
member, who was featured on ABC affiliate WFTS-28 in Tampa, Fla.

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 July:

Donald Albersmeyer, SRA, Naples, Fla., and Ralph Bowley, SRA, Fairfield, Conn.

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 website,
www.appraisalinstitute.org/findappraiser/memoriam.aspx, which is continually updated.

AI Media Coverage Potentially Seen 1.3 Billion Times
News stories including the Appraisal Institute and its members were potentially seen, heard or read more
than 1.3 billion times during the first half of 2010, a July 19 internal AI report found. The Appraisal Institute
and its members appeared in 1,288 stories that appeared in 638 media outlets.



55 | Appraiser News Online Vol. 11, No. 13/14, July 2010
During the first six months of this year, the Appraisal Institute‘s coverage resulted in a publicity value of
more than $1 million, according to an AI vendor‘s proprietary formula. All the figures represent massive
growth over results from the second half of last year.

To see a five-minute video with highlights of the Appraisal Institute‘s first- and second-quarter 2010 media
coverage, go to: https://appraisalinstitute.box.net/shared/ojnfotrov7.

During the second quarter alone, the Appraisal Institute appeared in six of the nation‘s seven largest
newspapers, including The Wall Street Journal, USA Today and The New York Times. A CNBC ―Power
Lunch‖ story on green valuation that featured AI Immediate Past President Jim Amorin, MAI, SRA, was
seen by a potential 21 million viewers. The Appraisal Institute and its members appeared in media
coverage in at least 44 states (not counting national media outlets) and in 162 cities (not counting
statewide media outlets).

News coverage about the Appraisal Institute appearing in media outlets around the country is updated
daily in the members-only section of the AI website at:
www.appraisalinstitute.org/myappraisalinstitute/Default.aspx.

AI in the News: AI Members Comment on Fannie Mae Appraisal Updates
Gary Crabtree, SRA, and Frank Gregoire, Associate member, were featured July 18 in The Los Angeles
Times, the nation‘s fourth largest newspaper, concerning updates to Fannie Mae‘s lending guidelines. Jim
Blaydes, SRA, was featured July 16 in the Chicago Tribune, the nation‘s ninth largest newspaper, on the
same topic.

In the articles, Crabtree, Gregoire and Blaydes discussed current hurdles that appraisers experience after
submitting reports -- including the practice of lenders and underwriters reducing value estimates -- and
how Fannie Mae‘s new guidelines will benefit the appraisal profession.

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 website.

Appraisal Institute members featured in local media coverage around the country last week included
Ryan Hlubb, SRA, Howard County (Md.) Times; Tom McKeown, Associate member, Pocono Record
Writer (Stroudsburg, Pa.); Tom Cook, MAI, Baton Rouge (La.) Business Report; Glen Sprecher, SRA,
Kitsap Peninsula Business Journal (Port Orchard, Wash.); Greg Halberg, Associate member, Peninsula
Daily News (Port Angeles, Wash.); and Jacqueline Green, SRA, Orlando Sentinel.

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.

AI in the News: AI Committee Chair Hails New Guidelines



56 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Appraisal Institute Government Relations Committee Chair Richard Maloy, MAI, SRA, was featured in a
Valuation Review article July 8 concerning updates to Fannie Mae‘s appraisal process, which focus on
appraiser geographic competence and knowledge requirements, the submission of interior photos when
an conducting an interior inspection, communication under the Home Valuation Code of Conduct and the
proper determination of comparable sales.

Maloy has been quoted in American Banker regarding Fannie Mae‘s new regulations and also has been
interviewed by Inside the GSEs. He told Valuation Review the new requirements may result in lenders
rethinking their use of third-party vendors such as appraisal management companies. ―The buck now
stops at the lender,‖ Maloy said in the article. ―Fannie is saying the lender is held responsible for the
appraiser‘s selection even if they were selected by an AMC.‖

Also appearing in national media coverage this past week was Jonathan Miller, Associate member, who
appeared on Forbes.com, Bloomberg.com, NewsBlaze, SYS-CON, Yahoo!, CNBC.com, TheStreet.com,
StreetInsider.com, and Fox Business. Miller also was featured in the New York Daily News.

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 website.

Appraisal Institute members featured in local media coverage around the country last week included
Associate member Frank Gregoire and Gary Crabtree, SRA, The Boston Herald, The Toledo (Ohio)
Blade, The Canton (Conn.) Repository, The Washington Post, The Columbus (Ohio) Dispatch and The
Daily Herald (Arlington Heights, Ill.); Patricia Amidon, MAI, The Portland (Maine) Daily Sun; and Matt
Beaton, Associate member, The Tacoma (Wash.) News Tribune. Appearing on local radio last week was
Richard Hagar, SRA, who was featured on NPR affiliate KPLU-FM 88.5 in Seattle.

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.aspxand 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 Unveils Core Competency Model
The Appraisal Institute rolled out the Core Competency Model on July 14, seeking comments from
members on an exposure draft. The AI Core Competency Project Team and the Admissions and
Designation Qualifications Committee have defined core competencies as education, professional
experience and demonstration of knowledge.

Core competencies are the professional expertise, skills and proficiencies that result in outstanding
performance by the Appraisal Institute‘s Designated members. While the current designation
requirements were meeting the core competencies, the project team and ADQC found that there were
additional options that could be used by Associate members to demonstrate those core competencies.

Materials explaining the Core Competency Model are available in the members-only section of the
Appraisal Institute website at




57 | Appraiser News Online Vol. 11, No. 13/14, July 2010
http://www.appraisalinstitute.org/myappraisalinstitute/corecompetencies.aspx. The ADQC is requesting
feedback from membership on this proposal. To provide feedback, members may complete a survey
found in the PowerPoint document at this link.

Pending member feedback, the proposal could be placed into 45-Day Notice at the Aug. 12-13 Board of
Directors meeting. The Board of Directors then would vote on the proposal at its November meeting. If
passed, the core competency approach could be implemented by the end of the year.

New CE Requirements Take Effect for Most AI Members
Following action taken by the Appraisal Institute Board of Directors, new continuing education
requirements went into effect July 1 for Designated and Associate members.

Designated members now have more options to fulfill continuing education requirements. CE credit for
the seven-hour or 15-hour national Uniform Standards of Professional Appraisal Practice course will be
granted up to three times per CE cycle. Previously, CE credit for USPAP was only granted twice per
cycle.

Instead of taking the appropriate Appraisal Curriculum Overview course, Designated members may now
fulfill this requirement by taking a Level II course or certificate program. Designated members with CE
cycles ending Dec. 31, 2011, and after must complete the Appraisal Curriculum Overview requirement.

As of July 1, Associate members now have a 70-hour CE requirement over the course of their five-year
Appraisal Institute CE cycle. During the cycle, there are three required courses: USPAP (accepted up to
three times per cycle), Business Practices & Ethics and Appraisal Curriculum Overview (Associate
members may take the same alternative courses as Designated members). These required courses count
toward the 70-hour requirement. Since most states have two-year CE cycles, minimal extra steps may be
needed to meet this new 70-hour requirement. In addition, many Associate members engage in
leadership roles at the chapter or local level, which may also count toward the 70-hour requirement.

In addition to fulfilling CE hours with classroom education, members can: enroll in AI online education,
take advanced education courses and earn 1.25 hours of CE for every hour completed, volunteer for real-
estate related leadership positions and community service roles, take classes from outside education
providers, and take approved brokerage, law and computer training classes.

To view a webinar recording as well as comprehensive information on the new CE requirements, visit
www.appraisalinstitute.org/ce.

AI in the News: AI President Hails Financial Reform Bill
Appraisal Institute President Leslie Sellers, MAI, SRA, was prominently featured in a DSNews.com article
concerning sweeping financial reform legislation calling for a new set of industry-wide appraisal rules. If
signed into law, the legislation would ensure appraiser independence, require appraisal management
companies to register with state agencies and address appraiser compensation issues.

―This is extremely important for consumers and mortgage lenders,‖ Sellers said in the June 30 story.
―With distressed sales prevalent in the market, it is critical that highly trained appraisers be actively




58 | Appraiser News Online Vol. 11, No. 13/14, July 2010
involved in the mortgage market. In recent years, the inability to earn customary and reasonable fees has
been a significant obstacle.‖

Other national media covering the Appraisal Institute‘s support of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (H.R. 4173), which has passed the House and awaits a final Senate vote, were
Reverse Mortgage Daily, MortgageMag, National Mortgage Professional Magazine and RISMedia.com, in
addition to MyCentralJersey.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 website.

Appraisal Institute members featured in local media coverage around the country last week included Les
Linder, MAI, Indianapolis Business Journal; Skip Ogle, SRA, The Fresno (Calif.) Bee; Katherine Kelso,
Associate member, Memphis (Tenn.) Business Journal; Jim Amorin, MAI, SRA, The Sarasota (Fla.)
Herald-Tribune; Brian Kelly, MAI, SRA, Pittsburgh Tribune-Review; Joyce Pusey, SRA, The Business
Journal of the Greater Triad (N.C.) Area; Greg Halberg, Associate member, Peninsula Daily News (Port
Angeles, Wash.); Laurel Kelly, Associate member, TCPalm.com (Stuart, Fla.); Michelle Koeller, MAI,
Finance & Commerce (Minneapolis); Peter Bowes, MAI, InDenverTimes.com; Richard Chandler, MAI,
SRA, The Richmond (Va.) Times-Dispatch; Gordon Lowe, Associate member, The Provo (Utah) Daily
Herald; and Michael Clapp, MAI, Winston-Salem (N.C.) Journal.

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.

Four Members Named AI ―Volunteer of Distinction‖ for July
Region IV‘s Patricia Amidon, MAI, a member of the Maine Chapter; Region VI‘s Ryan Hlubb, SRA, of the
Maryland Chapter; Region VIII‘s M. Lance Coyle, MAI, North Texas Chapter; and Region X‘s Jacqueline
Green, SRA, East Florida Chapter, each have been named an Appraisal Institute ―Volunteer of
Distinction‖ for July.

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

Amidon has been involved in the real estate profession for 27 years and has been a member of the
Appraisal Institute for nearly 25 years. Her service to the Appraisal Institute includes serving as president
of the Maine Chapter and as a member of its Government Relations Committee. A former instructor of
appraisal courses at the University of Southern Maine, she currently writes monthly appraisal articles for
the New England Real Estate Journal. In addition, she currently serves in her community as a board
member for the Gulf of Maine Aquarium. She received her Bachelor of Arts degree from Kirkland College
and earned her MAI designation in 1992.

Hlubb has been involved in the real estate profession for nearly a decade and has been a member of the
Appraisal Institute for eight years. His service to the Appraisal Institute includes serving as president of



59 | Appraiser News Online Vol. 11, No. 13/14, July 2010
the Maryland Chapter and as a member of its Admissions and Designation Qualifications Committee. A
former representative on the Maryland Chapter‘s Board of Directors, he also serves as a member of the
Real Estate Advisory Board for the University of Baltimore‘s real estate program. In his community, he
has been actively involved in coaching youth sports and currently serves as a board member of the York
Suburban Communities that Care School Committee. He studied at the University of Maryland and
earned his SRA designation in 2008.

Coyle has been involved in the real estate profession for more than a quarter-century and has been a
member of the Appraisal Institute for 25 years. Currently the Education Committee chair, his service to
the Appraisal Institute includes serving as president of the North Texas Chapter and as chair of its finance
and public relations committees. A former Region VIII director, he has served as an instructor of Appraisal
Institute education since 2002 and holds a Certified Commercial Investment Member designation from the
CCIM Institute. He received a Bachelor of Business Administration degree from Texas Christian
University and attended the New York School of Finance. He earned his MAI designation in 1990.

Green has been involved in the real estate profession more than 25 years and has been a member of the
Appraisal Institute for more than 20 years. Her service to the Appraisal Institute includes serving as
president of the East Florida Chapter and as chair of its education and public relations committees. A
former Region X representative, she currently serves on the Risk Reduction Committee for the Orlando
Regional Board of Realtors. In her community, she is a past-president of the Friends of the Orange
County Library and currently serves as director of the Lois Holt Foundation and as a choir member at the
First Presbyterian Church of Maitland. She studied at the University of Central Florida and earned her
SRA designation in 1994.

To learn more about the Appraisal Institute‘s July Volunteer of Distinction honorees, visit
www.appraisalinstitute.org/membership/VolunteerOfDistinction.aspx.

Appraisal Institute Designates 23 Members in June
The Appraisal Institute conferred the MAI designation on 14 members in June, including four from China,
and the SRA designation on nine members.

The newly designated MAI members for June are: Robert Bottin, III, MAI, Vicksburg, Miss.;
John Chau, MAI, Minneapolis; Judson Cline, MAI, Lincoln, Calif.; Nicholas Danyi, MAI, Oregon, Ohio;
John Donnerberg, MAI, Portland, Ore.; Joe Fox, MAI, Tallahassee, Fla.; Ming Gao, MAI, Beijing, China;
Lindsay Garlinghouse, MAI, Atlanta; Hao Jiang, MAI, Beijing, China; Michael Lockard, MAI, Ripon, Calif.;
Richard Norton Jr., MAI, Spokane Valley, Wash.; Laura Stephens, MAI, Huntsville, Ala.; Chenxi Yu, MAI,
Beijing, China; and Yuan Yu, MAI, Beijing, China.

Gilber Valdez of Huntington Beach, Calif., who was already an MAI member, earned the SRA credential
in June. The rest of the newly designated SRA members for June are: David Crouse, SRA, Warren, Pa.;
Jay Kimmel, SRA, Pasadena, Md.; Christopher Lowell, SRA, Bend, Ore.; Anthony Marks, SRA, Petaluma,
Calif.; Andrew Skinner, SRA, Santa Rosa Beach, Fla.; Patricia Staebler, SRA, Bradenton, Fla.; Katrina
Woodard, SRA, Inez, Ky.; and Meridith Young, SRA, Barre, Mass.

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,



60 | Appraiser News Online Vol. 11, No. 13/14, July 2010
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.




61 | Appraiser News Online Vol. 11, No. 13/14, July 2010
ECONOMIC INDICATORS – June 2010
Market Rates and Bond Yields
                                                         Jun10         Dec09           Jun09           Dec08          Jun08         Jun07
 Reserve Bank Discount Rate                              0.75          0.50            0.50            0.86           2.25          6.25
 Prime Rate (monthly average)                            3.25          3.25            3.25            3.61           5.00          8.25
 Federal Funds Rate                                      0.18          0.12            0.21            0.16           2.00          5.25
 3-Month Treasury Bills                                  0.12          0.05            0.18            0.03           1.86          4.61
 6-Month Treasury Bills                                  0.19          0.17            0.31            0.26           2.13          4.76
 3-Month Certificates of Deposit                         0.52          0.22            0.39            1.77           2.76          5.33
 LIBOR-3 month rate                                      0.61          0.45            1.13            2.47           2.95          5.35
 U.S. 5-Year Bond                                        2.00          2.34            2.71            1.52           4.37          5.03
 U.S. 10-Year Bond                                       3.20          3.59            3.72            2.42           4.78          5.10
 U.S. 30-Year Bond                                       4.13          4.49            4.52            2.87           5.12          5.20
                              †
 Municipal Tax Exempts (Aaa)                             n/a           3.89            4.56            5.17           4.50          4.34
                            †
 Municipal Tax Exempts (A)                               n/a           4.72            4.84            6.15           4.92          4.65
                         †
 Corporate Bonds (Aaa)                                   4.88          5.26            5.61            5.08           5.68          5.79
                      †
 Corporate Bonds (A)                                     n/a           5.77            6.39            6.70           6.43          6.33
                         †
 Corporate Bonds (Baa)                                   6.23          6.37            7.50            8.46           7.07          6.70

Stock Dividend Yields
 Common Stocks—500                                       2.09          1.95            2.35            3.00           2.15          1.81


Other Benchmarks
                             ,¶
Industrial Production Index*                             92.5          89.6            85.5            91.0            98.0         100.1
                    ¶
Unemployment (%)                                         9.5           10.0            9.5             7.2             5.5          4.5
                                ¶
Monetary Aggregates, daily avg.
                                                                  ††            ††              ††              ††
 M1, $-Billions                                        1,722.6 1,696.6   1,646.2   1,602.1   1,385.6                                 1,363.9
                                                              ††      ††        ††        ††
 M2, $-Billions                                        8,611.8 8,544.4   8,455.3   8,257.5   7,687.2                                 7,241.2
Member Bank Borrowed Reserves
            ^
 $-Billions                                              n/a           n/a             n/a             n/a             n/a          0.187
Consumer Price Index
 All Urban Consumers                                     218.0         215.9           215.7           210.2           218.8        208.4

                                                         1Q10          4Q09          1Q09            4Q08       1Q08         4Q07      1Q07
Per Capita Personal
                    ††
 Disposable Income                                       35,920        35,665        35,124          35,304     34,925 34,893 34,055
 Annual Rate in Current $s
                    ††
Savings as % of DPI                                      3.5           3.7           3.7             3.8        1.2          1.5       2.0


* On June 25, 2010, the Federal Reserve Board advanced to 2007 the base year for the indexes of industrial production, capacity, and electric power
   use. This follows the November 7, 2005, change to a 2002 baseline, from the previous 1997 baseline. Historical data has also been updated.
^
   The Fed stopped releasing this figure in March 2008.
¶
   Seasonally adjusted
†
   Source: Moody's Bond Record
††
   Revised figures used




62 | Appraiser News Online Vol. 11, No. 13/14, July 2010
Conventional Home Mortgage Terms


                                                          Jun10       Dec09           Jun09       Dec08         Jun08          June07
 New House Loans—U.S. Averages
 Interest rate (%)                                        5.00          5.01          5.17         5.67          6.13            6.54
 Term (years)                                             28.2          28.4          29.0         29.1          29.1            29.5
 Loan ratio (%)                                           73.1          72.1          72.9         74.9          75.6            76.7
 Price (thou. $)                                          316.1         347.9         344.0        351.6         352.7           357.9

 Used House Loans—U.S. Averages
 Interest rate (%)                                        5.02          5.00          5.16         5.59          6.28            6.63
 Term (years)                                             27.5          27.2          28.4         28.5          28.3            29.7
 Loan ratio (%)                                           74.7          74.3          74.6         75.1          77.3            80.4
 Price (thou. $)                                          307.5         297.8         328.0        284.9         310.3           297.9

Conventional Home Mortgage Rates by Metropolitan Area

                                                       2Q10       2Q09       2Q08       2Q07
Atlanta                                                5.01       4.92       6.11       6.34
                              #
Boston-Lawrence-NH-ME-CT                               4.81       4.94       5.99       6.31
                      #
Chicago-Gary-IN-WI                                     5.33       5.18       6.11       6.62
                 #
Cleveland-Akron                                        5.11       5.17       6.07       6.37
                   #
Dallas-Fort Worth                                      5.00       4.96       6.19       6.44
                         #
Denver-Boulder-Greely                                  5.09       5.03       6.11       6.39
                        #
Detroit-Ann Arbor-Flint                                5.44       5.10       6.17       6.73
                            #
Houston-Galveston-Brazoria                             5.00       5.12       6.23       6.61
Indianapolis                                           5.04       5.09       6.33       6.65
Kansas City, MO-KS                                     4.98       5.09       5.93       6.24
                        #
Los Angeles-Riverside                                  5.06       5.00       6.16       6.39
                        #
Miami-Fort Lauderdale                                  5.21       5.17       6.34       6.68
                    #
Milwaukee-Racine                                       5.10       5.03       6.27       6.52
Minneapolis-St. Paul-WI                                5.07       5.04       6.11       6.37
                                #
New York-Long Island-N. NJ-CT                          5.03       4.96       6.09       6.34
                           #
Philadelphia-Wilmington-NJ                             5.08       5.05       6.09       6.34
Phoenix-Mesa                                           5.02       5.19       6.27       6.44
Pittsburgh                                             5.09       4.96       5.93       6.19
               #
Portland-Salem                                         4.99       4.98       6.11       6.27
St. Louis-IL                                           4.93       5.07       6.22       6.53
San Diego                                              5.18       5.05       6.17       6.32
                                  #
San Francisco-Oakland-San Jose                         5.03       5.02       6.19       6.37
Seattle-Tacoma-Bremerton                               4.97       5.03       6.06       6.42
Tampa-St. Petersburg-Clearwater                        5.03       5.08       6.26       6.54
Washington, DC-Baltimore-VA#                           5.07       5.00       6.17       6.47

As of the first quarter 2003, the Federal Housing Finance Board no longer reported on the markets of Greensboro, Honolulu and Louisville.
#
  Consolidated Metropolitan Statistical area




63 | Appraiser News Online Vol. 11, No. 13/14, July 2010

				
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