The Appraisal Foundation said it will create a new independent board that will focus on providing timely voluntary guidance to appraisers on emerging valuation issues occurring in the marketplace. According to a recent news release from the organization, the Appraisal Practices Board will join the Appraiser Qualifications Board and the Appraisal Standards Board in the Foundation’s mission to promote professionalism in appraising.

“In unanimously supporting this concept, the Board of Trustees strongly believes that this is the best avenue for issuing voluntary guidance to appraisers,” Paul Welcome, chair of The Appraisal Foundation Board of Trustees, said in the release. “We believe that this is the right thing to do for the profession, that it is the right time to do it and that we are the right organization to undertake the task.”

The new board will be responsible for monitoring market surveys to identify current issues affecting the profession. Once emerging issues are identified, the Board will establish panels consisting of volunteer subject experts who will be responsible for drafting guidance on the issues, which will be reviewed and approved by the board.

The Foundation expects the Appraisal Practices Board to be in operation by July 2010. Individuals interested in serving on the Board or volunteering as subject experts are encouraged to visit www.appraisalfoundation.orgafter the first of the year for more information.

Obama administration officials announced a new federal task force Nov. 17 to combat financial fraud and pursue criminals who bilked investors and consumers during the financial crisis. The Financial Fraud Enforcement Task Force, which was created by an executive order, will look into fraud related to securities, stimulus spending, mortgage lending and modification, as well as other issues, according to The Washington Post.

The task force is expected to go after what Attorney General Eric Holder Jr. described at a news conference as "unscrupulous executives, Ponzi scheme operators and common criminals."

In 2002, under the Bush administration, a similar task force was created that went after corporate malfeasance following the accounting scandals at Enron Corp. and WorldCom Inc., according to the Los Angeles Times.

The Times reported that the Obama administration task force is set to take advantage of new anti-fraud powers and funding enacted by Congress last spring. The Fraud Enforcement and Recovery Act authorized $245 million annually in 2010 and 2011 to hire hundreds of prosecutors, agents and other federal officials to pursue financial fraud. It also strengthened and expanded money laundering laws and other statutes that apply to fraud committed by private mortgage lenders. The task force is expected to use its funding and powers to not only prosecute, but to help ensure that the type of fraudulent activities that led to the current financial crisis are not repeated by a new set of industry players.

The Justice Department will lead the new task force, and officials from the Treasury Department, Securities and Exchange Commission and the Department of Housing and Urban Development will help oversee it. The group is planning to meet in the next 30 days, according to the Post.

A second-appraisal requirement that had been issued by the Federal Housing Administration at the height of the housing crisis has been repealed for loans that exceed $417,000 in declining markets and for cash-out refinances. A second-appraisal requirement will remain when a property is resold between 91 and 180 days following acquisition by the seller, if the resale price is 100 percent (or more) higher than the price paid by the seller when the property was acquired.

The policy changes can be found in FHA Mortgagee Letter 09-48, which rescinds two previous Mortgagee Letters on the subject.

In an interview with Mortgage Wire at the National Association of Realtors' convention Nov. 14-15 in San Diego, FHA Commissioner David Stevens said that the FHA had not seen any benefit from the two-appraisal mandate and that it “really slowed down the [FHA loan] process.”

The two-appraisal mandate, which required two appraisals prior to an underwriting decision, had long been opposed by industry groups such as the National Association of Realtors.

The Appraisal Institute Board of Directors approved the 2010 budget during its fourth regular meeting of the year Nov. 12-13, held in conjunction with the historic International Valuation Congress in Cancun, Mexico.

The budget includes the first multi-category member dues increase in seven years. Dues next year will increase $50 for practicing MAI Designated members, $40 for practicing SRA Designated members and $15 for practicing Associate, Trainee and Affiliate members. Other members are not scheduled to see dues increases in 2010. Additionally, the Board voted not to release a residential Supplemental Information for Pricing Purposes (SIPP) form. The Appraisal Institute will refer members interested in doing appraiser price opinions to software programs/vendors.

In other action, President-Elect Leslie R. Sellers, MAI, SRA, was sworn in as president for next year by 2009 President Jim Amorin, MAI, SRA. Also sworn in as 2010 elected officers were Joseph C. Magdziarz, MAI, SRA, as president-elect; Sara W. Stephens, MAI, as vice president; and Amorin as immediate past president. As he completed his term on the Board, 2009 Immediate Past President R. Wayne Pugh, MAI, was lauded for his efforts as an AI officer for the past four years.

The Board also heard presentations from David Wilkes, incoming chair of The Appraisal Foundation, and Julio Torres Coto, a member of the International Valuation Standards Council’s Professional Board.

The Board also voted to:

• Create Chapter, Regional and National Associate member committees. 
• Include members’ continuing education statuses in the member directory beginning Jan. 1, 2011.
• Include any future publishable disciplinary actions in the member directory.
• Require each of the 10 Regions to meet four times next year, prior to each Board meeting, with one of those meetings to be held face-to-face.
• Request further research before deciding whether, and if so how, to create a designation for review appraisers.

The Board voted to send to 45-Day Notice the following:

• A proposal to require that Associate members complete 70 hours of continuing education every five years.
• Proposed amendments to the Code of Professional Ethics prohibiting members from knowingly making or repeating false or misleading statements about the Appraisal Institute and its members.
• Proposed amendments to the Bylaws and Regulations requiring suspension up to six months of Associate members who fail to complete Business Practices and Ethics, and Uniform Standards of Professional Appraisal Practice requirements.
• A proposal to require that the Board’s Associate member be elected by the national Associate Member Committee.

The Board also elected the following members:

• Eric Schwartz, MAI, SRA, as chair of the Strategic Planning Committee.
• Ralph Griffin, MAI, as a member of the Strategic Planning Committee.
• Nick Tillema, MAI, SRA; Sara Stephens, MAI; and John Fiser, MAI, to the Appraisal Institute Relief Foundation’s Board of Directors.
• Robert Taylor, MAI, SRA; J. Brian O’Donnell, MAI; Terry Oetzel, MAI; and Larry Colorito, MAI, to the Appraisal Institute Education Trust Fund’s Board of Trustees.

The next Board meeting is scheduled for Feb. 4-5 in Nashville, Tenn.

Cancun, Mexico, is a symbol of long-term economic resilience, according to a local tourism developer who delivered the International Valuation Congress’s keynote address Nov. 12 to about 350 Mexican, American and other attendees at the Fiesta Americana Condesa Cancun hotel. The Appraisal Institute co-sponsored the International Valuation Congress with the Federation of Valuation Colleges, Institutes and Societies of the Mexican Republic, A.C. (FECISVAL).

“In times where we are worried about the future, the story of Cancun can give us confidence,” said Sigfrido Paz Paredes, project development adviser of Tres Rios, an eco-friendly tourist retreat in Riviera Maya, located just south of Cancun.

Paredes noted that Cancun’s tourism industry has survived two Category 5 hurricanes (Gilberto in 1988 and Wilma in 2005) that hit the Yucatan Peninsula and that Cancun also has endured the economic aftermath of the Sept. 11 terrorist attacks on the United States. Despite dips in visitors and spending after each event, Cancun has recovered each time, Paredes said, adding, “We are resistant to all these problems.”

The Mexican government in 1968 made tourism a national priority, focusing on Cancun’s “sun, sand and sea” as a Caribbean destination – despite that the area was then nothing more than a jungle, Paredes said. Public and private funding allowed construction to begin in 1970, with the first hotel completed in 1974.

Now more than 3.2 million visitors come to Cancun each year, staying at its more than 140 hotels and spending $2.3 billion annually, Paredes said, making the area Mexico’s top tourist destination. The tourism industry, directly and indirectly, has created 100 million jobs in Mexico. Now Cancun has the country’s fifth highest per capita income, Paredes noted, adding that in 1968 it had the nation’s lowest. The city’s airport ranks second in Mexico for total travelers and first for international flights.

In the wake of Hurricane Wilma’s damage, Cancun’s number of hotel rooms fell from 27,522 in 2004 to 11,192 in 2005 … but rebounded to 23,824 rooms the following year, topping 28,000 last year. Cancun’s post-Wilma construction has led to a plethora of new hotel rooms, Paredes said. “At the end, we said Wilma was the best thing to happen to Cancun – because it caused us to renew,” he said.

More recently, Cancun’s hotel occupancy fell below the 70 percent benchmark; it was 71 percent in 2008 and fell to 65 percent this year. Even so, Paredes said, “Next year is going to be a record year.”

Appraisal Institute President Jim Amorin, MAI, SRA, honored four AI members by bestowing upon them the prestigious President’s Award during a joint regional reception Nov. 10 in Cancun, Mexico.

Recipients of this year’s President’s Award were: Ted Anglyn, MAI, of Marietta, Ga.; Rick Borges, MAI, SRA, of Seymour, Ind.; David Riach, MAI, of Irving, Texas; and Bonnie Roerig, MAI, of Denver.

Anglyn has authored real estate books for the Appraisal Institute and is frequently called upon to teach seminars based on them. His fifth book, “Appraising Distressed Commercial Real Estate – Here We Go Again,” was released in March 2009. He is recognized for numerous articles written for The Appraisal Journal and Taxation for Accountants. “During my year as president, Ted has served as the Appraisal Institute adviser on matters relating to distressed assets,” Amorin said.

In recognition of Anglyn’s past efforts and contributions to the Leadership Development Advisory Council, the Appraisal Institute has bestowed at the event an annual leadership award in his name for the past 10 years. Among Anglyn’s service to the organization: 717 Business Model Project Team, Board of Directors, Continuing Professional Development Subcommittee, Finance Committee, General Appraiser Board, Demonstration Reports Subcommittee, General Appraiser Board Demo Reports Subcommittee, National Nominating Committee Alternate, Orlando Conference Organizing Committee, Seminars Division, Seminars Subcommittee and LDAC predecessor Young Advisory Council (chair, vice chair, discussion leader and member). He has also served in many capacities at the Region and Chapter levels, including as the Atlanta Chapter president in 1999.

Borges’s service to the Appraisal Institute began with the organization’s founding in 1991, when he served on the General Appraiser Board Admissions Committee. “When I think of Rick, these words come to mind: dedication, experienced, knowledgeable, commitment and most of all, a gentleman,” Amorin said.

Borges has served in the following roles: Admissions & Designation Qualification Committee, Board of Directors, Demo Appraisal Grading Panel, General Admissions Project Team, General Appraiser Board Demo Reports Subcommittee, General Appraiser Council, National Committee of Regional Chairs, National Nominating Committee Alternate, Real Estate Appraiser Group Insurance Trust and Regional Educational Liaisons Subcommittee. He also served as president of the Hoosier State Chapter, in addition to other Region and Chapter service: Admissions Chair, Associate Guidance Chair (General), Associate Guidance Chair (Residential), Membership Admissions, Development & Retention Committee, Regional representative, Chapter secretary and Regional chair.

Riach serves as the chair of the Admissions and Designation Qualifications Committee and as a member of the Strategic Planning Committee. “The first year of David’s chair tenure on ADQC has been a monumental year,” Amorin said. “The Board asked ADQC to study many programs and look at constraints in the profession that have mounted as the year progresses.”

Riach served on the Board of Directors for 10 years, longer than any other member in the history of the organization. He also has served as chair of the Audit Committee, member of the Audit Committee, Board of Directors liaison to the Ethics and Counseling Committee, General Appraiser Council Admissions Committee member and on the National Committee of Regional Chairs, National Nominating Committee and Valuation 2000 Project Team.

Having served the Appraisal Institute since its 1991 founding, Roerig is currently serving her second year as chair of the Appraisal Standards Committee. “As Chair of the ASC, Bonnie attended most of The Appraisal Foundation’s Appraisal Standards Board meetings over the past two years,” Amorin said. “She delivered Appraisal Institute comments to the exposure drafts distributed by The Appraisal Foundation.”

Roerig also serves on the Strategic Planning Committee. Among her past service to the organization: Commercial Database Study Group, Appraisal Journal Editorial Board (chair and member), Appraisal Journal Editorial Subcommittee, Appraisal Standards Committee, Board of Directors, Educational Publications Committee, Ethics Administration Division, Executive Committee, Faculty Division – General and Residential Appraiser Boards, Finance Committee, General Appraiser Board (chair and member), General Appraiser Board Admissions Committee, General Demo Reports Subcommittee (chair and member), Instructor Subcommittee, Leadership Development & Nominating Committee, National Nominating Committee, Planning Committee, Professional Ethics and Counseling Committee, Qualifying Education Committee, Research Paper Project Team, Task Force on Review Appraisers and University Relations Subcommittee.

Other activities at the joint regional reception in Cancun included a video tribute saluting Immediate Past President Wayne Pugh, MAI, whose term of service on the AI Board of Directors ends Dec. 31.

Also honored at the event was Board member Shauna Elmer, SRA, who received her designation from Amorin.

A Mexican armed forces drill team, national anthems and welcoming remarks highlighted the International Valuation Congress’ opening ceremonies attended by approximately 350 appraisers from several countries Nov. 12 in Cancun, Mexico.

The Appraisal Institute, along with the Federation of Valuation Colleges, Institutes and Societies of the Mexican Republic, A.C. (FECISVAL), co-sponsored the International Valuation Congress at the Fiesta Americana Condesa Cancun hotel.

Undeterred by the non-event that Hurricane Ida proved to be, other Appraisal Institute activities in Cancun included the AI Board of Directors’ fourth-quarter meeting (see separate story), joint and individual regional committee meetings, Strategic Planning Committee and International Relations Committee meetings, and AI education classes, including “An Introduction to Valuing Green Buildings,” taught by Timothy Lowe, MAI, and “Appraising Distressed Commercial Real Estate,” instructed by Ted Anglyn, MAI.

Amidst flashing camera lights, a representative of Quintana Roo Governor Felix Gonzalez officially declared the International Valuation Congress open. (Cancun is located in the southeastern Mexican state of Quintana Roo.) The opening ceremonies also included comments from Appraisal Institute President Jim Amorin, MAI, SRA. After greeting attendees in Spanish, Amorin concluded, “Howdy, y’all – I’m from Texas” to robust applause.

The ceremonies opened with a presentation of the Mexican flag by an armed forces drill team, which then led attendees in a bugle-and-drum rendition of the host nation’s national anthem. Appraisal Institute Chief Executive Officer Fred Grubbe then led attendees in singing “The Star-Spangled Banner.”

Other IVC activities in Cancun included an opening night reception highlighted by dancers in traditional Mexican attire; a boat cruise to Isla de Mujeres, a nearby island located in the Gulf of Mexico; a luncheon program featuring an eight-piece mariachi band; and a closing night dinner dance that featured a children’s dance troupe in traditional Mayan outfits and later a rock band that played as attendees jammed the dance floor.

The Appraisal Institute and its sister appraiser organizations have sent a letter to the House Appropriations Committee questioning the validity of a statement found in the recent Conference Report of the Interior Appropriations Bill. The statement criticizes delays in obtaining appraisals and calls for the Interior Department to revisit the consolidation of Department-wide appraisal services.

“We are unaware of any evidence that would indicate the performance of the Appraisal Services Directorate is worse than the previous system where appraisal management was scattered throughout individual bureaus. In fact, our understanding is that tracking data from the ASD shows that the length of time between ordering an appraisal and the final review has consistently declined since the founding of ASD,” the groups wrote.

The appraisal organizations pointed out that delays can be caused by factors outside of the appraisal process. The groups suggested that the Appropriations Committee do a comprehensive review of the responsiveness that explores all aspects of valuation request, including the Bureau realty function and contracting as well as the ASD.

They also urged the Committee to consider factors other than turnaround time. “While responsiveness is an important factor, what is far more important is that the Department of Interior obtains quality appraisal reports from professionally trained, certified and accredited real estate appraisers,” said Bill Garber, Appraisal Institute director of government and external relations. “Given that significant taxpayer funding is involved with ASD projects, it is our belief that quality should reign over quantity in assessing any critical risk management and control and audit function like that conducted by ASD. Further, the appraisal assignments of the ASD are oftentimes extremely complex, and due diligence is required of the appraiser – and the ASD – to ensure the highest quality of work . ”

For more information on the Interior Appropriations Bill, visit http://appropriations.house.gov/Subcommittees/sub_ienv.shtml .

Dennis Lockhart, president and chief executive officer of the Federal Reserve Bank of Atlanta, told an audience at the Urban Land Institute’s recent conference that economic conditions will recover at a slow pace because of increasing commercial real estate defaults, Bloomberg News reported.

However, Lockhart added that although the climate of commercial real estate “is very worrisome for parts of the banking industry, I don’t see it posing a broad risk to the financial system. … As the recovery develops, the CRE problem will be a headwind, but not a show stopper, in my view.”

With all 12 Federal districts reporting weak or declining commercial real estate conditions, policymakers have voiced concerns that commercial loan defaults may derail an economic recovery. In the second quarter, 6 percent of all commercial real estate loans — totaling $110 billion — were in default, according to Bloomberg. Data collected by Bloomberg found that commercial real estate loan losses and write-downs around the globe totaled more than $1.6 trillion since the beginning of 2007.

“My baseline forecast is for a relatively subdued pace of growth beyond the current quarter and through the medium term,” Lockhart told conference attendees. “The potential sluggishness of the recovery partly reflects certain unique characteristics of this recession.”

In a separate speech to Lambda Alpha International’s Phoenix Chapter, Janet Yellen, president of the Federal Reserve Bank of San Francisco, aired similar sentiments. “All indications are that commercial real estate will continue weighing down the recovery going forward,” Yellen told the audience, according to NASDAQ’s In Focus News.

Her statement echoed the findings in PricewaterhouseCoopers/Urban Land Institute’s recent commercial real estate survey, Emerging Trends in Real Estate 2010, which indicated that the commercial sector will not hit bottom until late 2010 or 2011. (See Nov. 11 Appraiser News Online story, “CRE Surveys Indicate at or Near Bottom; Recovery Beginning 2010.”) Respondents also noted that commercial prices will fall between 40 to 50 percent below 2007 peaks.

Recent economic trends and conditions prompted federal regulators to issue guidance on commercial real estate to financial institutions last month, with a focus on sound practices for loan modifications, Bloomberg reported. According to the central bank, fewer financial institutions tightened lending standards for businesses and consumers in the third quarter.

According to data compiled by the Commerce Department, the gross domestic product increased 3.5 percent during the third quarter from the same period a year ago, while household spending jumped 3.4 percent, Bloomberg reported. To keep up the momentum, the Fed restated its plan to keep interest rates near zero for “an extended period” as long as inflation remains stable and unemployment rates decline, Bloomberg reported.

Appraisal Institute Chief Executive Officer Frederick H. Grubbe participated in a meeting Nov. 16 with fellow members of the Federal Reserve Bank of Atlanta’s Real Estate Advisory Council. The group provides advice and counsel on real estate issues to Dennis P. Lockhart, president and chief executive officer of the Sixth District Federal Reserve Bank.

The Council’s discussions focused on current conditions and short-term outlook for the real estate market, capital market issues and other topics.

The discussion on current conditions included whether there was evidence that supports a near-term economic recovery, in addition to an analysis of current credit market conditions for loans in residential and commercial real estate and for loans in acquisition, development and construction. Talks also centered on whether, and if so how, banks have modified loan requirements; recent changes in residential and commercial real estate market fundamentals; and what is driving residential loan demand.

During the capital market issues discussion, Council members discussed whether recent money flows among asset classes give any sign of the market’s risk appetite, liquidity or sector performances; what recent notable developments have occurred in markets such as CDOs, municipals and auction rate securities; and how critical continued intervention by the Federal Reserve is to the sustainability of the recovery in financial markets.

An independent audit released last week indicated the Federal Housing Administration’s reserve, which covers losses on mortgages the agency insures, fell to 0.53 percent – well below the 2 percent ratio mandated by Congress, according to a report by CNNMoney.com. "They have a horrendous foreclosure problem, and it's getting worse," said Edward Pinto, a former chief credit officer for Fannie Mae.

Some industry experts suggest the FHA may require a federal bailout. However, CNNMoney.com reported that Housing Secretary Shaun Donovan said the agency’s overall reserves total $31 billion, more than 4.5 percent of its required ratio. "We certainly don't need any extraordinary assistance today," Donovan said.

In fiscal 2009, FHA guaranteed more than $360 billion in single-family mortgages, more than four times the amount in fiscal 2007, according to CNNMoney.com. However, the agency saw an increase in delinquencies as the economy spiraled downward. According to the Mortgage Bankers Association, roughly 14.42 percent of FHA-insured loans were past due in the second quarter, up 0.58 percent from a year ago. Furthermore, almost 3 percent were in foreclosure, up 0.22 percent, CNNMoney.com reported.

FHA Commissioner David Stevens said the FHA is taking steps to return the agency to solid financial footing by monitoring risks and exposure to fraud more closely. In addition, the agency is considering increasing insurance premiums and down payment requirements, while maintaining its mission to support homeownership.

Some experts are advocating that FHA underwriting standards be tightened and that the agency raise insurance premiums, according to CNNMoney.com. Pinto suggested the agency should raise the down payment requirement from its current level of 3.5 percent to 10 percent, as well as require lenders to co-insure loans.