Capital Update

• HVCC, FHA, VA Changes Highlight D.C. Chapter's Residential Policy Seminar
• Appraising Distressed Commercial Real Estate: Here We Go Again!
• Appraisers Really Can Make a Difference!
• HUD HQ in Washington DC is looking for a staff appraiser
• Mark Your Calendar for Upcoming Education & Events

HVCC, FHA, VA Changes Highlight D.C. Chapter's Residential Policy Seminar

For those who missed AIDC's Residential Appraisal Policy Update on February 23, here's a re-cap from AI.

New data initiatives under development by Fannie Mae and Freddie Mac – along with updates from Federal Housing Administration and the Department of Veterans Affairs – were among the highlights at a Feb. 23 appraisal policies seminar sponsored by the Washington, D.C., Metro Area Chapter of the Appraisal Institute.

Appraisal policy managers from the two government-sponsored enterprises, the FHA and VA spoke at the event. The GSEs presented the latest information on their proposed collateral data delivery, which would enable the agencies to receive full copies of appraisals prior to delivering the loan for purchase. Today, Fannie Mae and Freddie Mac only see limited fields within the appraisal unless the loan is in default.

L-R: Gerald Kifer, Robert Murphy, Peter Gillispie and Jacqueline Doty

Robert Murphy, senior business manager of credit policies & control with Fannie Mae, explained that the program would not initially impact the work of appraisers, but that it would likely lead to changes with appraisal forms in the future. Specifically, the potential development of “smart forms” – similar to online tax completion software programs like TurboTax – may de-emphasize the forms and garner more market analysis from appraisers in the field.

Jacqueline Doty, director of collateral policy of Freddie Mac, outlined her agency’s recent initiatives relating to appraisal, including the Home Valuation Code of Conduct and best practices. Doty confirmed that the underlying cooperation agreement establishing the HVCC was scheduled to expire in October 2010 but that neither Fannie nor Freddie had made any decisions relative to any potential changes to their seller/servicing guides. Doty also explained that the results of the HVCC from an agency risk standpoint had been positive, particularly in the wholesale loan channel, which has been particularly vexing for many years.

In terms of best practices, Doty said Freddie Mac continues to encourage lenders to look to affiliations with professional designations when hiring appraisers.

Peter Gillispie, senior appraiser with the FHA, outlined numerous policy changes advanced by the agency in the past year, including the appraisal independence rules, appraisal portability and upgrading minimum appraiser certification requirements. Gillispie confirmed that FHA’s market share has increased to 40 percent, up from a 2.5 percent share three years ago.

Gerald Kifer, the VA’s supervisory appraiser, outlined his agency’s success with administering appraisal programs. He described the VA as a government-sponsored appraisal management company with more than 5,000 appraisers on the agency’s designated fee panel. The rotating system has been an important component of a program that historically has had far fewer losses than the conventional mortgage market, he said. Based on that track record, he said, the agency was receiving inquiries from Congress and federal mortgage fraud investigators as the latter entities attempt to develop solutions to prevent mortgage fraud and promote safe and sound lending.

The panel fielded several questions relating to the HVCC, AMCs and prospects for the appraisal profession. The panelists nearly all agreed that a burgeoning area of business possibly well suited for appraisers is conducting “energy audits” of houses, which was advanced as a potential supplemental service that could be provided by qualified appraisers.

Special thanks to AI's Director of Government and External Relations, Bill Garber, who hosted and MC'd the event. Additional thanks to AIDC member Steve Rochkind, SRA, who provided the photos.

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• Aanalyze distressed development properties and improve commercial real estate under the present market conditions.
• Examine, in detail, specific steps to enhance distressed properties.
• Develop methods for arriving at a market-supported “as-is” value forecast and in doing so, acquire techniques for enticing entrepreneurs, among other buyers.
• Discuss adaptive and alternative use on distressed properties that no longer support their current use by reviewing three examples that demonstrate the conversion process.
• Also, learn to accurately evaluate land values with limited direct comparables while you explore three unique case studies involving property in times of distress.

• Define key concepts associated with distressed real estate
• Analyze current trends affecting real estate values
• Explore the six basic steps involved in conducting a market analysis
• Review market consideration on distressed real estate
• Explore how capital markets (debt and equity) affect commercial real estate from a cost availability perspective
• Review basic physical and functional issues that cause real estate to become distressed
• Explore “as-is” value concepts to more accurately analyze distressed real estate properties
• Distinguish between entrepreneurial profit and cost of capital
• Explore the concept of reflecting entrepreneurial profit as a dollar amount deduction
• Review adaptive-use potential on distressed properties
• Analyze and critique valuation methods on a failed subdivision