Apr_Updates by QG3nlfjj


									Appraiser News Online
Vol. 9, No. 7 & 8, April 2008

Government Update—Commercial/General
        Casey-Martinez Bill Would Halt Appraisal Fraud, Property Flipping [Posted April 30, 2008]
        Treasury Proposes New Mortgage Origination Commission, Roll Up of Appraisal Subcommittee
         [Posted April 14, 2008]
        Appraisal Legislation Still in the Mix [Posted April 14, 2008]

Government Update—Residential
        Administration Unveils Proposal to Expand FHA Loan Program [Posted April 30, 2008]
        Appraisal Institute-Backed Amendment Added to House Foreclosure Prevention Bill [Posted April 30,
        Senate Passes Foreclosure Bill without Casey-Martinez Amendment [Posted April 14, 2008]
        Dodd‘s Foreclosure Prevention Act Advances [Posted April 14, 2008]
        Depression-Era Home Owners Loan Corporation May Get Resurrected [Posted April 14, 2008]

In the States
        Colorado to Increase Oversight on Conservation Easements; Allard Questions IRS [Posted April 30,
        Missouri House Approves Mortgage Fraud, Appraisal Coercion Bill [Posted April 14, 2008]
        Ohio High Court Finds Property's Sale Price Determinative in Taxable Value [Posted April 14, 2008]
        Correction: Virginia Bill Only Affects Contracted Firms [Posted April 14, 2008]

Around the Industry
        Appraisal Institute on Cuomo Agreement: Promote Competence; Limit AMCs, AVMs, BPOs
         [Posted April 30, 2008]
        OFHEO‘s Pollard to Appraisal Institute: Federal Law Will Trump Fannie, Freddie Agreement
         [Posted April 30, 2008]
        Over 100 Appraisal Institute Members Lobby Capitol Hill [Posted April 30, 2008]
        RealtyTrac: Foreclosure Rate Nearly Doubles [Posted April 30, 2008]
        Green Buildings Selling for More [Posted April 30, 2008]
        Now Online: Residential Site Valuation Course [Posted April 30, 2008]
        Architecture Billings Index Drops to its Lowest Level Ever [Posted April 30, 2008]
        Housing, Commercial Markets Continue Slowdown [Posted April 30, 2008]
        ASB, AQB Issue Final Call for USPAP Comments [Posted April 30, 2008]
        Appraisal Foundation Seeks Candidates for Vacancies on National Boards [Posted April 30, 2008]
        New Seminars to Highlight AI Meetings in Austin [Posted April 14, 2008]
        Forest Service Announces Forest Legacy Grants [Posted April 14, 2008]
        Existing Home Sales Up, New Sales Down; Inventory Declines [Posted April 14, 2008]
        Appraisal Institute Releases New Publication on Appraisal of Subdivisions [Posted April 14, 2008]
        AQB to Address Criteria Implementation at June Meeting [Posted April 14, 2008]

Inside the Institute
        VP Sellers Featured in USA Today Article [Posted April 30, 2008]

550 W. Van Buren St., Suite 1000, Chicago, IL 60607 | T 312-335-4100 F 312-335-4400 | www.appraisalinstitute.org
         Appraisal Institute Weighs Fannie/Freddie Survey Results in Prep for Official Comments [Posted
          April 14, 2008]
         In Memoriam [Posted April 30, 2008]

Economic Indicators – February 2008

2 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Government Update – Commercial/General
Casey-Martinez Bill Would Halt Appraisal Fraud, Property Flipping
Congressional backers are strongly pushing a bipartisan Senate bill to curb fraudulent house appraisals
and thwart flipping schemes. The Fair Value and Independent Appraisal Act, introduced April 15 in the
Senate, is aimed at addressing shortcomings in the appraisal process and ensuring an accurate appraisal
by prohibiting interference with an independent appraisal and requiring lenders to obtain a second,
independent appraisal before extending credit on certain properties. The Senate bill would require that
the lender, rather than the consumer, be responsible for paying for the second appraisal. It also would
prohibit dishonest brokers and appraisers from artificially inflating property values, but would allow
legitimate investors to improve a property and then sell it at a price that reflects the improvements that
have been made.

Other provisions in the Senate bill would:
    Require a physical property visit and a second independent appraisal for high-interest, high-risk
        mortgages for properties sold at a higher price within 180 days of their last purchase.
    Seek to ensure appraiser independence by prohibiting interested parties from improperly
        influencing or attempting to improperly influence a property appraisal.
    Ensure that appraisers are qualified and follow specified minimum standards.
    Require a mortgage originator to make available to the credit applicant all appraisal valuation
        reports no later than three days prior to the transaction closing date.
    Set increased civil penalties for violating any of these provisions.

Bill sponsors Sens. Bob Casey, D-Pa., and Mel Martinez, R-Fla., who were joined by Reps. Judy Biggert,
R-Ill., and Paul Kanjorski, D-Pa., were instrumental in having similar language inserted in H.R. 3915, the
Mortgage Reform and Anti-Predatory Lending Act, passed by the House November 15 by a vote of 291 to
127. Both bills aim to combat mortgage fraud and flipping schemes by requiring an independent second
appraisal for high-risk, high-interest mortgages.

"A disturbing byproduct of the increased rates of foreclosures is unscrupulous individuals trying to profit
from other people's losses," Casey said, adding that "stopping these flipping schemes will help give
confidence to those buying homes that appraisals on their new homes are accurate and won't come back
to haunt them later."

Martinez, a former secretary of the Department of Housing and Urban Development, added that "some
truly bad actors" are out there posing as legitimate appraisers, and creating a "ripple effect‖ that is
worsening the mortgage crisis. He noted that there were still "too many unchecked components" in the
appraisal process, and said his bill would protect both consumers and lenders by "putting more checks in

Appraisers play a critical role in ensuring the integrity of the home buying process, and it is essential that
Congress adopt policies that preserve their independence from pressure, said Kanjorski, who chairs the
House Financial Services Capital Markets, Insurance and Government Sponsored Enterprises
Subcommittee, adding that homebuyers, sellers, lenders and investors all depend upon appraisers "to
provide verification of the true value of homes."

3 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Bill Garber, Appraisal Institute director of government and external relations, said, ―We applaud Senators
Casey and Martinez for recognizing the importance of appraisal reforms and for introducing an extremely
important bill in the Senate.‖ Garber added that ―moving forward, we think the bill could be improved by
adding reforms to the existing appraisal regulatory structure, which passed the House last year.‖

A summary of the bill can be found on Sen. Casey's Web site at

Treasury Proposes New Mortgage Origination Commission, Roll Up of
Appraisal Subcommittee
To address gaps in mortgage origination oversight, the Department of Treasury has issued a three-part
proposal. In its March 31 release, Blueprint for a Modernized Financial Regulatory Structure, the Treasury
recommended creating a federal Mortgage Origination Commission (MOC); making sure the Federal
Reserve‘s sole responsibility is to draft regulations for national mortgage lending laws; and clarifying and
enhancing enforcement authority for federal laws, especially Truth in Lending Act provisions. In addition,
the Treasury also encourages states to improve regulation over mortgage brokers.

In its proposal for the MOC, the Treasury envisioned that the President would appoint a director – to a
four- to six-year term – to chair a six-person board comprised of the principals (or their designees) of the
Federal Reserve, OCC, OTS, FDIC, National Credit Union Administration and Conference of State Bank
Supervisors. The MOC would develop and/or enforce uniform minimum licensing qualification standards
for state mortgage market participants, including personal conduct and disciplinary history, minimum
educational requirements, testing criteria and procedures, and appropriate license revocation standards.
The MOC would also evaluate, rate and report on the adequacy of each state's system for licensing and
regulation of participants in the mortgage origination process.

According to the Treasury, the structure of the MOC would incorporate some aspects of the structure and
operations of the Appraisal Subcommittee (ASC) and perhaps even some current responsibilities of The
Appraisal Foundation. The ASC does not oversee or regulate appraisers themselves, but rather,
Congress created it to monitor the activities of The Appraisal Foundation. If the ASC finds that a particular
state‘s appraiser regulation and certification program is inadequate, then, under the banking agencies‘
regulations, all appraisers in that state are no longer eligible to do appraisals for depository institutions.

―This draconian and un-calibrated authority is impractical, and it has not been used,‖ Treasury wrote. ―The
MOC would be vested with broader and more calibrated authorities to set uniform minimum standards for,
evaluate, and address weaknesses in, state systems."

―The Treasury Department has it right relative to the Appraisal Subcommittee‘s authority,‖ said Bill
Garber, the Appraisal Institute‘s Director of Government and External Relations. ―The current system of
oversight and enforcement is all of those things – draconian, un-calibrated, impractical -- and I would go
so far as to say it is also ineffective. Decertification of a state appraisal board is not an effective
enforcement tool, which is why we have suggested intermediate enforcement powers, as well as other
broader reforms to the appraisal regulatory structure for several years on Capitol Hill. The Treasury
recommendation in this area is some vindication of those concerns and ideas.‖

4 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
For the full Blueprint, visit www.treas.gov/offices/domestic-finance/regulatory-blueprint/. Specifically,
pages 78-79.

Appraisal Legislation Still in the Mix
With last week‘s Senate vote on the ―housing stimulus‖ bill (H.R. 3221), and the House advancing its own
proposals, where does that leave legislation impacting the appraisal profession?

First, H.R. 3915, which contains reforms to the existing appraisal regulatory structure, is still pending in
the Senate following passage in the House last year. The Appraisal Institute is urging the Senate to
immediately schedule and approve this measure, but thus far, mortgage industry regulatory reforms have
taken a backseat to foreclosure prevention, according to Bill Garber, Director of Government and External

―Congress is focusing intently on addressing the issues of foreclosure prevention to jumpstart the housing
market; however, those discussions could easily evolve into debates over mortgage market regulatory
reform, including appraisal regulatory reform,‖ Garber said. ―We continue to urge the Senate to take up
the significant appraisal regulatory reforms that passed the House last year in H.R. 3915,‖ he added.

At the same time, the Appraisal Institute is working diligently to defeat a proposal that would require
residential real estate appraisers to carry a ―surety bond.‖ Such a requirement would cost individual
appraisers thousands of dollars in out-of-pocket expenses and likely force thousands of appraisers out of
work. According to insurance industry estimates, the surety bond proposal contained in S. 2452 would
cost residential appraisers a minimum of $10,000, and as much as $40,000, in annual out-of-pocket

―This proposal would cripple the residential appraisal business, and do nothing to address real problems
with the appraisal regulatory system that Congress enacted nearly 20 years ago,‖ Garber said. It should
also be a rallying cry for the residential appraisal community, according to Garber. ―The bonding
requirement is universally rejected by the appraisal community,‖ he concluded.

To weigh in on these issues, visit the Appraisal Institute‘s Legislative Action Center
(http://capwiz.com/appraisal/callalert/index.tt?alertid=11130391) and contact your Senators in support of
H.R. 3915 and speak out against the appraiser bonding measure.

5 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Government Update – Residential
Administration Unveils Proposal to Expand FHA Loan Program
The Bush administration has unveiled a plan that would expand the FHASecure program to help up to
100,000 more at-risk homeowners by the end of 2008. The program expansion would allow the FHA to
insure new mortgages if a lender voluntarily wrote down the mortgage principal to a maximum of either 90
percent or 97 percent of the new value, depending on the borrower's risk profile, according to Federal
Housing Administration Commissioner Brian Montgomery.

Montgomery‘s comments came at an April 9 House Financial Services Committee hearing, which was
held in response to a broader proposal by panel Chairman Barney Frank, D-Mass. Frank‘s proposal
would have the FHA back from $300 billion to $400 billion in restructured loans for distressed borrowers if
lenders were willing to take a substantial loss on the mortgages. Frank estimated that his proposal would
reach between 1 million and 2 million borrowers.

The legislation first announced by Frank in March, was divided into two measures: H.R. 5830, the FHA
Housing and Homeowner Retention Act, and H.R. 5818, the Neighborhood Stabilization Act of 2008.

H.R. 5818, introduced by Subcommittee on Housing and Community Opportunity Chairwoman Maxine
Waters, D-Calif., would provide loans and grants to states and cities to deal with problems associated
with large numbers of foreclosures in neighborhoods across the country. A summary of H.R. 5818 can be
found at www.house.gov/apps/list/press/financialsvcs_dem/press0417083.shtml.

H.R. 5830 would expand the FHA program to help refinance at-risk borrowers into viable mortgages and
also requires the Federal Reserve Board to conduct a study on the need for an auction or bulk refinancing
mechanism. Specifically, H.R. 5830 would institute a voluntary program that would permit FHA to provide
up to $300 billion in new guarantees to help refinance at-risk borrowers into viable mortgages. To be
eligible for such monies, existing mortgage holders/investors must accept their losses – taking substantial
write-downs sufficient to: (1) establish a 3 percent loan loss reserve for the FHA; (2) pay the origination
and closing costs for the new loan up to 2 percent; and (3) bring the loan-to-value ratio on the new FHA-
guaranteed loan down to no greater than 90 percent of property‘s current appraised value, resulting in a
substantial reduction in debt service to the borrower. Accordingly, to qualify mortgage holders would
need to accept a substantial write-down, accepting as payment in full no more than 85 percent of the
property‘s current appraised value.

As for new FHA-insured loans, they would have to be properly underwritten and based on current
appraised value of the house and borrower‘s documented income (borrowers with higher – but not
disqualifying – debt levels would need to make six months of timely payments at the new payment level to
qualify for the guarantee).

The program will run for 2 years (with flexibility for additional 6 month extensions not to exceed 2 more
years). For more information on H.R. 5830, visit http://financialservices.house.gov/FHA.html.

6 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
A committee mark-up session and vote on the two measures was scheduled for April 30 and May 1st.
Results were not available at press time, but will be forthcoming in subsequent issues of Appraiser News

For Montgomery‘s full comments, visit

Appraisal Institute-Backed Amendment Added to House Foreclosure
Prevention Bill
A bipartisan amendment that would ensure an independent and competently performed appraisal process
has been added to pending foreclosure prevention legislation. On April 24, the House Financial Services
Committee agreed by voice vote to add the amendment to H.R. 5830, the Federal Housing Administration
Housing Stabilization and Homeowner Retention Act. The amendment, backed by the Appraisal Institute,
prohibits all parties involved in a real estate transaction from improperly influencing an appraiser and
requires all appraisals in connection with this legislation to be performed by qualified appraisers who have
demonstrated a high level of valuation competency, according to the Uniform Standards of Professional
Appraisal Practice.

H.R. 5830 authorizes the FHA to guarantee billions of dollars worth of refinanced loans if lenders reduce
loan amounts to reflect reduced home values. The measure would require banks to make less money on
the loans but it would also reduce their credit exposure, while helping families stay in their homes.

The amendment, offered by Reps. Paul Kanjorski, D-Pa., and Judy Biggert, R-Ill., was also sponsored by
Reps. Gwen Moore, D-Wisc., and Andre Carson, D-Ind.

―We applaud the leadership of the amendment sponsors for recognizing the importance of accurate
appraisals in the pending foreclosure prevention legislation,‖ said Bill Garber, Appraisal Institute director
of government and external relations. ―This legislation has real potential to help both homeowners and
financial institutions facing distress, and much of the proposal hinges on competent and reliable
appraisals. When many local areas find themselves in declining markets, it is absolutely essential that
Congress require the use of competent appraisers.‖

The bill was expected to be on the House floor for final vote on Wednesday, April 30. Results were not
available by press time. Discussions are underway in the Senate on companion legislation to H.R. 5830,
where several other questions will likely be addressed at the committee level, including what property
standards (FHA or conventional) will be applied to the appraisals and who will actually order the
appraisal. Given the uniqueness of the program, whereby lenders are encouraged to write down the
balance of loans to current appraised values, some have questioned the viability of allowing lenders to
order the appraisal, or whether that function would best be performed by the FHA.

For further information on this legislation, contact Brian Rodgers, Appraisal Institute Congressional
Representative, at 202-298-5597 or brodgers@appraisalinstitute.org.

Senate Passes Foreclosure Bill without Casey-Martinez Amendment
On April 10, the Senate overwhelmingly passed H.R. 3221, a bipartisan package of tax breaks and other
steps designed to help businesses and homeowners weather the housing crisis. However, some fear that

7 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
the plan, which combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy
foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes,
favors businesses like homebuilders rather than helps borrowers at risk of losing their homes.

While originally proposed and passed by the House, changes to the bill in Senate mark-up leads to
speculation that the bill will be significantly redrawn again in the House, such as rejecting $25 billion over
three years in tax breaks for money-losing businesses such as homebuilders. A plan adopted April 8 by a
key House panel dropped that idea as well as the tax credit for purchasers of foreclosed homes.

The measure calls for a long-awaited modernization of the Federal Housing Administration that would
enable more homeowners to refinance into loans backed by the Depression-era agency. The bill also
offers $150 billion for pre-foreclosure counseling and stronger loan disclosure requirements as well as
$10 billion in tax-free mortgage revenue bonds to help homeowners refinance subprime loans.

A House bill takes a far different tack, steering tax breaks toward first-time homebuyers and investors in
low-income rental housing. That measure is likely to be paired with a broader housing rescue package
being drafted by House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., which
would have the FHA step in to back $300 billion in refinanced loans for 1 million or more homeowners
who otherwise might face foreclosure. Under a similar plan by Sen. Christopher Dodd, D-Conn., the
Senate Banking Committee chairman, the FHA would insure up to $400 billion in loans. (See related

The April 10 vote on H.R. 3221 came after an April 8 invocation of cloture, which meant limited debate
and a speedy vote. Therefore, the bill did not include many proposed amendments, including one offered
April 7 by Sens. Robert Casey, D-Penn., and Mel Martinez, R-Fla., that would specifically ban appraiser
coercion, among other reforms to the real estate appraisal process.

The Appraisal Institute heralded the Casey-Martinez proposal in a release on April 7, stating, , ―We
support this amendment, applaud its bipartisan approach, and urge its immediate passage.‖

Congressman Paul E. Kanjorski, D-Pa., the chairman of the House Financial Services Capital Markets,
Insurance, and Government Sponsored Enterprises Subcommittee, also supported the Casey-Martinez
amendment, saying it echoed some of the appraisal improvement provisions found in his proposed
legislation, H.R. 3837. The House Financial Services Committee approved these reforms last fall, which
were then adopted as an amendment to H.R. 3915, a broader mortgage lending reform bill.

In its April 7 statement, the Appraisal Institute called on Congress to enact H.R. 3915, which would
provide more resources to state appraisal boards and grant expanded oversight and enforcement powers
to the Appraisal Subcommittee.

―The existing appraisal regulatory structure is underfunded and lacks the enforcement powers necessary
to adequately oversee the more than 100,000 licensed and certified real estate appraisers in the United
States. With ineffective federal oversight and a patchwork of state laws, which in some cases require only
‘minimum‘ qualifications for licensing and certification, state and federal oversight bodies too often have
not carried out their specific intended responsibilities to enforce the standards as required by the federal
law,‖ the Appraisal Institute stated.

8 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
These deficiencies were identified last week in the ―Blueprint for Financial Regulatory Reform,‖ in which
the Department of the Treasury referred to the existing structure as ―draconian and un-calibrated.‖ (See
related story.)

Dodd’s Foreclosure Prevention Act Advances
The House and Senate have worked up a measure that would have the Federal Housing Administration
guaranteeing hundreds of billions of dollars worth of refinanced loans if lenders reduce loan amounts to
reflect reduced home values. The measure would force banks to make less money on the loans but
would also reduce their credit exposure.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., and the panel's top Republican, Sen.
Richard Shelby, R-Ala., worked together in early April to craft a bipartisan substitute for a Democratic
housing bill, S. 2636, that Senate Majority Leader Harry Reid, D-Nev., had introduced Feb. 13.

Legislation passed by the House (H.R. 1852) and Senate (S. 2338) could enable the FHA to help more
borrowers refinance their mortgages into FHA-backed loans, which typically carry lower interest rates.
The Senate bill, which is more in line with the Bush administration‘s initial plans, would allow the FHA to
insure loans of up to $417,000 in high-cost areas. The limit currently is $362,000, far below the amounts
that many borrowers need. The House version would boost the limit to more than $700,000 in certain
circumstances. It also would give the Housing and Urban Development secretary authority to raise the
new insurance limit on different categories of loans by as much as $100,000 ―if market conditions

H.R. 1852 and S. 2338 differ in their down-payment requirements. The Senate bill would reduce the
minimum required down payment for an FHA-insured loan from 3 percent of the appraised value of a
home to 1.5 percent. The House bill would allow zero down-payment loans under certain circumstances.
Some Republicans, however, had expressed concern about lower down payments, as some studies have
shown such borrowers are more likely to default.

The core proposal was expected to include a number of provisions both parties can accept, including $10
billion in new bond authority for refinancing distressed subprime mortgages.

Before the Senate could act on the Dodd-Shelby legislation, it had to call up H.R. 3221, which will serve
as the vehicle for the housing package. (See related story.)

―The Appraisal Institute is working to address several valuation questions relating to these bills,‖ said Bill
Garber, Director of Government and External Relations. ―Specifically, if loans in some fashion are to be
written down to their market value, it is imperative that credible appraisals be performed by qualified
appraisers, especially in declining markets.‖

Depression-Era Home Owners Loan Corporation May Get Resurrected
Rep. Mark Kirk, R-Ill., has introduced legislation to provide emergency home mortgage relief by
reintroducing the Home Owners‘ Loan Corporation. In 1933, with nearly 50 percent of all depression
mortgages in default, Congress established HOLC, a temporary corporation which restored stability to
uncertain mortgage markets. HOLC had the following goals: (1) Protect homeowners from foreclosure; (2)

9 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Relieve homeowners of the higher interest and principal payments incurred during periods of higher
property values and higher earning power; (3) Declare that it was a national policy to protect home
ownership; (4) Impose the least possible cost on the federal treasury; and (5) Avoid injustice to the

Between 1934 and 1937, HOLC acquired and refinanced over 1 million troubled mortgage loans—about
20 percent of all mortgage loans in the country. HOLC purchased troubled mortgages from lenders at a
substantial discount (on average 20 percent below their pre-depression value), and then offered
reasonable refinancing options to homeowners. This prevented a total collapse of banks and allowed
families to remain in their homes. States and local communities appreciated keeping local taxpayers in
their homes rather than turning whole neighborhoods into rat-infested ghost towns. After fulfilling its
mission, HOLC was liquidated in 1951, returning a $14 million profit to taxpayers.

The Home Owners‘ Loan Corporation for the 21st Century Act, H.R. 5649, would re-establish HOLC, now
called ―HOLC-21,‖ which would, for a period of three years after enactment, acquire in exchange for
bonds issued by the Corporation, home mortgages and other obligations and liens secured by real estate;
and in connection with any such change, to make advances in cash to pay the taxes and assessments on
the real estate, to provide for necessary maintenance and make necessary repairs, to meet the incidental
expenses of the transaction.

The face value of bonds exchanged for any home mortgage or other obligation or lien secured by real
estate, plus accrued interest thereon and any cash advanced shall not exceed the lesser of $900,000 or
90 percent of the fair market value of the real estate involved, as determined by an appraisal made by the
Corporation. The Board shall establish rules for the appraisal of the property on which loans are made
under this section to accomplish the purposes of this Act.

The bill applies to one- to four-unit properties that are used by the owner of the dwelling as a principal
residence and that have a value not exceeding $1,000,000. It also applies to one-family units in a
multifamily project, including a project in which the dwelling units are attached or are manufactured
housing units, semi-detached or detached, that is used by the owner as a principal residence that has a
value not exceeding $500,000.

HOLC-21 would have a five-person board consisting of a designee of the Board of Directors of the
Federal Deposit Insurance Corporation, and the Secretary of the Treasury, the Comptroller General, the
Secretary of Housing and Urban Development, and the Director of the Office of Federal Housing
Enterprise Oversight, or their designees.

10 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Inside the States
Colorado to Increase Oversight on Conservation Easements; Allard
Questions IRS
Colorado‘s H.B. 1353 passed the House and is currently in the Senate Committee on Finance giving
spark to the idea that it will pass the legislature in some form. The measure increases oversight on
Conservation Easements and specifically conservation easement appraisals. The measure requires an
appraiser who conducts a conservation easement appraisal to submit a copy of the appraisal to the
Division of Real Estate. In addition, it creates a fee to be charged for each CE appraisal in order to
support administrative costs.

The measure also authorizes the board to establish classroom education and experience requirements
for an appraiser who prepares an appraisal for a conservation easement for which a tax credit is claimed.

For the full bill, visit

In related news, in an April 16 hearing, Sen. Wayne Allard, R-Colo., questioned the Internal Revenue
Service settlements on Colorado‘s conservation easements. In mid-November the IRS began making
settlement offers to a significant number of conservation easement donors under audit in Colorado. The
settlements were only offered in those cases where the sole issue between the owner and the IRS was
the valuation and, according to Allard‘s understanding, the offers ―generally fell into a bucket where the
IRS stated only 30 percent, or 60 percent or 75 percent of the original value of the charitable donation
was allowed.‖ According to IRS Commissioner Douglas Schulman, most people were offered close to 70
percent of their original claim.

In his response, Schulman disclosed that he had authorized more resources for appraisers to try to move
the backlog through. ―The people running this program have told me that they understand the frustration
that you have around the length of time that this has taken and that they're not happy with the pace and
would like to pick up the pace.‖

Allard also questioned the criteria used to place different taxpayers into these various buckets and if the
IRS indicated in writing to the donor how and why the IRS arrived at their decision. His comments came
at an April 16 hearing on the fiscal 2009 budget for the IRS held by the Senate Appropriations
Subcommittee on Financial Services.

Schulman said, ―Regarding the exact criteria, I've talked to the team about the program. I'm four weeks
into the job; I'd like to request if I could come back and talk with you. What I will tell you is I believe we
need to move the backlog. I've requested and authorized to put some more appraisers onto these cases.‖

Missouri House Approves Mortgage Fraud, Appraisal Coercion Bill
Legislation that would create a specific state crime of mortgage fraud and expand civil penalties for it
passed the Missouri House without any dissent on April 2. The bill defines ―mortgage fraud‖ to include

11 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
making false statements or failing to inform borrowers of material facts. Also included in the definition are
attempts to influence real estate appraisals through extortion or bribery.

The legislation would create a state felony of mortgage fraud, punishable by up to seven years in prison.
It also would grant expanded powers to the state‘s appraiser and real estate commissions and the state
finance division to investigate allegations of mortgage fraud, pursue civil penalties in court and revoke
people's professional licenses.

Courts could impose civil fines of up to $2,500 for each violation of mortgage fraud. The Division of
Finance could impose fines of up to $5,000 on people working as mortgage brokers after being prohibited
from doing so by the division.

The bill passed the House 153-0 and now goes to the Senate, which passed a similar version of the bill
last month. Some lawmakers complained the legislation doesn't go far enough because it doesn't include
any measures regulating the subprime mortgage industry or providing relief to people facing foreclosures
of their homes because they can't afford their loan payments.

Ohio High Court Finds Property's Sale Price Determinative in Taxable Value
The Ohio Supreme Court ruled April 3 that the state Board of Tax Appeals acted reasonably and lawfully
in using the sales price of a property to determine its value for tax purposes, rejecting a school district's
claim that other factors indicated a higher value. The Board of Tax Appeals ruling regarded the sales
price of a property purchased by Cummins Property Services LLC as probative of its value and placed the
burden of proving otherwise on the shoulders of the party advocating some other measure of the value.

The Worthington, Ohio, Board of Education contended that two factors militated against regarding the
sale price as indicative of the property's value. First, it contended that the deed contained a use restriction
so that the sale price did not relate to the full fee simple interest in the property. Additionally, the owner
undertook renovations between the date of the sale and the tax lien date that constituted an intervening
improvement in the property.

The Ohio Supreme Court disagreed, finding there was ample evidence in the record to support the
propriety of using the sale price to determine value.

Correction: Virginia Bill Only Affects Contracted Firms
Virginia House Bill 314 does not require staff assessment personnel to be certified by the Department of
Taxation. It only requires that the staff of third-party contracted assessment firms be certified. In the
March 31 issue of Appraiser News Online, the article "Virginia to Require Certification of All Government
Appraisers" misspoke when it said the bill would "affect all real property tax professionals working for local

In Virginia, many of the rural counties hire third-party firms to perform the appraisal function for their
reassessment. The contracted firm's employees will have to be certified. The part of the bill that relates to
staff employees of Assessors‘ offices states that they must have the qualifications prescribed by the
Department of Taxation. They will not be required to be certified and will not be subject to discipline by
the Department, if the bill is approved.

12 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Around the Industry
Appraisal Institute on Cuomo Agreement: Promote Competence; Limit
―Certain aspects of the agreement‖ between New York Attorney General Andrew Cuomo, Fannie Mae
and Freddie Mac ―could be harmful to the delivery of residential appraisal services and possibly to the
mortgage underwriting process itself,‖ according to the official comments from the Appraisal Institute. The
comments came in an April 30 response to the two government-sponsored enterprises regarding the
Home Valuation Code of Conduct (HVCC), which seeks to reinforce the independence of real estate
appraisers and the integrity of appraisals. The HVCC is the offshoot of the agreement between the New
York Attorney General, the two GSEs and the Office of Federal Housing Enterprise Oversight.

The comment letter represents a broad, industry response from virtually all corners of the professional
appraisal community, and it was developed after extensive member feedback, communications, and
internal and external discussion and deliberations with Appraisal Institute members. Drawing on this
feedback , the Appraisal Institute expressed concern that the agreement could:

         Destroy well-established business relationships between honest appraisers and reputable
          mortgage professionals;
         Proliferate Appraisal Management Companies;
         Unnecessarily ban appraisals prepared by appraisers working for federally regulated financial
          institutions and other lenders with independent appraisal operations (those reporting to risk
          management vs. loan production);
         Incentivize substitution of appraisals with automated valuation models and so-called broker price
          opinions to avoid compliance concerns; and
         Leave inadequate attention to appraiser competency, appraisal quality and training.

―The basic framework of the agreement and the new Home Valuation Code of Conduct is very good, but
we think many sections of the new appraisal guidelines should be revised because of potentially severe
unintended consequences,‖ Appraisal Institute Director of Government and External Relations Bill
Garber.said. ―Our comments are meant to be solution-based and we hope that the parties will implement
them to the best of their ability.‖

For example, the new guidelines ban appraisers working for financial institutions that sell loans to Fannie
Mae or Freddie Mac from performing appraisals. Upon review, and given that there is virtually no public
record of abuse in this area, the Appraisal Institute proposes eliminating this ban. Further, given that
federally regulated institutions are subject to bank examinations and adherence to federal appraisal
independence requirements, as well as a pending amendment to the Truth-in-Lending Act that grants
greater federal enforcement authority over non-bank mortgage lenders in this area, this proposed ban
should be dropped.

Furthermore, the Appraisal Institute recommended that the relationship between honest appraisers and
reputable mortgage brokers be allowed to continue under an increased level of scrutiny, including such
things as field reviews on all mortgage broker ordered appraisals. This complements a component of the
settlement which itself called for increased review of appraisals. The organizations believe that allowing

13 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
this solution would dispel a common concern that appraisal ordering would be centralized further into the
appraisal management industry. Secondly, the organizations highly recommend that appraisal
management fees not be paid by appraisers, but borne by lenders as they traditionally were in the past.

Additionally, according to Garber, the business model used by the typical appraisal management
company considers only price and delivery but does not consider competency or the complexity of
competency. ―We have addressed this disparity in our response and hope that the settlement parties
recognize that the quality of valuation services is paramount to stabilizing the housing market,‖ Garber

―This letter is only a first step in a long journey to advance appraisal independence issues,‖ said R.
Wayne Pugh, MAI, Appraisal Institute President. ―We have committed the resources of our organizations
to the Agreement‘s parties, as they seek to implement the Agreement and the HVCC.‖

The Appraisal Institute was joined in its response by the American Society of Appraisers, the American
Society of Farm Managers and Rural Appraisers and the National Association of Independent Fee
Appraisers. The full comment letter, including a line-by-line comment on the HVCC, is available on the
Appraisal Institute Web site at www.appraisalinstitute.org/myappraisalinstitute/downloads/AI-ASA-
ASFMRA-NAIFA_HVCCFinal.pdf. Members can gain independent access to each of these documents
under the ―News and Reminders‖ section of ―My Appraisal Institute‖ on the organization‘s Web site (log-in

A full overview of the issues surrounding the Cuomo agreement is available at

OFHEO’s Pollard to Appraisal Institute: Federal Law Will Trump Fannie,
Freddie Agreement
In detailing the Home Valuation Code of Conduct, the focal point of the agreement between New York
Attorney General Andrew Cuomo and Fannie Mae and Freddie Mac, Alfred Pollard, General Counsel at
the Office of Federal Housing Enterprise Oversight, said that it recognizes that the overall agreement is
susceptible to federal change. Pollard‘s comments came at an address to the 100 members of the
Appraisal Institute‘s Leadership Development and Advisory Council April 25 in Washington, D.C.

Pollard addressed many aspects of the Code, the plans for implementation, and highlighted the
importance of the real estate appraisal process. Pollard said he expected that there would be
―movement‖ in the Code following that comment period; to what extent, though, he was unable to predict.

―We were excited to have Mr. Pollard with us this year and his presentation helped shed light on the
recent agreement Fannie Mae and Freddie Mac signed with OFHEO and the Attorney General of New
York,‖ said Bill Garber, Appraisal Institute director of government and external relations. ―The issue of
appraiser independence is of the utmost importance to our profession and to clients of appraisal

Over 100 Appraisal Institute Members Lobby Capitol Hill
More than one hundred participants in the Appraisal Institute‘s 2008 Leadership Development and
Advisory Council lobbied Capitol Hill on April 24 to alert their Congressional representatives of two

14 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
key issues impacting real estate appraisers and the real estate appraisal profession: improving the
existing appraisal regulatory structure and foreclosure prevention.

Several bills have been introduced in the 110 Congress to address both issues, the most prominent
being H.R. 3915, which passed the House last year, and foreclosure prevention legislation scheduled to
be voted on in the House and Senate in late April. Results of those votes were not available at press time.

"Congress is poised to act on several bills that will have an impact on real estate appraisers and the real
estate market, so this is an opportune time for appraisers themselves to meet and discuss these
proposals with their elected officials,‖ explained Bill Garber, Appraisal Institute director of government and
external relations. ―Just as the expertise of real estate appraisers is important in real estate financial
transactions, professional appraisers can give insight to policymakers on key valuation questions relating
to the current housing crisis.‖

The group, which is composed of industry leaders, gathered April 23-25 at the Washington Court Hotel in
Washington, D.C. LDAC has served as a source of leadership and an inspiration for new programming
ideas for the Appraisal Institute for more than 30 years. Through a series of roundtable discussions,
LDAC provides a forum for the exchange of ideas and opinions on targeted topics of concern to the
appraisal profession. For more information about the advocacy efforts of the Appraisal Institute, visit

RealtyTrac: Foreclosure Rate Nearly Doubles
The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year
earlier, as weakening property values and tighter lending left many homeowners powerless to prevent
homes from being auctioned to the highest bidder, according to Irvine, Calif.-based RealtyTrac Inc.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the
nation with a foreclosure rate that was 6.6 times the national average, according to RealtyTrac Inc.
Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the
year, up 112 percent from 306,722 during the same period last year. The latest tally also represents an
increase of 23 percent from the fourth quarter of last year. The most recent quarter marked the seventh
consecutive quarter of rising foreclosure activity, RealtyTrac noted.

"What would normally alleviate the foreclosure situation in a normal market is people starting to buy
properties again," said Rick Sharga, RealtyTrac's vice president of marketing. However, the unavailability
of loans for people without perfect credit and a significant down payment is slowing the process, he said.

"It's a cycle that's going to be difficult to break, and we're certainly not at the breaking point just yet,"
Sharga added.

RealtyTrac monitors default notices, auction sale notices and bank repossessions. All told, one in every
194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but
four states.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to
receive a foreclosure-related filing plunged 24.4 percent from a year earlier. Sharga credited the decline

15 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
to the state's foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium
on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to

The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet
lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Green Buildings Selling for More
New analysis shows "green" homes may be a bright spot in today's real estate market. Environmentally
certified homes sold for 4.8 percent more and stayed on the market for 24 percent less time than
comparable homes sold last year, according to GreenWorks Realty. The firm‘s research focused on the
Seattle market.

In the first year since it began tracking environmentally certified homes, 19.8 percent of new homes in
Seattle sold on the Northwest Multiple Listing Service were environmentally certified. These homes
averaged 1,477 square feet, just slightly smaller than the 1,492 square foot average for all new homes
sold. On a square foot basis, this means green homes sold for a 5.9 percent premium. Green homes
certified by a third party sold for a 10.5 percent premium on a square foot basis.

"In today's changing market, this is an important finding for homeowners to consider," noted Ben
Kaufman, founder of GreenWorks Realty. He added, "Environmentally certified homes offer homeowners
a way to get the most value and sell more quickly."

Environmentally certified homes include those certified by Built GreenT, Energy StarT or LEED for
HomesT. From September 1, 2007 to March 31, 2008, 168 environmentally certified single-family new
homes were sold in Seattle out of a total of 848 new homes sold.

"Until now, the idea that people are willing to pay more for environmentally certified housing has been
mostly based on anecdotes," said Aaron Adelstein, Executive Director of Built Green. "Now we have the
first hard data to back up what many of us have believed for a long time – green sells for more," he

Kaufman noted, "When buying homes, it seems buyers understand the benefits of green homes - from
lower energy bills to healthier indoor air." Kaufman initiated the effort to include environmental certification
checkboxes in the NWMLS. "These new figures will help appraisers, homeowners and real estate agents
understand what buyers are willing to pay for an environmentally certified home," added Kaufman.

Now Online: Residential Site Valuation Course
The Appraisal Institute‘s course Residential Site Valuation and Cost Approach, which covers two basic
aspects of residential real estate appraisal: land/site valuation and the development of the cost approach,
is now available online.

The course focuses on the appraisal of residential building sites and the various means of measuring
accrued depreciation, as well as analysis to aid development of skills in generating current cost estimates

16 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
using market extraction, interview techniques and information provided by professional cost-data sources.
An in-depth case study is presented that features the valuation of a two-unit residential rental property
and demonstrates the fundamentals of site valuation, estimation of current improvement cost, and various
methods of recognizing and measuring accrued depreciation.

For more information or to register, visit

Architecture Billings Index Drops to its Lowest Level Ever
The March Architecture Billings Index as well as the month‘s inquiries for new projects, fell to their lowest
levels since the survey‘s inception in 1995. The American Institute of Architects reported the March ABI
rating dropped two points to 39.7, following its steep 9-point decline in February. The inquiries for new
projects score was 48.0. As a leading economic indicator of construction activity, the ABI shows an
approximate nine- to 12-month lag time between architecture billings and construction spending; any
score above 50 indicates an increase in billings.

―We‘ve seen an 11-point fall-off in the first quarter of the year and the prognosis for commercial
construction later this year is not favorable at this point,‖ said AIA Chief Economist Kermit Baker,
PhD. ―Aside from historically low project demand, all regions are showing very poor business
conditions. This is not likely to reverse itself anytime soon.‖

The regional averages for March were South (45.3), Northeast (38.7), West (38.7) and Midwest (36.9),
while the sector index breakdown was institutional (50.8), commercial / industrial (38.3) multi-family
residential (31.7).

The Architecture Billings Index is derived from a monthly ―Work-on-the-Boards‖ survey and produced by
the AIA Economics & Market Research Group. Based on a comparison of data compiled since the
survey‘s inception in 1995 with figures from the Department of Commerce on Construction Put in Place,
the findings provide an approximately nine- to 12-month glimpse into the future of nonresidential
construction activity. For more information, visit www.aia.org.

Housing, Commercial Markets Continue Slowdown
Sales of existing homes dropped 2 percent in March to an annual rate of 4.93 million units, the National
Association of Realtors reported April 22. The median price of an existing home dropped 7.7 percent from
a year ago to $200,700, the second biggest decline since a record 8.4 percent drop in February.

Sales of new homes dropped 8.5 percent in March to an annual rate of 526,000 units, the slowest sales
pace since October 1991, the Commerce Department said April 24. The median price of a new home
dropped 13.3 percent from a year ago to $227,600, the biggest year-over-year price decline since a 14.6
percent decline 38 years ago. At the current sales pace, it would take 11 months to deplete the national
inventory of new homes.

Housing starts fell by 11.9 percent in March to an annual rate of 947,000 units, the Commerce
Department said April 16, a much bigger decline than economists were predicting. Meanwhile, building
permits fell 5.8 percent to an annual rate of 927,000, the slowest pace since a 916,000 rate in April 1991.

17 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Meanwhile, 30-year and 15-year fixed-rate loans edged up for the week ending April 24, according to
Freddie Mac‘s weekly survey of mortgage lenders.

Furthermore, according to RealtyTrac Inc, foreclosure filings were 5 percent higher in March than
February and 57 percent higher than a year ago. March marked the 27th consecutive month of year-over-
year increases in national foreclosure filings. Approximately one in every 538 households received a
foreclosure filing in March.

In an April 25 Wall Street Journal article a report showing a 28 percent drop in nationwide office
construction between March and February. Projects across the country – from Seattle, Phoenix and Las
Vegas to New York and Atlanta – "have been shelved, scaled back or beset by financial problems in
recent months," particularly those relying heavily on debt financing. As the article notes, liquidity has dried
up significantly as "major financial institutions struggle with huge losses from the commercial real-estate
debt they've been unable to move off of their books." The leading contributing factors is the virtual
shutdown of the commercial mortgage-backed securities market this past year, in the wake of the
subprime mortgage market meltdown and its negative effects on investor confidence and risk tolerance.

At the same time, as the Journal states, ". . . many major projects continue unabated, particularly those
for which the financing is less dependent on the U.S. debt markets."

ASB, AQB Issue Final Call for USPAP Comments
The Appraisal Standards Board and Appraiser Qualifications Board are inviting a final round of comments
on the Uniform Standards of Professional Appraisal Practice and USPAP Education. Comments are due
May 30, 2008. In response to its December 17, 2007, call for comments on the same topic, the ASB
received comments ranging from the need to reduce the complexity of USPAP, to increase awareness of
the document and its purpose, and the need for increased enforcement. In AQB-related responses, many
suggested that individuals wishing to enter the appraisal profession have a lack of context when taking
the required 15-hour National USPAP Course.

Several comments directed to the AQB suggested that a short ―Introduction to USPAP‖ course be
required prior to taking the 15-hour course. In addition, several comments suggested that the AQB
consider establishing criteria that dictates the sequence of the initial education (Basic Appraisal
Principles, Basic Appraisal Procedures, 15-hour National USPAP Course). Therefore, the AQB is seeking
feedback on the following two specific issues:

1) Requiring a short (4-hour to 7-hour) ―Introduction to USPAP‖ course prior to the initial qualifying
education courses; and
2) Requiring the initial qualifying education to be completed in the following sequence:
a. Introduction to USPAP (if adopted)
b. Basic Appraisal Principles
c. Basic Appraisal Procedures
d. 15-hour National USPAP Course

According to the Foundation, while the recent changes – such as the removal of the Departure Rule and
the creation of the Scope of Word Rule – have helped reduce the length and complexity of USPAP, the
ongoing challenge to the ASB is to continue to clarify vague or ambiguous portions of USPAP.

18 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Many responses suggested a need for greater public awareness of the fact that there are professional
standards for appraisers. Furthermore, many expressed frustration that no matter how clear and direct
Standards become, unethical individuals will continue to flaunt the basic precepts of professional conduct.
The need for improved enforcement is needed to reduce unethical and incompetent practice. The
Foundation summarized these responses as: ―USPAP is helpful for appraisers seeking to do a good job,
but too many appraisers fail to follow USPAP. While this state of affairs may be disheartening, it
demonstrates the need for the ASB to improve USPAP to facilitate better enforcement.‖

Other comments tied recent valuation failures to competent performance, suggesting that the
Competency Rule should be reviewed for clarity and adequacy.

Comments must be submitted by May 30, and can be e-mailed to comments@appraisalfoundation.org
or faxed to 202-347-7727. They may also be mailed to: ASB/AQB ‗2008‘ Invitation to Comment; c/o The
Appraisal Foundation; 1155 15th Street, N.W., Suite 1111; Washington, D.C. 20005. All written
comments will be posted for public viewing, exactly as submitted, on the website of The Appraisal

Comments are also invited at the ASB and AQB Public Meetings on June 6, 2008, in Atlanta, Ga. For
more information, contact The Appraisal Foundation at 202-347-7722.

Appraisal Foundation Seeks Candidates for Vacancies on National Boards
The Appraisal Foundation seeks qualified candidates to serve on Appraiser Qualifications Board and
Appraisal Standards Board. Those selected will serve up to three-year terms commencing January 1,
2009. Completed applications are due August 1.

There are up to three vacancies on the Appraisal Standards Board, with two incumbents eligible for
reappointment. The ASB is charged with developing, interpreting and amending the Uniform Standards of
Professional Appraisal Practice. Familiarity with USPAP is a prerequisite of service on the ASB, and a
minimum of 10 years of appraisal experience is required. The ASB meets five times per year for a total of
approximately 15 days.

There are up to four vacancies on the Appraiser Qualifications Board, with three incumbents eligible for
reappointment. The AQB is responsible for setting minimum qualification criteria for state licensure and
certification of real estate appraisers and has established voluntary qualification criteria for personal
property appraisers. Familiarity with appraiser qualifications is a prerequisite of service on the AQB, and a
minimum of 10 years of appraisal experience is required. The AQB meets four times per year for a total of
approximately 10 days.

Individuals serving on the ASB and AQB are compensated for their time and are reimbursed for travel
expenses. Individuals serving on the Board of Trustees are reimbursed for travel expenses but are not
compensated for their time.

The Appraisal Foundation is interested in expanding the diversity of all Boards by considering
applications from business leaders with an interest in valuation or involved in various appraisal

19 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Application packages for all positions outlined above are available at
www.appraisalfoundation.org/s_appraisal/sec.asp?CID=123&DID=169. To request an application
package via e-mail, contact Anne Raley at anne@appraisalfoundation.org with the words "2008 Boards
Application Information" in the subject line, and your full name, mailing address and phone number in the
body of the e-mail.

New Seminars to Highlight AI Meetings in Austin
New seminars on two ―hot‖ topics – green buildings and appraising in declining markets – are being
offered in conjunction with the Appraisal Institute‘s multi-regional meeting taking place at the Hyatt
Regency Hotel in Austin, Texas, June 20-25. Seven of the 10 regions will convene both jointly and by
region June 20-22. In addition the annual membership meeting will be held June 22, from 1-5 p.m. The
Appraisal Institute‘s Board of Directors will meet June 24-25. Other national committees meeting in Austin
include the Strategic Planning Committee, Leadership Development & Nominating Committee and the
Education Trust.

The seminars will be presented June 24. ―An Introduction to Valuing Green Buildings‖ will have its debut
with seminar co-developers Theddi Wright Chappell, MAI, and Tim Lowe, MAI, as instructors. Mark
Rattermann, MAI, SRA, will instruct ―Appraisal Challenges: Declining Markets & Sales Concessions,‖
which he developed. Each seminar offers seven hours of Appraisal Institute continuing education credit.

Recently added to the schedule are two half-day panel programs on key appraisal issues hosted by the
Appraisal Institute‘s Client Advisory Board on June 25. The first session will focus on mortgage lending
processes and the appraiser‘s role and obligations under the new Fannie Mae and Freddie Mac
agreements. During the second session, a panel will discuss major trends, issues and opportunities in the
commercial appraisal market.

On June 26-27 the two-day ―Yellow Book‖ seminar, which deals with federal standards for land
acquisition, will be offered. This seminar, which will be taught by Brian Flynn, MAI, focuses on land
acquisition policies of various federal agencies. This program offers 14 hours of CE credit.

Social events of the Austin meetings include the Education Trust reception and auction on June 21 and a
Texas-style barbecue on June 24. Advance reservations are required for the latter event, which will take
place at the Salt Lick Texas Bar-B-Que in Driftwood, Texas.

In addition to Appraisal Institute meetings and educational programming, members coming to Austin may
register for the IRWA‘s 54 annual Education Conference, which will take place at the Hilton Austin Hotel.
IRWA is extending to Appraisal Institute members a special two-day pass (June 22-23) for $225 if
purchased before May 23 or $250 thereafter and onsite. The pass includes IRWA‘s opening ceremony
and reception on June 22 as well as education sessions and exhibits.

To register for the Appraisal Institute‘s multi-regional meeting and education sessions, visit

May 19 is the deadline to obtain the Appraisal Institute group rate of $165 (plus tax) at the Hyatt Regency
Austin. Hotel reservations can be placed directly by calling 888-421-1442.

20 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Forest Service Announces Forest Legacy Grants
Private forest landowners are facing increasing real estate prices, property taxes and development
pressure, resulting in conversion of forests to other land uses. To combat this trend, the Forest Service
recently awarded $54 million in grants to permanently protect 35 working forests across 32 states.
According to Forest Service Chief Abigail Kimbell, The Forest Legacy Program, focused on the
permanent protection of important private forestland, promotes voluntary land conservation by operating
on the principle of "willing buyer, willing seller."

Most Forest Legacy Program projects are conserved through conservation easements, allowing
landowners to keep their forestlands while protecting them from future development. Examples of 2008
projects include: a forest vital for wildlife and cultural resources in Georgia; a rare pine barren ecosystem
in New Hampshire; and a valley in Montana with abundant recreation opportunities, rare fish and wildlife,
and local economic benefits.

For more information on the Forest Legacy Program, visit

Existing Home Sales Up, New Sales Down; Inventory Declines
New and existing home sales moved in opposite directions in February. New home sales fell for the fourth
straight month while the annualized pace of sales of total existing homes is the fastest since October

New homes sales fell 1.8 percent in February to a seasonally adjusted 590,000 homes. New home
inventory declined to 467,000, the lowest it has been since July 2005. The number of new homes for sale
continued to decline as builders have been scaling back production until the market stabilizes. At the
current sales pace, 9.8 months‘ supply of new homes remain on the market.

Annualized sales of total existing homes increased 2.9 percent in February to 5.03 million units. However,
sales of existing homes are down 23.8 percent from the 6.60 million units in February 2007. The inventory
of existing homes fell 3 percent from the previous month to 4.034 million units. At the current sales pace,
the supply of existing homes stands at 9.6 months.

The median price for a new home jumped 8.2 percent in February to $244,100 which is the highest it has
been since November but down 2.7 percent from the level of a year ago. Median existing home prices in
February declined again to $195,900, their lowest levels since May 2004.

The national average mortgage rates increased slightly to 5.88 percent in Freddie Mac‘s April 3 Primary
Mortgage Market Survey, the first time in three weeks that rates have posted a weekly increase.

Appraisal Institute Releases New Publication on Appraisal of Subdivisions
Subdivision Valuation, offering a comprehensive overview of single-unit residential subdivision valuation
methodology focused primarily on valuing proposed subdivisions competently and avoiding common
errors found in subdivision appraisal reports, has just been released by the Appraisal Institute.

21 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
―Subdivision analysis can be one of the most difficult areas of real estate appraisal,‖ explains R. Wayne
Pugh, MAI, president of the Appraisal Institute. ―This book sheds valuable light on subdivision valuation
and will be useful to appraisers seeking to expand their repertoire as well as more seasoned appraisers
who want to brush up on their skills.‖

Subdivision Valuation, by Don M. Emerson, Jr., MAI, SRA, addresses all the basic elements of this area
of appraisal practice, also specifically covers the topics of: market, neighborhood, site and improvement
analysis; profit, timeline, yield and discounting concepts; highest and best use; and the three approaches
to value. To illustrate its points, the book provides a variety of case studies.

Subdivision Valuation (Stock No. 0714M) is available to Appraisal Institute members for $40. It is $50 for
nonmembers. To order, visit www.appraisalinstitute.org/store or call 800-504-7440.

AQB to Address Criteria Implementation at June Meeting
Among the items that the Appraiser Qualifications Board will take up at its June 6 public meeting are
implementation of the 2008 criteria, course approval program activity, 2008 national uniform licensing and
certification examinations, and 2008 AQB Exposure Draft on a Guide Note and an Interpretation
regarding the two-year time frame of the seven-hour National USPAP Update course.

The board will meet from 9 a.m.-12 p.m. on June 6 at the Hyatt Regency located at 265 Peachtree
Street, in Atlanta, Ga. Individuals who wish to address the AQB regarding any agenda items should
submit a written request outlining the agenda topics to be addressed. Requests can be e-mailed to
magdalene@appraisalfoundation.org or faxed to 202-347-7727 with AQB in the header.

To register to attend, visit www.zoomerang.com/Survey/survey.zgi?p=WEB227M4RM3UCX.

22 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Inside the Institute
VP Sellers Featured in USA Today Article
Appraisal Institute Vice President Leslie Sellers, MAI, SRA, was featured in an April 24 USA Today article
on the current state of the market. The focus of the article was tips to home sellers on how to fare as best
as possible in the spring home-buying season. The article took its cue from the news that the median
price of an existing home in March was 7.7 percent less than it was a year ago, according to the National
Association of Realtors. This bodes well for buyers who have the time, patience and money for a sizeable
downpayment, according to the newspaper.

"We hear about the large price drops in California, Florida," Sellers said. "But it's important to remember
that those are the areas that were increasing at the same rates in the upward direction in the past few
years. More areas of the country are at a more stable pace, and those have not dropped at those
dramatic paces."

The article featured advice on what sellers should consider doing, such as developing a marketing plan,
including analyzing comparable home sales in the area in the past six months and offering inducements.
For homebuyers, the advice was: do homework; negotiate; educate yourself; and obtain financing ahead
of time.

The article also quoted an April study by Frank N. Magid Associates, a media-oriented research and
consulting firm based in Marion, Iowa, that indicated that just 13 percent of respondents say they plan to
buy a home within 12 months and an additional 21 percent said they were unsure. The survey included
1,938 participants.

For an expanded USA Today interview, visit www.usatoday.com/money/economy/housing/2008-04-28-

Appraisal Institute Weighs Fannie/Freddie Survey Results in Prep for
Official Comments
More than 1,000 Appraisal Institute members submitted comments and participated in a member survey
on the recent agreement between the Attorney General of New York, Fannie Mae, Freddie Mac, and the
Office of Federal Housing Enterprise Oversight. In an April 11 letter to its members, the Appraisal Institute
noted, ―While many members of the Appraisal Institute are cautiously optimistic about the results of the
agreement, many also are deeply concerned about several potential unintended consequences that may
result. Our research suggests that the most worrisome issues for members relate to the future role of
appraisal management companies, the continued lack of regard to appraisal quality and/or appraiser
competency in the appraiser hiring process, and potential harm to existing business relationships and/or
business development.‖

Appraisal Institute members may review the Summary of Findings by logging into My Appraisal Institute
on the organization‘s Web site, www.appraisalinstitute.org, and clicking on the Home Valuation Protection
Program Survey, under ―News and Reminders.‖

The Appraisal Institute anticipates that while January 1, 2009, is the implementation date of the
agreement, the parties will attempt to finalize the Code of Conduct much sooner than that, as early as late

23 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
spring or early summer, so that the mortgage industry can make the necessary adjustments to business
operations. So, in drafting their official comments for the April 30 deadline, the Appraisal Institute will
identify its members‘ concerns along with others that they have identified in the agreement, and make
specific recommendations on how they can be avoided and rectified. ―We believe that changes in the
Code of Conduct will be necessary to avoid unintended consequences harmful to the appraisal
profession,‖ the organization wrote in its April 11 letter.

Information sessions on the issue are scheduled for the Appraisal Institute‘s upcoming Joint Regional
Meeting in Austin, Texas, June 20-22 (see related story for registration information). In addition, more
programs are under development related to the implementation of the agreement, including Webinars,
chapter-sponsored events, direct marketing to clients, and future publications.

In Memoriam
The Appraisal Institute regrets the passing of the following designated members, which were reported in
April: Harold T. Allen, SRA, Springfield, Ill.; Earl R. Baughar, MAI, Lakewood, Colo.; B. Saunders Brooks,
MAI, Louisville, Colo.; John R. Brossette, SRA, Shreveport, La.; Stuart Chaffee, SRA, Barrington, R.I.;
George Fox, Jr., MAI, Little Rock, Ark.; George J. Kelly, MAI, Champaign, Ill.; John W. Landon, III, MAI
Dallas, Texas; Charles R. McCoy, SRA, Decatur, Ill.; and William R. Merritt, SRA, Decatur, Ill.

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

24 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Market Rates and Bond Yields
                           Feb 08                                 Aug07       Feb07          Aug06        Feb 06      Feb05
Reserve Bank Discount      3.50                                   6.01        6.25           6.25         5.50        3.49
Prime Rate                 6.00                                   8.25        8.25           8.25         7.50        5.49
Federal Funds Rate         2.98                                   5.02        5.26           5.25         4.49        2.50
3-Month T Bills            2.12                                   4.20        5.03           4.96         4.43        2.54
6-Month T Bills            2.04                                   4.38        4.96           4.97         4.52        2.77
3-Month CD                 3.06                                   5.49        5.31           5.38         4.72        2.77
LIBOR-3 month rate         3.12                                   5.52        5.35           5.41         4.75        2.75
5-Year Bond                2.78                                   4.43        4.71           4.82         4.57        3.77
10-Year Bond               3.74                                   4.67        4.72           4.88         4.57        4.17
30-Year Bond*              4.52*                                  4.93*       4.82*          5.00*        4.73*       4.61*
Municipal Tax Exempts Aaa† 4.44                                   4.30        3.93           4.10         4.30        4.17
Municipal Tax Exempts A†   4.63                                   4.57        4.24           4.62         4.53        4.42
Corporate Bonds Aaa        5.53                                   5.79        5.39           5.68         5.35        5.20
Corporate Bonds A†         6.26                                   6.29        5.88           6.19         5.85        5.51
Corporate Bonds Baa        6.82                                   6.65        6.28           6.59         6.27        5.82

Stock Dividend Yields
Common Stocks—500                                    2.10         1.92         1.82          1.92         1.86        1.76

Other Benchmarks
Industrial Production Index¶**                       113.7**      114.4**      113.1**       113.7**      110.8** 107.4**
Unemployment¶                                        4.8          4.6          4.5           4.7          4.8     5.4
Monetary Aggregates¶
    M1, $ Billions                                   1,367.5      1,367.7      1,359.4       1,369.0      1,376.8 1,350.9
    M2, $ Billions                                   7,601.6      7,333.7      7,112.0       6,855.7      6,761.2 6,407.4
Member Bank Borrowed Reserves
    $ Billions                                       0.157        0.975        0.030         0.369        0.053       .042
Consumer Price Index
 All Urban Consumers                                 211.7        207.9        203.5         203.9        198.7       191.8

Per Capita Income
                                                     4Q07        3Q07        4Q06           3Q06        4Q05       3Q05       4Q04
Per Capita Personal
 Disposable Income
Annual Rate in Current $s                            32,741      32,355      31,209         31,064      29,918 29,693 28,479
Savings as % of DPI(††)                               0.2        0.6         0.4            0.0         0.8    -0.5   2.5

** As of April 2006, the Fed went back to reporting 30-yr rates; the historical data is 20+ year rates. A factor for adjusting the daily
nominal 20-year constant maturity in order to estimate a 30-year nominal rate can be found at www.treas.gov/offices/domestic-
** On November 7, 2005, the Federal Reserve Board advanced to 2002 the base year for the indexes of industrial production,
capacity, and electric power use. This follows the December 5, 2002, change to a 1997 baseline, from the previous 1992 baseline.
Historical data has also been updated.

25 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008
Conventional Home Mortgage Terms

                                                  Feb08        Aug07     Feb07       Aug06   Feb06   Feb05
New Houses Loans—U.S. Averages
Interest rate                                     5.96         6.73      6.31        6.87    6.40    5.75
Term                                              29.2         29.6      29.5        29.5    29.3    28.9
Loan Ratio                                        78.1         78.6      76.3        74.8    75.4    75.5
Price                                             373.1        368.9     361.9       343.1   338.1   317.1

Used House Loans—U.S. Averages
Interest rate                                     5.94         6.79      6.46        6.81    6.47    5.71
Term                                              27.8         29.3      29.4        29.0    28.8    28.1
Loan Ratio                                        76.0         80.4      78.3        77.1    75.8    74.6
Price                                             298.1        284.2     291.0       295.8   298.7   278.7

Conventional Home Mortgage Rates by Metropolitan Area

                                                  4Q07        4Q06     4Q05   4Q04
Atlanta                                           6.42        6.50     6.21   5.70
Boston-Lawrence-NH-ME-CT#                         6.27        6.32     5.95   5.54
Chicago-Gary-IN-WI#                               6.44        6.62     6.10   5.79
Cleveland-Akron#                                  6.57        6.67     5.93   5.88
Dallas-Fort Worth#                                6.40        6.51     6.20   5.80
Denver-Boulder-Greely#                            6.39        6.51     6.10   5.70
Detroit-Ann Arbor-Flint#                          6.53        6.56     6.31   5.69
Houston-Galveston-Brazoria#                       6.40        6.61     6.31   5.88
Indianapolis                                      6.65        6.80     6.26   5.83
Kansas City, MO-KS                                6.12        6.14     5.91   5.71
Los Angeles-Riverside#                            6.43        6.51     5.87   5.49
Miami-Fort Lauderdale#                            6.59        6.84     6.25   5.95
Milwaukee-Racine#                                 6.38        6.48     6.01   5.90
Minneapolis-St. Paul-WI                           6.36        6.43     6.02   5.51
New York-Long Island-N. NJ-CT#                    6.44        6.52     5.97   5.75
Philadelphia-Wilmington-NJ#                       6.41        6.63     6.43   5.97
Phoenix-Mesa                                      6.45        6.61     6.12   5.68
Pittsburgh                                        6.16        6.14     6.27   5.98
Portland-Salem#                                   6.35        6.44     6.11   5.71
St. Louis-IL                                      6.62        6.54     6.24   5.97
San Diego                                         6.43        6.26     5.90   5.25
San Francisco-Oakland-San Jose#                   6.46        6.52     5.90   5.47
Seattle-Tacoma-Bremerton                          6.36        6.56     5.90   5.57
Tampa-St. Petersburg-Clearwater                   6.49        6.62     6.26   5.79
Washington, DC-Baltimore-VA#                      6.49        6.54     6.47   5.85
¶                Seasonally adjusted
†                Source: Moody's Bond Record
††               Revised figures used when available
#                Consolidated Metropolitan Statistical area

26 | Appraiser News Online Vol. 9, No. 7 & 8, April 2008

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