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The uptick in third quarter commercial mortgage transaction volumes indicates that lenders are loosening the historically tight credit terms that prevailed over most of 2008 and 2009, according to an Oct. 7 report from Real Capital Analytics.
“Competition among CMBS conduits has noticeably relaxed loan-to-value targets recently. In addition, the improvements in the debt markets extend beyond conventional mortgages to include unsecured facilities, acquisition lines, CMBS securities and even construction financing,” Real Capital Analytics’ US Capital Trends report stated.
In the apartment sector, interest rates on longer-term loans show a clear correlation with loan-to-value ratios, according to RCA. “Across commercial property types, the direct relationship between leverage and rate is less clear, clouded by other sources of risk such as variation in the quality of borrowers, properties, and tenants,” the report said.
Furthermore, lenders are extending credit for new acquisitions and for refinancing but are also warming to the potential for selective development, according to RCA. Recent construction financing has generally focused on the apartment sector, where fundamentals are stabilizing earlier than for other core commercial real estate. But lenders have also evidenced their willingness to evaluate and fund opportunities for other projects backed by strong sponsors, according to the report.
Appraisal Institute members can find US Capital Trends reports from Real Capital Analytics, including the Oct. 7 report, in the members-only section of the Appraisal Institute website at
The Government Accountability Office issued an Oct. 19 letter to key Congressional lawmakers updating its status as it continues to study real estate appraisal issues as mandated by the July passage of the Dodd-Frank financial regulatory reform bill.
The GAO, which serves as an investigative arm of Congress, is conducting a year-long study of appraiser independence. As required by the Dodd-Frank legislation,
the GAO must study the effectiveness and impact of options for selecting appraisers, different valuation methods and the effectiveness of the Home Valuation Code of Conduct.
The GAO’s study will focus on appraisals of one- to four-unit residential properties to answer four broad questions:
To view the GAO’s status update letter to Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-Mass., visit
Bank of America said it will “
vigorously defend" itself
against mounting pressure from federal regulators and investors to buy back soured mortgages that the large lender packaged into securities,
according to an Oct. 19 Dow Jones Newswires report.
The bank is feeling the squeeze to repurchase billions of dollars in failing mortgages originally issued by the Charlotte, N.C., bank's Countrywide subsidiary as bond holders and government agencies threaten legal action. And it’s part of a greater trend.
Fannie Mae and Freddie Mac’s overseer, the Federal Housing Finance Agency, recently hiredQuinn Emanuel Urquhart & Sullivan LLP, a Los Angeles-based firm that specializes in business litigation, to coordinate its investigations into soured mortgage-backed securities and plot how to recoup billions in losses, The Wall Street Journal reported Oct. 21. FHFA already issued 64 subpoenas to issuers of mortgage securities in July.
The Federal Reserve also wants banks to buy back bad mortgages.
Two years removed from buying billions in troubled mortgage securities as part of the financial bailout, its New York arm is reevaluating the paperwork and, where discrepancies are found, is pressing banks into buy-backs, The New York Times reported Oct. 19.
Estimates about banks' exposure to buy-back requests vary considerably. According to the Journal, banks could face between $55 billion and $179 billion in repurchase demands from investors in a worst-case scenario for servicers. More conservative estimates put the dollar amount on repurchase requests at between $24 billion and $51 billion, the Journal reported.
most efforts to force banks to repurchase securities have focused on mortgages that Fannie and Freddie bought and guaranteed themselves, and not from mortgage securities issued by Wall Street firms. As it stands, the government-sponsored enterprises are continuing to comb through their inventory of delinquent loans to find fraudulent underwriting that constitutes a violation of representations and warranties, the Journal reported.
As delinquencies have risen rapidly, so too have buy-back requests. According to an Oct. 19 report published by analysts at RBS Securities Inc., the GSEs have put back $6 billion in mortgages during the first two quarters – a number that could climb to as high as $28 billion by 2012. Banks, for their part, have grown aggressively more resistant in recent months to buy-back efforts.
Meanwhile, Bank of America is on the defensive after receiving a letter from the New York Fed, BlackRock Inc., The Pacific Investment Management Co., and other investors that demanded it agree to repurchase requests. According to an Oct 21 Bloomberg story,
if the Fed and the investors succeed, Bank of America could owe more than $47 billion.
For its part, Bank of America has announced it plans to hire more attorneys and fight buy-back requests on a case-by-basis.
"We're not responsible for the poor performance of loans as a result of a bad economy," the bank said in a statement as reported by Dow Jones. "We don't believe we've breached our obligations as a servicer. We will examine every avenue to vigorously defend ourselves."
After the New York Fed’s letter surfaced on Oct. 19, Bank of America shares spiraled down 4.4 percent, to $11.80,
wiping out $5.92 billion of its market value, Bloomberg reported.
Repurchases have been costing Bank of America about half a billion dollars a quarter, according to the Times. Total buy-back claims stood at $12.9 billion as of September 30, which cost the bank $872 million, the Times reported.
The head of the Federal Deposit Insurance Corporation told attendees during an Oct. 25-26 FDIC-Federal Reserve joint workshop that three “fatal flaws” in the housing finance system must be corrected in order to rebuild public confidence, according to an Appraisal Institute representative who attended the event.
FDIC Chair Sheila Bair said
misaligned incentives, implicit government support of Wall Street and the emergence of “too big to fail” institutions need to end for the sake of a healthy and stronger housing system. In addressing these issues, she called for stronger loan disclosure standards, risk retention and the end of implicit guarantees that encourage risk taking.
Bair’s remarks came as part of the FDIC and Fed’s conference highlighting policy-oriented research focused on U.S. housing and mortgage markets. The conference emphasized two major issues: mortgage foreclosures and the future of housing finance.
In addition, three policy panels were held to specifically discuss the future of housing finance, mortgage modification issues and the future of the government-sponsored enterprises, Fannie Mae and Freddie Mac.
After several weeks of insisting that internal probes have not turned up any problems, Bank of America now says that it has found a small number of cases where errors have been made in foreclosure proceedings. Errors include incorrect data and misspelled names, The New York Times reported Oct. 25.
“These are examples of exceptions that were caught early in the process through control steps,” Dan Frahm, a spokesperson for Bank of America, told the Times. “They do not reflect exceptions in final documents that are being resubmitted to the courts.”
Amid growing concerns over questionable foreclosure documents and procedures, several lenders – including JPMorgan Chase, GMAC Mortgage and Bank of America – halted foreclosures while each conducted internal investigations. Additionally, JPMorgan Chase and Bank of America are among the lenders who have begun discussion with state attorneys general on ways to resolve the current controversy, Reuters reported Oct. 21.
Bank of America said that it had not found a single case where a homeowner was facing foreclosure in error. “We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,” Barbara Desoer, president of Bank of America Home Loans, added. “We paused while we were doing that, and now we’re moving forward.”
Based on its review, Bank of America said that it has combined signing and notarization into one step to minimize errors, the Times reported. While it placed a foreclosure freeze in 23 states, the bank said Oct. 18 that foreclosures will resume, noting that it was “confident in the procedures it had in place.”
Since the foreclosure paperwork controversy began, Bank of America shares have plunged. Not only does the bank have to reassure investors regarding the allegations, but consumers as well. However, the problem does not seem likely to go away anytime soon as lawyers for some homeowners who were foreclosed on are preparing for court battles.
Freddie Mac said that delinquent borrowers facing foreclosure are staying in their homes longer after they stop making payments, The Financial Times reported Oct. 24. Freddie said the foreclosure process now takes up to eight months, an increase from six months prior to the onset of the housing crisis.
“People understand that it’s difficult for lenders to get them out of their homes, and so they are staying longer,” Mark Zandi, chief economist at Moody's Analytics, told The Financial Times. “In the past, if you got an eviction notice, you were likely to leave quickly. Now people are staying until there is a sheriff at their door.”
While a backlog of foreclosures is contributing to the slowdown, questions are mounting regarding the legality of foreclosure procedures conducted by some lenders. Adding to the problem, some law enforcement agencies are refusing to evict homeowners, arguing that some may be losing their homes without just cause.
Because it can take months to get a distressed home ready for the market, as well as cost millions of dollars, Freddie Mac said that it is offering financial assistance for relocation expenses to help get borrowers out of foreclosed homes. Eviction proceedings are a last resort, The Financial Times reported.
Struggling homeowners hoping to short sell their properties are finding it increasingly difficult as major lenders opt to pursue foreclosures again after a brief break to assess foreclosing mechanisms, according to an Oct. 24 story in The New York Times.
With so many foreclosures stagnating on the market, short sales are seen as an alternative in which struggling homeowners sell their home for less than is owed to the bank. The benefit of a short sale is a less disruptive process that puts a new owner into the home – as opposed to a foreclosure potentially removing an owner only for a house to sit vacant.
But banks have cooled on the idea of short sales, particularly in the face of concerns about fraud. According to the Times’ story, a recent industry report estimated that short sale fraud occurs in at least 2 percent of sales and costs banks about $300 million annually. There are also concerns about finding qualified buyers, handling the mountain of paperwork and ensuring there are no existing tax liens to complicate the deal.
Short sale advocates – including homeowners, real estate brokers and consumer groups – argue that banks have created a short sale process that is prohibitive and favors foreclosures. Many banks require a struggling homeowner to be delinquent and have applied for a modification before a short sale application will be considered – even if the homeowner has little chance of qualifying, the Times reported.
Even then, a large percentage of homeowners seeking short sales fall into foreclosure while awaiting bank approval, which has been criticized for often taking too long or setting unrealistic asking prices, the Times reported.
As part of a government initiative to encourage short sales
, Fannie Mae now offers cash incentives to servicers to approve short sales. But the financial incentive is greater for banks to push foreclosures instead. According to the Times’ article, servicers can reap high fees from foreclosures while lenders can try to collect on private mortgage insurance.
An April 2009 regulatory change in an obscure federal accounting law that allows banks to foreclose on a home without being required to write down a loss until that home was sold. By contrast, if a bank agrees to a short sale, it must report the loss immediately, the Times reported.
The continued government bailout of mortgage giants Fannie Mae and Freddie Mac could double over the next three years under a worst-case scenario projection released by the Federal Housing Finance Agency. According to its Oct. 21 analysis, the FHFA projects the ongoing bailout is likely to cost taxpayers an additional $19 billion to $124 billion by 2013.
To date, Fannie and Freddie have drawn $135 billion from the Treasury Department to essentially prop up the nation’s housing market. The FHFA developed three loss-projection scenarios in conjunction with the government-sponsored enterprises to reflect possible further losses on the GSEs’ pre-conservatorship mortgage business.
“These projections are intended to give policymakers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac,” FHFA Acting Director Edward DeMarco said in an Oct. 21 agency news release. “These are not predictions; the results reflect the potential effects of a limited set of hypothetical changes in house prices, a key variable driving credit losses for (Fannie and Freddie).”
According to the most likely scenario, housing prices would decline slightly amid a modest economic recovery before inching upward. In this scenario, the total bailout of Fannie and Freddie would cost taxpayers $19 billion more, or $154 billion in overall bailout funds.
In its best-case scenario, the FHFA projected the housing market to spring back to life quickly, necessitating the allocation of just $6 billion more to bailout the GSEs, bringing the total bailout to $141 billion.
In its worst-case scenario, housing prices would drop by as much as 25 percent and cause a second recession. Under this projection, the FHFA projects the GSEs would need $124 billion more, bringing the bailout total to $259 billion.
Industry observers told The Washington Post in an Oct. 22 story that the FHFA’s projections provided good indications of what Fannie and Freddie may ultimately cost taxpayers, but provided nowhere near a definitive picture of it.
At issue are the potential costs associated with breakdowns in the foreclosure process, which could cost the GSEs more in the long run – though putting a reliable forecast on those losses are impossible at this time, according to observers.
To view the FHFA’s projections report for the future performance of the GSEs, visit
The Appraisal Institute responded to the North Carolina Appraisal Board’s proposed appraisal management company rules in an Oct. 26 letter. The Arizona and Illinois appraisal boards have also issued proposed rules regarding the registration and supervision of appraisal management companies operating in those states.
As proposed, the North Carolina rules would require that AMCs “compensate appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.” This language replicates language that was added to the Truth in Lending Act by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
In its Oct 26 letter, the AI said:
“It is important for appraisers to have a state agency to which they can complain if they feel that they have not been paid a reasonable and customary fee by an AMC.”
The AI was joined by the American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers in penning the letter.
“It is important for the Board to have at its disposal the ability to pursue an injunction against an AMC that has failed to properly compensate an appraiser, and to deny, suspend, revoke or refuse the AMC’s authority to operate in the state. These sanctions are not available under the federal reasonable and customary law.”
Comments are being accepted by the North Carolina Appraisal Board until Nov. 15, and a public hearing will be held in Raleigh on Nov. 9. To view a copy of the proposed rules, visit
. A copy of the joint comment letter can be viewed at
In addition to specifying the registration and supervisory requirements for AMCs, the Arizona proposed rules would require that an AMC disclose to its client the actual fees paid to an appraiser for appraisal services. These amounts must be stated separately from any other fees or charges for appraisal management services. In addition, the proposed rules would prohibit an AMC from using any of the data in an appraisal report in any databases or automated valuation models. The Arizona Board of Appraisal filed a Notice of Rulemaking Docket Opening and intends to submit the proposed rules to the secretary of state by the end of 2010. At that time the public may submit written comments. To view a copy of the Arizona proposed rules, visit
Similar to Arizona, the Illinois proposed rules would require that an appraiser identify an AMC as the client if an AMC is engaging the appraiser. And, if an AMC is acting on behalf of a financial institution, then the appraiser must identify the institution as an additional intended user. The proposed rules in Illinois also would require that an appraiser “ascertain the relationship between the client/authorized agent and the financial institution”. This can be accomplished by reviewing a copy of the contract between the AMC and the institution, obtaining a letter from the AMC outlining its “level of responsibility,” or directly communicating with the financial institution to determine the scope of the appraisal assignment. Lastly, the Illinois rules would require that an appraiser “prominently display the appraisal fee received from the appraisal management company in the certification.” Comments on the Illinois proposed rules – available at
– are due to the Department of Financial and Professional Regulation by Nov. 29.
The North Carolina and Arizona rules are the result of new AMC laws the states passed in 2010. Additionally, Illinois has proposed AMC rules as part of a broader package of modifications to the state’s appraiser licensing and certification law.
The Federal Housing Finance Agency is now reviewing comments on its proposal to ban Fannie Mae, Freddie Mac and the Federal Home Loan Banks from buying mortgages tied to homes in communities with private transfer fees. The public comment period, as Appraiser News Online reported Aug. 18, closed Oct. 15.
According to an Oct. 21 Big Builder News story, more than 2,600 people and organizations on both sides of the argument submitted feedback regarding what are known as “private transfer fee covenants,” which allow the inclusion of resale fees to be added to home purchase contracts. The length of the resale fee attachment is typically 99 years and the fees are usually less than 1 percent of the home sale price.
Critics view the practice as controversial because it potentially allows a third-party to sell the right to collect these fees to Wall Street investors. Proponents, on the other hand, argue that the fees are an essential tool in the development and maintenance of communities across the country, supporting entities and causes such as homeowners associations, affordable housing initiatives and environmental conservation, according to Big Builder.
While the FHFA has yet to outline how it will handle its comment review proceedings or set a timetable for issuing its final guidance, proposed legislation could play a role in the agency’s decision-making process.
In September, Rep. Maxine Waters, D-Calif., proposed the Homeowner Equity Protection Act of 2010, which would prohibit the collection of private transfer fees for for-profit organizations. Her legislation aligns with a request made to the FHFA by the 34-organization Coalition to Save Community Benefits. The coalition asked the FHFA to consider narrowing the scope of its transfer fee regulation to exempt community benefit recipients, such as homeowners associations, environmental groups and other not-for-profits, Big Builder reported.
Currently, 17 states have legislation in place to restrict the use of private transfer fees.
Under recently clarified rules, only a lender’s underwriter may request a reconsideration of value from a Federal Housing Administration roster appraiser. Furthermore, the information only needs to be considered; not necessarily resulting in an amended report. Regardless, the appraiser cannot charge for reconsideration, according to the FHA.
The clarifications are among the FHA’s updated list of frequently asked questions on valuation protocol. Other new topics addressed include appraisal portability, manufactured housing, inspections and certifications, FHA appraisals and title concerns.
“A reconsideration of value,” the FHA wrote, “is the process of analyzing data not utilized in an appraisal report … (such as) information regarding comparable sales, listings or under contract of sale properties that the FHA roster appraiser did not cite in the appraisal report but was available to the appraiser in the normal course of business as of the effective date of the appraisal.”
Since such information was available, the appraiser should already have it in their workfile – but perhaps decided not to include it in the report – the FHA said. They are therefore not allowed to charge for providing it under a reconsideration of value request, the FHA said.
The FHA further asserted that if an amended report does not occur, ordering another consideration or appraisal is not allowed; and clarified that it does not accept retrospective appraisal reports for FHA-insured loans. “Comparable sales and other market activity that occurred after the effective date of the appraisal cannot be used by the underwriter when requesting a reconsideration of value,” they wrote.
Regarding appraisal portability, the FHA recognized the need for appraisers to comply with the confidentiality section of the Uniform Standards of Professional Appraisal Practice. As such, in cases where an appraisal is transferred from one lender to another, the second lender may be required to obtain a release of liability from the first lender and provide it to the appraiser before the appraiser can cooperate with the second lender. The second lender must obtain the actual appraisal report from the original lender itself; the appraiser cannot provide the second lender with a copy.
The FHA also clarified its manufactured housing guidelines by adding that “light-weight non-load bearing skirting may be attached over [a] perimeter enclosure [of concrete, masonry or treated wood] but is not an acceptable substitute” for the enclosure. Furthermore, the FHA said that Form 10004D cannot be used in lieu of the HUD-92501 form for manufactured housing. The 1004D Part B can be used only for existing site built construction (stick built or modular).
Under “lender concerns,” the FHA clarified that a new conditional commitment only needs to be completed when a completely new second appraisal is performed, not in instances where an appraisal is updated.
The FHA also clarified its lead-based paint rules, which changed April 22. The FHA said that homeowners of houses built prior to 1978 are exempt from the rule, but are “encouraged to learn to perform lead-safe work practices.” Landlords and contractors are not exempt and are required to follow specific work practices to avoid lead contamination. The FHA said that Roster appraisers and inspectors may inspect to verify that painting repairs have been performed as required, but that they are to determine completion of the repairs, not compliance with the rules.
Other topics covered in the 26-page FAQs include: cost approach new construction, manufactured housing, home equity conversion mortgages, accessory dwelling units, two-unit properties, lender concerns and title concerns.
To view the complete FAQs, visit www.hud.gov/offices/hsg/sfh/appr/aprval.pdf.
The Federal Reserve says the “cookie-cutter” approach to “risk retention” in this year’s financial overhaul law might not account for how securitization functions across different markets, according to an analysis by the Real Estate Roundtable.
As relayed in its Oct. 22 Roundtable Weekly, RER said the Fed concluded that the bill would not help revive financial markets, and that it could ultimately reduce credit availability. The Fed recommended that forthcoming regulations in this area be tailored to various classes of securitized assets, such as auto and student loans, and residential and commercial mortgages.
A simple set of risk-retention rules applied uniformly across all asset classes “are unlikely to achieve the stated objective of the [Dodd-Frank] Act — namely, to improve the asset-backed securitization process and protect investors from losses associated with poorly underwritten loans,” the Fed stated. Under Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, banks that package loans for sale into the secondary market must retain at least 5 percent of the credit risk of those assets in their portfolios. Importantly, the law allows “B-piece” buyers of commercial mortgage-backed securities to satisfy the new “skin-in-the-game” requirements. The Roundtable pointed out that an interim “safe harbor” rule the Federal Deposit Insurance Corporation adopted Sept. 27 omits the alternative risk-retention arrangements for the CMBS market provided for under Dodd-Frank. The Roundtable said this could hurt efforts to restart the still-dysfunctional commercial mortgage securitization market, where new issuance plummeted from $230 billion in 2007 to $1.36 billion in 2009, and “only recently began to show signs of life again.”
The four federal bank regulatory agencies and the Securities and Exchange Commission must issue an interagency risk-retention rule within 180 days of this week’s Fed report.
James Tellatin, MAI, was recently named chair of the Missouri Health Facility Review Committee. The committee – which consists of governor-appointed members and state legislators – reviews, approves or denies applications for certificates of need for new development and expansions of hospitals, nursing facilities and assisted living facilities in Missouri.
Tellatin, president of Tellatin, Short, Hansen & Clark, Inc. in Chesterfield, Mo., was appointed to the committee in January after a Senate confirmation process, and was named vice chair in March and chair in September. He was originally appointed by Gov. Jay Nixon after several persons close to the governor recommended him based on his health care property appraisal expertise.
“The objectivity and analytical tools used every day in appraising (are) skills that easily transfer to determining reasonable costs and need for capital spending on additional health care property,” Tellatin said. “Because the scope of my appraisal practice is national, I’ve been able to bring to the committee a large base of experience and knowledge of various certificates of need programs, Medicaid reimbursement systems and wide perspectives from investors, health care providers, and financial markets.”
He added that
“throughout the governor’s selection process, confirmation and short tenure of the committee, my membership in the Appraisal Institute, along with my published writings and seminar development made a very favorable impression.”
U.S. commercial real estate prices fell 3.3 percent in August from July, putting prices at 2002 levels after a third straight month of declines, according to Moody’s/REAL Commercial Property Price Index released Oct. 19.
Citing Moody’s data, Dow Jones Newswires reported that prices for office buildings, shopping centers and apartments are down 45 percent from their late-2007 peak. Rental demand has dwindled, reducing properties' cash flow, while a tighter financing market has restricted investors' ability to inflate their returns using leverage.
REAL President Neal Elkin told REIT.com Oct. 20 that a closer inspection of the data suggests that the market is divided into three segments. “It’s not as simple as saying there are good assets and there are bad assets,” he said.
Prices on “trophy” assets in the country’s three premier markets – New York, San Francisco and Washington, D.C. – increased 5 percent in August from July, a 37-percent gain since January. Meanwhile, pricing in secondary markets have remained relatively flat, and the values for distressed properties dropped 10 percent in August, marking a 60-percent drop from their peak level in 2007, REIT.com reported.
The $52.5 billion in new financing for apartment buildings with five or more units in 2009 represents a 40 percent decline from 2008 multifamily dollar volume levels, according to the Mortgage Bankers Association’s Annual Report on Multifamily Lending for 2009, released Oct. 14.
On the plus side, according to the report, there were numerous lenders involved signaling a possible thawing of credit lines. Of the 2,725 total different multifamily lenders in 2009, the most active 122 lenders accounted for 77 percent of the dollar volume lent. Three-quarters of the active lenders made five or fewer loans over the course of 2009, according to the report.
The report showed that in terms of total dollar volume, the top five multifamily lenders in 2009 were Wells Fargo Bank N.A., PNC Real Estate, Deutsche Bank Commercial Real Estate, CBRE Capital Markets, Inc., and Capmark Financial Group Inc.
The report – based on data from the MBA 2009 Commercial Multifamily Annual Origination Volume Summation and the Home Mortgage Disclosure Act – is available for $150 at
Two leading reports on U.S. home prices are showing conflicting data for the month of August. The Federal Housing Financing Agency reported in an Oct. 26 news release that home prices were up 0.4 percent in August from the previous month on a seasonally adjusted basis.
However, according to the latest Standard & Poor’s/Case-Shiller Home Price indices, also released Oct. 26, the 10-city composite was down 0.1 percent from the previous month while the 20-city composite was down 0.2 percent.
FHFA’s monthly index is calculated using purchase prices of houses with mortgages tied to Fannie Mae or Freddie Mac in the nine U.S. census divisions, while Standard & Poor’s indices are based on the sales price of single-family homes located in the 20 metropolitan statistical areas.
According to FHFA’s Housing Price Index, the increase in August follows July’s downwardly revised decline of 0.7 percent. On a year-over-year basis, prices are down 2.4 percent and 13.6 percent from April 2007’s peak.
By region, the West South Central Census Division had the largest monthly increase at 1.5 percent, followed by the West North Central and East North Central divisions, each with increases of 1.2 percent, FHFA data showed. The Mountain Census Division fared the worst with a 0.6 percent fall in prices compared to the previous month, followed by the Middle Atlantic Division with a drop of 0.3 percent. The Pacific and South Atlantic divisions tied for third place with prices dropping 0.2 percent compared to the previous month.
In the latest Standard & Poor’s/Case-Shiller Home Price indices
, home prices decreased in 15 of the 20 MSAs in August compared to the previous month. Chicago, Detroit, Las Vegas, New York and Washington, D.C., were the only cities that recorded improvements in August compared to the previous month.
On a year-over-year basis, the 10-city composite was up 2.6 percent compared to a year ago while the 20-city composite was up 1.7 percent.The report also showed that 12 of the 20 MSAs posted negative annual growth rates. From peak levels, the 10-city composite was down 28.4 percent as of August and the 20-city composite was down 28.1 percent, according to the report. Home prices across the country were at late 2003/early 2004 levels.
To view FHFA’s
Housing Price Index, visit www.fhfa.gov/webfiles/19440/AugHPI102610F.pdf. To view Standard & Poor’s/Case-Shiller Home Price indices, visitwww.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----.
Sales of existing homes increased 10 percent in September to a seasonally adjusted annual rate of 4.53 million units from the previous month’s downwardly revised rate of 4.12 million units, the National Association of Realtors reported Oct. 25. The pace is 19.1 percent down from the September 2009 rate of 5.6 million units.
NAR Chief Economist Lawrence Yun said in a news release that the housing market is in the early stages of recovery mode, which “will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.”
Single-family existing home sales increased 10 percent in September to a seasonally adjusted annual rate of 3.97 million units from the previous month’s rate of 3.61 million units, NAR reported. That marked a 19.5 percent drop from the 4.93 million units recorded a year ago. Existing condominium and co-op sales increased 9.8 percent in September to a seasonally adjusted annual rate of 560,000 units from the previous month’s rate of 510,000 units, down 16.2 percent from the 668,000 units reported a year earlier.
Existing home sales in the Northeast increased 10.1 percent in September to an annual rate of 760,000 units, down 20.8 percent from a year ago. The Midwest surged 14.5 percent to an annual rate of 950,000 units, down 26.4 percent from a year ago. The South increased 10.6 percent to an annual rate of 1.77 million units, down 14.9 percent from a year ago. The West rose 5 percent to an annual rate of 1.05 million units, down 16.7 percent from a year ago.
First-time buyers accounted for 32 percent of home purchases in September, up slightly from the previous month’s figure of 31 percent, while investors accounted for 18 percent, down 3 percent from the previous month. Repeat buyers accounted for the remaining transactions. All-cash sales accounted for 29 percent of all purchases, up 1 percent from the previous month, while distressed homes accounted for 35 percent, up 1 percent from the previous month.
NAR reported that the median existing home price for all home types logged in at $171,700 in September, down 2.4 percent from a year ago. The median existing single-family home price came in at $172,600, down 1.9 percent from a year ago, while the median existing condominium price was $165,400, down 6.2 percent from a year ago.
By region, the median price in the Northeast was $239,200, down 1.4 percent from a year ago. The Midwest came in at $139,700, down 5.2 percent from a year ago. The South logged in at $149,500, down 2.6 percent from a year ago. The West came in at $213,600, down 4.9 percent from a year ago.
Existing home inventory inched down 1.9 percent in September to 4.04 million units, NAR said. Based on the current sales pace, there is now a 10.7-month supply of existing homes on the market, down from the previous month’s 12-month supply.
Sparked by the first increase in interest rates in six weeks, mortgage application activity fell in the week ending Oct. 15, according to the Mortgage Bankers Association’s weekly Mortgage Application Survey.
The survey, released Oct. 20, showed that the Market Composite Index, which measures mortgage loan application activity, fell 10.5 percent both on a seasonally adjusted basis and on a non-adjusted basis from the previous week. The four-week moving average for the Market Index nudged up 0.4 percent on a seasonally adjusted basis.
Refinancing made up 82.4 percent of applications, down from 83.1 percent the previous week, while adjustable-rate loan activity increased 0.4 percent to 5.8 percent. The four-week moving average for the Refinance Index rose 0.7 percent on a seasonally adjusted basis.
The MBA’s Oct. 15 Purchase Index fell 6.7 percent from the previous week on a seasonally adjusted basis. On a non-adjusted basis, the index decreased 6.6 percent from the previous week, down 29.4 percent from a year ago. The four-week moving average for the Purchase Index fell 1.1 percent on a seasonally adjusted basis.
The average rate on a 30-year fixed loan increased to 4.34 percent from the prior week’s 4.21 percent, while points, including origination fees, fell from 1.02 to 0.81 for 80 percent loan-to-value ratio loans, according to the MBA. The average rate on a 15-year fixed loan rose from 3.62 percent to 3.74 percent, while points, including origination fees, dropped from 1.06 to 1. The average rate on a one-year adjustable rate mortgage increased from 7.03 percent to 7.17 percent.
Modest consumer spending and sluggish job creation will continue to spur slow economic growth into next year, according to an October 2010 Economic Outlook issued by Fannie Mae's Economics & Mortgage Market Analysis Group. Fannie projected a 2.2 percent growth for 2010 and a 2.5 percent growth for 2011.
"The labor market has yet to make significant progress, which is the primary reason for our continued weak growth forecast," Fannie Mae Chief Economist Doug Duncan said in a news release. "With economic growth slowing, job creation also has been tepid, keeping the unemployment rate high. Housing sales will likely be soft until the labor market strengthens," Duncan added.
After collapsing in July, total existing home sales rebounded in August – for the first home sales increase in four months – and then again in September – though homebuilding remains weak, according to the report. Builders said the two leading obstacles to sector growth were reluctant consumers amid a weak labor market and the large number of foreclosed properties on the market. But these obstacles are unlikely to improve in the coming year, which will keep residential investment weak, the report noted.
There also are concerns about foreclosure processes and delays creating uncertainty for prospective homebuyers. The report noted that foreclosed homes account for a substantial part of the existing home market. Therefore, a moratorium on foreclosures, if spread widely enough across the nation, has the potential to suppress home sales in the near term and interfere with the housing recovery.
According to the report, housing starts are expected to increase in 2010 by about 6 percent from 2009’s record-low level. However, total home sales this year are projected to decline by about 7 percent from 2009.
As for refinancing, the report projects applications to further decline – as they have every week since peaking in late August – despite record low mortgage rates.
For 2010, total mortgage originations are projected to decline to $1.5 trillion from an estimated $1.9 trillion in 2009, with a refinance share of 65 percent, according to the report. Total single-family mortgage debt outstanding is projected to decline by 3.1 percent, compared with a 1.9 percent decline in 2009.
While the report predicts weak economic growth, it was optimistic that the odds of the economy slipping back into recession have eased, thanks in large part to steps taken by the Federal Reserve to manage inflation, ensure price stability and promote job growth, the report cited.
To access Fannie’s October Economic Outlook, visit
During a week of activities in Miami highlighted by the XXV Union of PanAmerican Valuers Congress, the Appraisal Institute will hold a brief version of its annual meeting Nov. 3 at the Loews Miami Beach Hotel.
This year’s event will include awards and recognition of members, strategic presentations and reports by Appraisal Institute officers and a keynote address by a recognized valuation expert. Next year’s annual meeting will be held Aug. 15-17 in Las Vegas; it will be the Appraisal Institute’s first full national conference since 2005.
Highlights of this year’s annual meeting will include the presentation of two prestigious Appraisal Institute awards, both to be presented this year for the first time: the Lifetime Achievement Award and the Outstanding Service Award. The Lifetime Achievement Award will be presented to an individual member who demonstrates high ethical standards; has volunteered several years of service and contribution to the Appraisal Institute on the chapter, regional, national and/or international level; has provided service to his or her community; and who has contributed to the appraisal profession for at least 20 years.
The Outstanding Service Award will be presented to an individual who has contributed ideas, service hours and dedication to ensure a specific program or effort is implemented at either the chapter, region, national and/or international level. To qualify, a member must be instrumental in the success of the program or effort, which must also be far enough along to measure and provide proof of success. Additionally, the program or effort must be beneficial to members or the profession at the chapter, regional, national or international level.
Other program elements will include reports by President Leslie Sellers, MAI, SRA; President-Elect Joe Magdziarz, MAI, SRA; Vice President Sara Stephens, MAI; and special recognition of Immediate Past President Jim Amorin, MAI, SRA. Sellers also will present the annual President’s Award to distinguished members.
The meeting also will feature a keynote address by Norm Miller, Ph.D., who will examine the pricing trends for commercial real estate over the last several years and will focus on the spreads in pricing based on location, size, quality and distress. He is vice president of analytics for the CoStar Group, a public commercial real estate data and market analysis company headquartered in Bethesda, Md. He had been academic director at the Burnham-Moores Center for Real Estate at the University of San Diego, where he retains the positions of distinguished research professor and editor of the Journal of Sustainable Real Estate.
Previously, Miller was at the University of Cincinnati, where he was academic director and founder of the real estate program. He has written numerous books and articles on housing, brokerage, mortgage risk, valuation, sustainable real estate and many other topics. He has lectured domestically and globally from Singapore to Russia to Thailand.
The XXV Union of PanAmerican Valuers Congress, featuring hundreds of valuation professionals from throughout North and South America, will be held Nov. 2-4 at the Loews Miami Beach Hotel. For more information, go to
Additional background information on the Appraisal Institute’s Core Competency Framework was posted Oct. 22 to the members-only section of the AI website (log-in required). The AI Board of Directors is seeking member feedback before taking up the topic at its Nov. 3 and 5 meeting in Miami.
The newly posted information contains historical context, showing the Appraisal Institute’s MAI designation requirements from 1990 to 2010. Another new document compares current MAI designation requirements with those proposed under the Core Competency Framework.
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 Framework are available in the members-only section of the Appraisal Institute website at
. Feedback can be e-mailed to
. Comments will be shared with the AI Board of Directors.
If approved by the Board of Directors at its November meeting, the core competency approach could be implemented by the end of the year.
The full 45-Day Notice can be found at www.appraisalinstitute.org/myappraisalinstitute/downloads/45-day-Notice_92110.pdf (log-in required).
The Appraisal Institute is accepting nominations for members who would like to serve as Strategic Planning Committee chair. The AI Board of Directors will fill the current vacancy at its next meeting Nov. 3 and 5 in Miami. The member selected will serve through Dec. 31, 2011.
Nominations are limited to members in good standing who hold one or more AI designations. Other requirements include not being subject to a punishable disciplinary action by the AI in the past five years; holding the status “continuing education completed”; and having a minimum of one year experience as an AI committee, project team or panel member.
Desirable qualifications are: previous experience on planning bodies of other organizations; previous AI board experience; chapter committee and/or officer experience.
Members who are interested in being considered by the board for this position should e-mail Appraisal Institute Director of Governance Darlene Grass at
Appraisal Institute President Leslie Sellers, MAI, SRA, conducted a tour of media outlets in Washington, D.C., on Oct. 20, meeting with national real estate reporters, editors and columnists to help increase coverage and enhance the reputation of the organization, its members and the profession.
“It’s important that we aggressively share our message that competency counts,” Sellers said. “By communicating with representatives of the country’s top media outlets, the Appraisal Institute can spread the word that lenders and others should rely on competent, qualified real estate appraisers to perform valuations for risk management.”
Sellers and Appraisal Institute Director of Communications Ken Chitester met with six representatives of four publications or media groups: National Mortgage News, Inside Mortgage Finance Publications and Bureau of National Affairs’ Real Estate Law and Industry Report, in addition to the Washington Post Writers Group.
The meetings were similar to Sellers’ three-day media tour of New York City in April, when he and Chitester met with 11 representatives of nine media outlets, in addition to Appraisal Institute Designated members at global appraisal and lending institutions.
Sellers’ ongoing efforts are intended to enhance the reputation of the Appraisal Institute, its members and the profession by further boosting media coverage of the AI and its members. During the third quarter, the Appraisal Institute and its members were included in 382 stories (up from 92 in third quarter 2009) that appeared in 289 media outlets (up from 73 in the third quarter last year), according to an internal AI report.
AI and its members appeared in stories that potentially were read, seen or heard more than 401 million times in the third quarter, an increase from 35 million during the period last year. This year’s third-quarter coverage was valued at more than $235,000, according to an AI vendor’s propriety formula. (The figure was not tracked last year.)
The Appraisal Institute and its members appeared in nine of the nation’s 10 largest newspapers during the third quarter, and coverage appeared in at least 117 cities (not counting statewide media outlets) and at least 37 states (not including national outlets). A July 28 story in USA Today on foreclosure sales that quoted Sellers reached a potential print and online audience of 11.4 million readers.
During the third quarter, 41 percent of the stories including AI and its members were on local issues, 34 percent were about market trends and 12 percent addressed legislative or regulatory issues. Nearly two-thirds (63 percent) appeared in online media outlets and one-third (33 percent) ran in newspapers.
The Appraisal Institute and the American Bankers Association will host a Nov. 16 telephone briefing titled “How to Use Market Data: Solutions for Hard to Value CRE Assets.”
In this live presentation, bankers and appraisers will explore advanced methods and techniques employed by real estate appraisers in today's commercial real estate market. Particular emphasis will be placed on valuing incomplete subdivisions, land and condominium projects, with case studies and illustrations as examples. Participants will be presented with fundamental appraisal review techniques and residual techniques employed by expert appraisers.
Participants will learn: fundamental appraisal review techniques and procedures; an appropriate "scope of work" for hard to value assets; fundamental valuation techniques for finished lots and condominiums, illustrated by detailed case studies; an illustration of the importance of market analysis and highest and best use; how to review and develop support for data needed in valuing finished lots; and how to identify sources of discount rates for finished lots and condominium projects and adjust older sales when valuing raw land.
The cost for the telebriefing is $255 per site license for ABA and AI members; $385 per site license for nonmembers. Each site license entitles participants to one phone and one Internet connection at one location where an unlimited number of listeners can participate. The two-hour telebriefing starts at 2 p.m. ET and is approved for two hours of AI continuing education credit. It is not approved for state CE credit.
For more information and to register, visit
Two one-day “green” courses from the Appraisal Institute, a recognized leader in green valuation, will premiere in January in Chicago: “Introduction to Green Buildings: Principles & Concepts” and “Case Studies in Appraising Green Residential Buildings.”
“Introduction to Green Buildings: Principles & Concepts,” premiering Jan. 24, focuses on the evolution of green buildings, the concept of sustainability in buildings, and the principles, practices and components that distinguish sustainable from traditional buildings.
Topics that will be covered include: competency and Uniform Standards of Professional Appraisal Practice implications of appraising green buildings; the evolution and six elements of green buildings; benefits and costs of green buildings; green building certification and ratings programs for energy conservation and sustainability; primary areas of green reporting; highest and best use implications; and the three approaches to value in the context of green buildings.
Course developer H. Taylor Watkins, an AI Associate member, is the president of Watkins & Associates, a Portland, Ore.-based appraisal firm. The firm has specialized in data collection on and appraisal of green properties in the Portland area for more than seven years.
“Case Studies in Appraising Green Residential Buildings,” premiering Jan. 25, willuse in-depth, real-life case studies from 2009-2010 provided by builders, real estate agents and appraisers.
Topics include: ways to assess potential contributory value of green or energy-efficient items; how gross rent multiplier analysis and paired analysis support adjustments for green building; issues requiring careful verification of comparables for green buildings; and the three approaches to value in context of green residential buildings.
The developer, Sandra Adomatis, SRA, has been appraising Green Certified and Energy Star houses in Florida since 2006. She has co-presented seminars on the valuation of high performance houses with Energy Star and was a reviewer for the Appraisal Institute’s “Valuation of Green Residential Properties” seminar. Adomatis developed a seminar, “Inspecting the Residential Green House,” and has spoken about valuing high performance houses at home builder association meetings across Florida and Arkansas.
Each course is approved for eight hours of Appraisal Institute continuing education credit (including one-hour exam). The cost for each course is $300 for AI members; $350 for nonmembers. To register for “Introduction to Green Buildings,” visit
. To register for “Case Studies,” visit
Gov. Jeremiah Nixon appointed Ann Nunn Jones, SRA, to the Missouri Real Estate Appraisers Commission on Oct. 18.
The board, under the umbrella of Missouri’s Division of Professional Registration, is responsible for regulating and licensing real estate appraisers in accordance with federal laws, as well as with Missouri-specific rules and policies. The board also investigates complaints against real estate appraisers and enforces disciplinary actions.
Nunn Jones, of Jefferson City, Mo., has been active in lobbying for appraisal legislation including the drafting of mortgage fraud legislation pertaining to appraisers. She continues to serve as a disciplinary hearings officer for the Supreme Court of Missouri, has been involved on the Board of Adjustment for the City of Jefferson, Mo., and was appointed to the state House of Representatives Housing Task Force.
“It is the responsibility of Designated appraisers to be involved on a grassroots basis in our profession to ensure it continues to be viable, safe and strong,” Nunn Jones told Appraiser News Online.
Nunn Jones established Appraisal Associates Nunn & Young LLC in 1999, before which she was co-owner of The Nunn Company. She has served on several committees including the AI’s Greater St. Louis Chapter’s board of directors. She is the current chair of the Missouri Association of Realtors Appraisal Section, has served on the Missouri Appraiser Advisory Council’s board since 1992, and continues to be involved in Missouri Housing Industry Alliance.
Jay Delich, SRA, has been inducted into the Worldwide ERC Hall of Leaders – becoming only the 45th such recognized person since the program was established in 1989, according to the association’s Oct. 21 news release.
Worldwide ERC members oversee, manage, or support U.S. domestic and international employee transfer from a variety of perspectives, including real estate, human resources, recruiting, government, military, financial services, moving, counseling and consulting.
“The Hall of Leaders induction was magnificent, and I am so honored,” Delich told Appraiser News Online. “This award denotes an achievement of a career invested in the relocation family as a relocation appraiser specialist.”
Delich, president of Arizona Appraisal Team LLC, began his appraisal career in Scottsdale, Ariz., in 1972, and received his SRA designation in 1976. He is a frequent speaker and author on appraisal issues, focusing his attention on education and training to promote appraisal guidelines and professionalism. In 2008, Delich was named to serve on the Worldwide ERC Board of Directors.
In connection with the announcement, 2010 Worldwide ERC Chair Al Blumenberg noted that Delich has been instrumental in defining relocation appraisal. “Over the past 15 years, the Worldwide ERC appraisal report has been revised three times, and each time, (Delich) was a key part of the task force overseeing the process, receiving multiple President’s Awards for his work,” he said.
Headquartered in Arlington, Va., with offices in Brussels, Belgium and Shanghai, Worldwide ERC specializes in relocation in the U.S. and in major global markets. The Service Recognition Awards program recognizes the efforts of its members with three awards — Meritorious Service Awards, Distinguished Service Awards, and induction into the Worldwide ERC Hall of Leaders.
The Financial Accounting Standards Board’s Oct. 28 webinar, “Proposed Changes to Lease Accounting,” will discuss changes to lease accounting proposed Aug. 17 by FASB and the International Accounting Standards Board in their joint leases project.
Panelists Kevin Stoklosa, a FASB assistant director; Danielle Zeyher, a FASB project manager; and FASB member Larry Smith will discuss the exposure draft and some initial stakeholder reactions gathered as part of the Boards’ outreach activities.
The accounting standard setters are accepting public comment on their proposal until Dec. 15. To access the exposure draft, visit
The free one-hour webinar will be presented at noon CDT on Oct. 28. For more information and to register, visit
John Doyle, MAI, spoke about market trends and comparability in multi-family housing at the National Leased Housing Association’s conference Oct. 22 in Washington, D.C.
Using a 12-city, four-year survey of unemployment rates, vacancy rates and changes in rental rates, Doyle provided a macro-economic perspective to assert that unemployment adversely affects occupancy and rental rates. Therefore, if the owner's local market is experiencing high unemployment, they can anticipate a markdown from contract rents to market rent, Doyle said.
Doyle also addressed how to evaluate Rent Comparability Studies in order to prevent the owner from buying a boomerang property or triggering a Housing and Urban Development-sponsored RCS. Doyle provided a 10-point checklist to critique the RCS and said that just because the number looks "good" does not mean it should not be checked for reasonableness and rigor.
“In the end, it is better to take a haircut that is understood and financially feasible than to experience rejection and live with HUD's RCS and possible restructuring through the Office of Affordable Housing Preservation,” Doyle said. He recommends that owners start planning for Section-8 contract renewal two years prior to the expiration date.
At this year’s Greenbuild Residential Summit, scheduled for Nov. 18 in Chicago, Sandra Adomatis, SRA, will lead a session on the art of valuing green houses, giving special attention to how all parties involved in green construction can
network to assist in producing credible valuations.
“My emphasis will be on how builders, developers, realtors, lenders and appraisers can network to educate and assist in the valuation process,” Adomatis told Appraiser News Online. “The more we communicate, the more quickly the current valuation difficulties experienced in the market will fade.”
Adomatis, a frequent speaker at homebuilder associations across the country on the topic of high performance houses, is the owner of Adomatis Appraisal Service in Punta Gorda, Fla. She is the current vice chair for the AI’s National Education Committee. Her experience includes three years as chair of the Appraisal Institute’s Residential Demonstration Report Writing Committee, and she served as 2009 president of the West Coast Florida Chapter.
The annual Greenbuild Residential Summit, hosted by the U.S. Green Building Council, brings together leaders in the residential building industry for innovative education, networking and dialogue. Education sessions will cover a wide range of topics from green building science to marketing. To learn more about the summit or to register, visit
A Nov. 12 seminar will address the impact this spring’s BP oil leak has had on Florida, including the amount of damage the state will suffer in money and jobs; best, worst and most likely outcomes; minimizing potential damage; and determining controllable causal variables.
"Oil Leak Damage Scenarios for Florida 2010-2012," is being sponsored by the Southeast Florida Chapter of the National Association for Business Economics and the Economics and Finance Club of Nova Southeastern University's H. Wayne Huizenga School of Business and Entrepreneurship.
The speaker, David Goldenberg, Ph.D., is currently a consulting economist specializing in establishing and measuring business damages. He is a co-founder and chairman of Systematic Forecasting, Inc., an international business economics and strategy consultancy. Goldenberg has published three books, numerous articles and many commercial reports.
The Nov. 12 seminar will be held from 8-11 a.m. at Nova Southeastern University’s School of Business and Entrepreneurship in Ft. Lauderdale/Davie, Fla. The NABE member price is $10 before Nov. 10, $15 thereafter; nonmember price is $15 before Nov. 10, $20 thereafter. For more information and to register, visit
The International Real Estate Society is calling for nominations for its achievement, corporate excellence and service awards. The awards are available to members and nonmembers.
The IRES Achievement Award recognizes outstanding achievement in real estate research, education and practice at the international level. The IRES Corporate Excellence Award recognizes outstanding corporate leadership at the international level. The IRES Service Award identifies outstanding service to the International Real Estate Society and/or sister real estate societies.
The nomination process itself is restricted to IRES member societies, of which the Appraisal Institute is not. For a list of member societies, visit www.iresnet.net/societies.htm.
Nomination submissions should include a detailed letter and any supporting documentation clearly identifying the nominee’s achievements and why the nominee should receive the award. Nominations should be submitted to Paloma Taltavull, IRES Awards Committee Chairperson, at firstname.lastname@example.org by April 29. Awards will be presented at the Asian Real Estate Society Annual Meeting in July 2011.
U.S. Bankruptcy Judge Allan Gropper approved General Growth Properties Inc.'s plan to exit from bankruptcy Oct. 21, preparing the mall giant to split into two companies and sell more than $2.1 billion of new stock in November, The Wall Street Journal reported Oct. 22.
The exit will bring a 19-month stretch in bankruptcy to an end. During this period, General Growth extended the due dates of roughly $15 billion of mortgages on its 200 U.S. malls and rejected buyout offers from larger rival Simon Property Group Inc, the Journal reported.
In addition, General Growth lined up $7 billion of capital from new investors led by Brookfield Asset Management Inc. to trim its debt. In return, those investors will receive General Growth stock collectively amounting to two-thirds of the company's total upon its bankruptcy exit. After exiting from bankruptcy, General Growth will still carry roughly $20 billion of debt, the Journal reported.
Upon its exit, General Growth will split into two companies. The larger company will own 185 U.S. malls and will keep the General Growth name. The smaller spinoff, Howard Hughes Corp., will hold many of General Growth's riskier assets, such as its residential-development division and a handful of malls, according to the Journal.
Although its bankruptcy exit plan was approved, General Growth is still facing two challenges. General Growth is seeking a new chief executive officer and an operations chief. It also plans to sell as many as 215 million shares in November, replacing up to half of the capital commitments from Fairholme Capital Management, Pershing Square Capital Management LP and Teachers Retirement System of Texas at higher prices than the $10-a-share those investors agreed to pay.
The Federal Deposit Insurance Corp. on Oct. 22 closed seven banks in Florida, Georgia, Illinois, Kansas and Arizona, boosting the number of U.S. banks that have fallen so far this year to 139, the Associated Press reported Oct. 23. Last year saw 140 bank shutdowns.
The FDIC took over the banks, the largest of which was Hillcrest Bank, based in Overland Park, Kan., with $1.6 billion in assets. Hillcrest Bank N.A. agreed to share losses on $1.1 billion of its assets; its failure is expected to cost the deposit insurance fund $329.7 million, the AP reported.
The other shuttered banks were: First Bank of Jacksonville (Fla.), with $81 million in assets; Progress Bank of Florida, based in Tampa, with $110.7 million in assets; First National Bank of Barnesville (Ga.), with $131.4 million in assets; Gordon Bank of Gordon, Ga., with $29.4 million in assets; First Suburban National Bank in Maywood, Ill., with $148.7 million in assets; and First Arizona Savings, based in Scottsdale, with assets of $272.2 million, the AP reported.
Florida, Georgia and Illinois are among the worst hit states by bank collapses. The Oct. 22 closures brought the total 2010 bank failures in Florida to 27 and to 16 each for Georgia and Illinois, the AP reported.
The bank shutdowns have drained billions of dollars out of the deposit insurance fund, which fell into the red in 2009. As of June 30, its deficit stood at $15.2 billion. The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014, according to the AP.
Richard Hagar, SRA, of the Appraisal Institute’s Seattle Chapter, was featured Oct. 17 on NPR’s Weekend Edition – which is aired on nearly 600 stations with a combined on-air and online audience of more than 7.6 million – in a story on the recent bank foreclosure moratorium.
While individuals who have lost their homes through foreclosure will likely not get their homes back, Hagar said, lawsuits are piling up to get banks to compensate those who’ve already lost them. “While they will likely not get their homes back, there is probably a very good chance that they will be able to receive damages,” Hagar told NPR. “And these damages may reach into the billions.” The story focused on how the moratorium could cause more real estate transition to fall though as lenders freeze transactions and states investigate banks for potential fraud.
Also appearing in national media coverage the week of Oct. 18 was Bill Pittenger, MAI, SRA, who was featured in Valuation Review, and Jonathan Miller, Associate member, who was cited by MoneyNews.com and Bloomberg.com. Miller also appeared in Newsday (Long Island, N.Y.) and Crain’s New York Business.
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 appearing in local media coverage last week included: Todd Flanders, MAI, Knoxville (Tenn.) News Sentinel; William LaChance, MAI, SRA, New England Real Estate Journal; Fitzhugh Stout, MAI, Charlotte (N.C.) Observer; Mark Johnstone, MAI, Jackson (Tenn.) Sun; Jack Morgan III, Associate member, and Earl Worsley Jr., MAI, Island Gazette (New Hanover County, N.C.); Adam Preuss, Associate member, TCPalm.com (Stuart, Fla.); Carole Laval, SRA, The Fresno (Calif.) Bee; Ann Nunn-Jones, SRA, InfoZine.com (Kansas City, Mo.); David Englund, MAI, SRA, Citybiz.com (Houston); and Albert DiPentino, MAI, SRA, Miami Herald and Lexington (Ky.) Herald-Leader.
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
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.
The Appraisal Institute regrets the passing of the following Designated members who were reported to Appraiser News Online in October:
Hop Bailey Jr., MAI, Knoxville, Tenn.; Walter Barczewski, MAI, Wilmington, Del.; Curtis R. Bottemiller, MAI, Vancouver, Wash.; Joseph L. Manzi, MAI, SRA, Burlington, N.J.; William M. McClellan, MAI, Arlington, Texas; Francis R. Montello Jr., MAI, SRA, Portland, Maine; J. Bill Little, MAI, Norman, Okla.; Steven M. Randall, MAI, SRA, Las Vegas; and Harry A. Taylor Jr., MAI, Sarasota, Fla.
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,
, which is continually updated.