The Winter 2008 issue of The Appraisal Journal examines the distinctive characteristics of special property interests – a key step in developing a valuation estimate. Featured articles specifically focus on the unique aspects of aircraft hangars, water rights, limited use service hotels, industrial incubator warehouses and apartments, and how these special properties are valued.
The spotlighted article, “An Introduction to the Valuation of Aircraft Hangars,” by Timothy J. Lindsey, provides an overview of the general features that appraisers take into consideration in the valuation and analysis of aircraft hangars. The article examines characteristics that affect value such as: location, structural systems, hangar features, property rights and leases tied to fuel consumption. In a subsequent article which will appear in the Spring 2008 issue of The Appraisal Journal, Lindsey will illustrate specific appraisal techniques for valuing aircraft hangars using the characteristics described in the current article.
“The Appraisal of Water Rights: Their Nature and Transferability,” by Steven J. Herzog, MAI, identifies the types of water rights and ownership interests that may be the subject of an appraisal. The author stresses the importance of the need for appraisers to familiarize themselves with the rules of each state in which water rights exist, as there is variability among these states. This article is part one of a two-part article; an article in the next issue of The Appraisal Journal will address the appropriate appraisal methodology to use in valuing water rights.
In “Valuing Limited-Service Hotels: A Pragmatic Framework from a Broker’s Perspective,” Byron B. Hinton, MAI, bridges the gap between the theoretical framework typically used for valuing hotels and the real world motivations and behaviors of buyers and sellers in transactions involving limited-service hotels. Hinton discusses both objective and subjective factors that ultimately influence a purchaser’s willingness to acquire a property and concludes that by considering these factors a hotel appraiser can approximate the thinking of active buyers and sellers in the limited-service hotel marketplace.
In “Industrial Incubators; Key Characteristics That Impact Value,” the authors Donald Sonneman and David J. Yerke, MAI, describe the various characteristics that distinguish multi-tenant industrial incubator properties from other types of warehouse properties. The authors note that small industrial warehouse users have different needs and priorities that influence design and appraisal analysis. They conclude that an awareness of the key characteristics that differentiate the industrial incubator category from other industrial property types will assist appraisers in selecting proper comparable properties and making appropriate adjustments.
Rounding out the articles on special property types is “Apartment Market Analysis,” by Richard L. Parli. MAI, who presents a six-step process that lays out a road map to guide the market analysis. The purpose of the market analysis is to investigate the marketability and feasibility of a property’s potential uses, which ultimately leads to a conclusion of the property’s highest and best use. The article includes a case study illustrating how a market analysis is conducted for existing apartment properties.
The Appraisal Journal, published quarterly by the Appraisal Institute, serves as a forum for advancing appraisal theories and practices. Containing articles, columns and letters written by experienced appraisers and educators, The Appraisal Journal presents ideas, concepts and analytical techniques to be considered. Each issue offers alternative valuation methods for serious thinkers seeking creative solutions to appraisal problems, appealing to appraisers, educators and other real estate professionals.
Showing posts with label Daily News. Show all posts
Showing posts with label Daily News. Show all posts
Monday, February 25, 2008
Teleconference Addresses Independence, Blacklisting, Anonymous Complaints
Appraisal independence was among the hot topics during a February 13 conference call by the Appraisal Institute’s Washington, D.C., office. Over 30 State Government Relations representatives from around the country took part in the call, which addressed current federal legislation, blacklisting and anonymous board complaints.
The call included an overview of last November’s passage by the House of legislation promoting appraisal independence, promoting appraisal designations and increasing enforcement. The bill was originally introduced as H.R. 3837 but was later rolled into H.R. 3915, and then passed through the House. On the Senate side, Sen. Chris Dodd, D-Conn., introduced legislation (S.B. 2452) that prohibits appraisal pressure as well.
“Unfortunately,” according to Justin Morton, Appraisal Institute State Government Relations representative, “Dodd’s bill includes provisions that would require appraisers to become bonded, plus the bill also includes other detrimental provisions.” Morton said the D.C. office is working closely with Dodd's staff to remove these provisions of the bill, and is confident they will be eliminated. The next step is a hearing for Dodd's legislation, which currently has not been scheduled. Morton says it is hoped this will occur by mid-March.
Related to appraiser pressure, Morton also discussed the blacklisting of appraisers, asking call participants whether there is a legislative solution. One response was to write a letter to the president of the company doing the blacklisting and carbon-copying the local office of the Office of Thrift Supervision. Other participants thought that including blacklisting in appraiser-coercion language would be a strong deterrent. South Carolina and Minnesota have such language, and Hawaii is attempting to include such language in its bill.
“It will be interesting to see whether such language can pass through the legislative process and become enacted into law,” Morton said.
Listeners also considered the effectiveness of allowing individuals to file complaints anonymously with their state appraisal boards. Oklahoma is considering such a bill this year. “The ultimate concern is the potential for abuse,” Morton said. “Anonymous complainants can use the process to tie up an appraiser, or they can use it as a means of impeaching an appraiser during a court hearing. On the other hand, anonymous complaints do allow appraisers in smaller communities to lodge complaints without fear of retribution,” he explained.
“This is an issue that is likely best resolved, state by state,” Morton said.
The call included an overview of last November’s passage by the House of legislation promoting appraisal independence, promoting appraisal designations and increasing enforcement. The bill was originally introduced as H.R. 3837 but was later rolled into H.R. 3915, and then passed through the House. On the Senate side, Sen. Chris Dodd, D-Conn., introduced legislation (S.B. 2452) that prohibits appraisal pressure as well.
“Unfortunately,” according to Justin Morton, Appraisal Institute State Government Relations representative, “Dodd’s bill includes provisions that would require appraisers to become bonded, plus the bill also includes other detrimental provisions.” Morton said the D.C. office is working closely with Dodd's staff to remove these provisions of the bill, and is confident they will be eliminated. The next step is a hearing for Dodd's legislation, which currently has not been scheduled. Morton says it is hoped this will occur by mid-March.
Related to appraiser pressure, Morton also discussed the blacklisting of appraisers, asking call participants whether there is a legislative solution. One response was to write a letter to the president of the company doing the blacklisting and carbon-copying the local office of the Office of Thrift Supervision. Other participants thought that including blacklisting in appraiser-coercion language would be a strong deterrent. South Carolina and Minnesota have such language, and Hawaii is attempting to include such language in its bill.
“It will be interesting to see whether such language can pass through the legislative process and become enacted into law,” Morton said.
Listeners also considered the effectiveness of allowing individuals to file complaints anonymously with their state appraisal boards. Oklahoma is considering such a bill this year. “The ultimate concern is the potential for abuse,” Morton said. “Anonymous complainants can use the process to tie up an appraiser, or they can use it as a means of impeaching an appraiser during a court hearing. On the other hand, anonymous complaints do allow appraisers in smaller communities to lodge complaints without fear of retribution,” he explained.
“This is an issue that is likely best resolved, state by state,” Morton said.
Sunday, February 24, 2008
Congress to Examine Housing Proposals
AP
Sunday February 24, 1:56 pm ET
By Marcy Gordon, AP Business Writer
Congress to Consider Bankruptcy Relief, Foreclosure Assistance Proposals to Help Homeowners
WASHINGTON (AP) -- Congress is set to examine another round of possible repairs for consumers and investors threatened by widening cracks in the housing market.
Proposals include easing bankruptcy rules, shielding banks from lawsuits and providing government assistance to homeowners facing foreclosure.
Lawmakers also plan this week to question several high-profile mortgage and banking executives about industrywide losses and lavish executive-compensation packages.
The housing proposals percolating on Capitol Hill, many of them designed by Democrats, are expected to face much tougher resistance than the recently approved economic stimulus package, which touched on the mortgage crisis in a limited way.
Some of these proposals have been kicked around in one form or another for months. Others are considered attempts to address perceived shortcomings in the Bush administration plan to freeze interest rates on a small percentage of loans made to high-risk borrowers.
A bill likely to be debated on the Senate floor Tuesday includes a proposed revision to the U.S. bankruptcy code that would allow judges to cut interest rates and reduce what's owed on troubled borrowers' mortgages. Currently, mortgage lenders can foreclose against a homeowner in default on a primary residence 90 days after a bankruptcy filing, and judges have no authority to order changes in mortgage terms.
"This week we have an opportunity to pass a housing bill that will help the economy recover, help American families stay in their homes and change the law so this never happens again," said Sen. Richard Durbin of Illinois, the Senate's second-ranking Democrat and author of the proposal to ease bankruptcy rules.
The bankruptcy measure, a similar version of which has cleared a House committee, is fiercely opposed by lenders and many Republicans.
The Mortgage Bankers Association, which is lobbying against the measure, said it would end up hurting many more borrowers in the long run by requiring "higher interest rates and larger down payments to offset the risk" of bankruptcy court intervention on behalf of some homeowners.
Consumer advocates, meanwhile, are pushing senators to approve the change.
Also included in the Senate legislation is a measure mandating $200 million for foreclosure-prevention counseling services -- a near doubling of funds already committed by Congress -- and an allowance for states to issue more tax-exempt bonds so that housing agencies could help homeowners refinance high-cost mortgages.
In the House, lawmakers are considering whether the federal government should shield banks from lawsuits brought by investors whose holdings of mortgage securities are negatively affected by changes in loan terms or other measures intended to help at-risk borrowers. The plan was first put forward by Rep. Mike Castle, R-Del., but appears to have attracted support from key House Democrats.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, has proposed the creation of a federal corporation, funded with as much as $20 billion, to buy distressed mortgages and help struggling homeowners refinance into affordable loans.
The focus on new housing proposals isn't limited to the legislative branch.
The federal Office of Thrift Supervision, a division of the Treasury Department, is drafting a plan to help borrowers who owe more on their mortgages than their homes are worth.
The plan would allow an estimated 8 million homeowners with "upside-down" mortgages to refinance into government-backed loans covering the home's current value. To make up the difference, lenders would receive a special certificate equivalent to the remainder of the balance owed that they could redeem if the home were eventually sold at a higher price.
On Thursday, the House Committee on Oversight and Government Reform will scrutinize the compensation and retirement packages of one chief executive and two recently deposed CEOs of companies ensnared in the mortgage crisis. The witness list includes: Angelo Mozilo of Countrywide Financial Corp., the nation's largest mortgage lender; Stanley O'Neal, formerly of Merrill Lynch & Co.; and Charles Prince, formerly of Citigroup Inc.
Sunday February 24, 1:56 pm ET
By Marcy Gordon, AP Business Writer
Congress to Consider Bankruptcy Relief, Foreclosure Assistance Proposals to Help Homeowners
WASHINGTON (AP) -- Congress is set to examine another round of possible repairs for consumers and investors threatened by widening cracks in the housing market.
Proposals include easing bankruptcy rules, shielding banks from lawsuits and providing government assistance to homeowners facing foreclosure.
Lawmakers also plan this week to question several high-profile mortgage and banking executives about industrywide losses and lavish executive-compensation packages.
The housing proposals percolating on Capitol Hill, many of them designed by Democrats, are expected to face much tougher resistance than the recently approved economic stimulus package, which touched on the mortgage crisis in a limited way.
Some of these proposals have been kicked around in one form or another for months. Others are considered attempts to address perceived shortcomings in the Bush administration plan to freeze interest rates on a small percentage of loans made to high-risk borrowers.
A bill likely to be debated on the Senate floor Tuesday includes a proposed revision to the U.S. bankruptcy code that would allow judges to cut interest rates and reduce what's owed on troubled borrowers' mortgages. Currently, mortgage lenders can foreclose against a homeowner in default on a primary residence 90 days after a bankruptcy filing, and judges have no authority to order changes in mortgage terms.
"This week we have an opportunity to pass a housing bill that will help the economy recover, help American families stay in their homes and change the law so this never happens again," said Sen. Richard Durbin of Illinois, the Senate's second-ranking Democrat and author of the proposal to ease bankruptcy rules.
The bankruptcy measure, a similar version of which has cleared a House committee, is fiercely opposed by lenders and many Republicans.
The Mortgage Bankers Association, which is lobbying against the measure, said it would end up hurting many more borrowers in the long run by requiring "higher interest rates and larger down payments to offset the risk" of bankruptcy court intervention on behalf of some homeowners.
Consumer advocates, meanwhile, are pushing senators to approve the change.
Also included in the Senate legislation is a measure mandating $200 million for foreclosure-prevention counseling services -- a near doubling of funds already committed by Congress -- and an allowance for states to issue more tax-exempt bonds so that housing agencies could help homeowners refinance high-cost mortgages.
In the House, lawmakers are considering whether the federal government should shield banks from lawsuits brought by investors whose holdings of mortgage securities are negatively affected by changes in loan terms or other measures intended to help at-risk borrowers. The plan was first put forward by Rep. Mike Castle, R-Del., but appears to have attracted support from key House Democrats.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, has proposed the creation of a federal corporation, funded with as much as $20 billion, to buy distressed mortgages and help struggling homeowners refinance into affordable loans.
The focus on new housing proposals isn't limited to the legislative branch.
The federal Office of Thrift Supervision, a division of the Treasury Department, is drafting a plan to help borrowers who owe more on their mortgages than their homes are worth.
The plan would allow an estimated 8 million homeowners with "upside-down" mortgages to refinance into government-backed loans covering the home's current value. To make up the difference, lenders would receive a special certificate equivalent to the remainder of the balance owed that they could redeem if the home were eventually sold at a higher price.
On Thursday, the House Committee on Oversight and Government Reform will scrutinize the compensation and retirement packages of one chief executive and two recently deposed CEOs of companies ensnared in the mortgage crisis. The witness list includes: Angelo Mozilo of Countrywide Financial Corp., the nation's largest mortgage lender; Stanley O'Neal, formerly of Merrill Lynch & Co.; and Charles Prince, formerly of Citigroup Inc.
Saturday, February 23, 2008
Upcoming Congressional Scrutiny May Target Mortgage Brokers
In recent statements, Senate Banking Chairman Christopher Dodd, D-Conn., and Sen. Charles Schumer, D-N.Y., have pointed the finger at mortgage brokers as a primary culprit of the mortgage crisis. Both have noted that while the industry was responsible for originating as much as 70 percent of subprime loans in recent years, it had little oversight from state regulators, thus contributing to a marketplace that allowed as many as 2 million borrowers to be placed into loans they could not afford to repay.
As such, mortgage brokers face their biggest challenge in coming months as the Senate begins work on legislation to curb predatory lending.
Meanwhile, House Financial Services Chairman Barney Frank, D-Mass., included a measure by Rep. Spencer Bachus, R-Ala., creating a uniform licensing system for brokers that would place them into a national registry to weed out bad actors. But the language would include licensing and registration for bank employees who originate mortgages – a provision opposed by the banks, which argue that they are already supervised sufficiently at state and federal levels.
The House bill attempted to ban the use of yield spread premiums in which mortgage brokers receive fees from lenders for issuing a loan with a higher interest rate than the minimum rate the borrower could have received. Critics call the practice a kickback that hurts consumers; brokers say it provides borrowers flexibility to pay closing costs that they might not be able to afford. In the end, the House amendment allows brokers to offer YSPs for zero point and no-cost loans, but they could not receive extra compensation for steering consumers into higher-rate loans.
Consumer groups warned that it could open a large loophole for the brokers, but Frank said he would try to clarify the issue in a later conference with the Senate. The overall bill passed by a strong 291-127 vote, due in part to the provision.
But the mortgage brokers now face their toughest test in the Senate. In two separate hearings in the past year, both Dodd and Schumer have lambasted National Association of Mortgage Brokers officials for their policy views. The senators have also sponsored anti-predatory lending legislation that would place some major constraints on the brokers, such as requiring them to have fiduciary responsibility for their customers and banning YSPs on all loans with limited exceptions.
As such, mortgage brokers face their biggest challenge in coming months as the Senate begins work on legislation to curb predatory lending.
Meanwhile, House Financial Services Chairman Barney Frank, D-Mass., included a measure by Rep. Spencer Bachus, R-Ala., creating a uniform licensing system for brokers that would place them into a national registry to weed out bad actors. But the language would include licensing and registration for bank employees who originate mortgages – a provision opposed by the banks, which argue that they are already supervised sufficiently at state and federal levels.
The House bill attempted to ban the use of yield spread premiums in which mortgage brokers receive fees from lenders for issuing a loan with a higher interest rate than the minimum rate the borrower could have received. Critics call the practice a kickback that hurts consumers; brokers say it provides borrowers flexibility to pay closing costs that they might not be able to afford. In the end, the House amendment allows brokers to offer YSPs for zero point and no-cost loans, but they could not receive extra compensation for steering consumers into higher-rate loans.
Consumer groups warned that it could open a large loophole for the brokers, but Frank said he would try to clarify the issue in a later conference with the Senate. The overall bill passed by a strong 291-127 vote, due in part to the provision.
But the mortgage brokers now face their toughest test in the Senate. In two separate hearings in the past year, both Dodd and Schumer have lambasted National Association of Mortgage Brokers officials for their policy views. The senators have also sponsored anti-predatory lending legislation that would place some major constraints on the brokers, such as requiring them to have fiduciary responsibility for their customers and banning YSPs on all loans with limited exceptions.
Appraisal Institute Board Proposes Action on Trainee Membership Change
In a recent 45-Day Notice, the Appraisal Institute Board of Directors announced a proposal to move members who are licensed appraiser trainees from affiliate membership to associate membership. In addition “aspiring appraisers” would also be able to apply for associate membership. The Board will meet March 26 to amend the Bylaws accordingly with the goal of implementing the change in the first quarter of 2008. The move comes as part of an aggressive membership recruitment program being initiated this year in which the Appraisal Institute aims to add 5,100 new members.
According to the proposal, dues for trainees and aspiring appraisers would be $95 for 2008. Aspiring appraisers are described as individuals seeking a trainee license or equivalent from their state but who have not completed the education required for such license. Such individuals may qualify for this status for a maximum of two years. Licensed appraiser trainees are those appraisers who hold a trainee or equivalent license.
In November 2007 the Board adopted changes to the Bylaws allowing trainees to become Affiliate members; however, because the Affiliate category is designed for members who do not perform USPAP-related work, it is more appropriate to have trainees positioned under the Associate category, according to the proposal’s rationale.
According to the proposal, dues for trainees and aspiring appraisers would be $95 for 2008. Aspiring appraisers are described as individuals seeking a trainee license or equivalent from their state but who have not completed the education required for such license. Such individuals may qualify for this status for a maximum of two years. Licensed appraiser trainees are those appraisers who hold a trainee or equivalent license.
In November 2007 the Board adopted changes to the Bylaws allowing trainees to become Affiliate members; however, because the Affiliate category is designed for members who do not perform USPAP-related work, it is more appropriate to have trainees positioned under the Associate category, according to the proposal’s rationale.
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