New Appraisal Regulations Under Fire
Beginning May 1, the responsibility for managing home appraisals will move to a middleman, known as appraisal management companies or AMCs.
Under new federal regulations, mortgage brokers and loan officers can’t directly order appraisals. Instead, they are expected to go through third-party AMCs, which are supposed to prevent them from pressuring appraisers.
But critics of the new plan say nobody is watching the AMCs.
“[The new rules] have transferred the [improper influence] problem to these appraisal management companies, which are not regulated by anybody," says Bill Garber, director of government affairs at the Appraisal Institute, a nonprofit
"[The marketplace is] still vulnerable to appraiser pressure because the incentives are still there to get deals done and collect the fees," says Susan M. Wachter, professor of real estate at the University of Pennsylvania's Wharton
Federal housing officials, who helped write the new laws, say they will hold AMCs accountable.
James B. Lockhart, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie, says, "If [AMCs] are applying undue pressure, that would be a violation of Fannie and Freddie rules, and we would take action.”
Appraisal Institute Urges Congress to Address Feeble Oversight
In testifying before Congress on March 11, the Appraisal Institute told lawmakers that mortgage reform legislation is needed to address structural weaknesses in mortgage industry regulation. Calling current regulatory oversight “feeble,” the Appraisal Institute
called upon Congress to provide state and federal appraisal oversight agencies with greater enforcement power, the lack of which has contributed significantly to mortgage fraud.
“Too often, the appraisal has been relegated to a formality in mortgage lending, a gimmick to push a deal, rather than an essential element of risk-management. It is a dangerous precedent for lenders to outsource their risk management functions,” Jim Amorin,
MAI, SRA, President of the Appraisal Institute, noted in his testimony. “Confidence in our financial system will be restored only when serious attention is devoted to prudent lending practices.”
To address weaknesses plaguing the mortgage lending industry, Amorin presented the U.S. House of Representatives Subcommittee on Financial Institutions and Consumer Credit with a short list of recommendations that the Appraisal Institute believes will protect
the safety and soundness of mortgage transactions. His recommendations included the following:
· The introduction and passage of mortgage reform legislation addressing the inappropriate pressure of appraisers, providing greater accountability of federal and state appraiser regulators, and promoting professionalism among appraisers.
· The establishment of a high-level agency Chief Appraiser position for collateral valuation review, with oversight of all appraisal and valuation issues across the financial spectrum, including the mortgage and secondary markets, and all financial, mortgage
and real estate-related financial instruments.
· The undertaking of an immediate review of the new loan modification guidelines (Home Affordable Modification) released by the Treasury Department last week, to ensure that consumers and neighborhoods are being protected and that proper valuation is being
utilized, including questioning the allowance of broker price opinions in lieu of appraisals.
In addition, Amorin identified automated valuation models and broker price opinions as unregulated methods of obtaining opinions of value that undermine federally created appraisal standards. Lenders’ use of these unregulated methods put both banks and consumers
at risk of receiving inaccurate valuations.
“Our organization is concerned by the Administration’s decision to rely heavily on unregulated valuation services such as brokers,” said Amorin. “Frankly, we are shocked. Once again, we are not treating the valuation process seriously. Computer-generated analyses
cannot approach the valuations prepared locally by hands-on appraisers who are experts in their communities.”
Amorin also voiced the need to regulate appraisal management companies. “Currently operating as unregulated institutions, AMCs act as a conduit between bankers and appraisers, but often fail to inform the consumer that the company retains as much as 60 percent
of an appraisal fee. As a result, such practices typically attract new and less qualified appraisers,” he said.
“With the rise of AMCs, we are concerned that the appraiser independence problem simply may be diverted from one formerly unregulated entity (mortgage brokers) to a new one (AMCs),” concluded Amorin.
For the full testimony, visit www.appraisalinstitute.org/newsadvocacy/letrs_tstimny.aspx#Testimony. For more information on this and other government affairs issues, contact Bill Garber at 202-298-5586 or email@example.com.
Over 75 Industry Leaders Converge on D.C. for First Collateral Matters Congress
In its commitment to helping shape the industry, the Appraisal Institute hosted the first-ever Collateral Matters Congress March 8-10, in Washington, D.C. At the event, over 75 appraisers and members of related professions brainstormed solutions to a variety
of problems facing the industry today.
Led by independent moderator Duke Kuehn, Congress participants broke into breakout groups, which then navigated through topics such as: regulation and licensing; appraisal practice, methods and theory; systemic issues regarding collateral; and the appraisal
profession and the Appraisal Institute. The groups then reconvened to present their findings and ideas to the rest of the Congress, who then asked questions to flesh out the concepts presented. These were then made into recommendations for actions going forward.
Prior to the breakout sessions, a panel gave an overview of some hot topics from their individual perspective, including Rachel Dollar, Esq., who runs www.MortgageFraudBlog.com; Joseph Swartz, Director of Securities of Deutsche Bank, who provided the secondary
market perspective; Jeff Bradford, President of Bradford Technologies; Tim Doyle, Vice President of Conference of State Bank Supervisors, who spoke on the SAFE Act; and Alfred Pollard, General Counsel of the Federal Housing Finance Agency.
To help facilitate openness among the participants, all of their comments during the Congress were “off the record.” However, Appraiser News Online and Valuation magazine will provide further coverage of the recommendations as details become available.
"Cramdown" Bill Passes
In a move sure to rile the financial industry, the House of Representatives last week passed H.R. 1106, the Helping Families Save Their Homes Act of 2009, a bill designed to protect America’s families that also contains a controversial provision which would
allow bankruptcy judges to modify the terms of troubled homeowners’ mortgages.
The bankruptcy provision, considered “cramdown” language by lenders, has been strongly opposed by the financial services industry for granting bankruptcy judges the power to reduce the principal owed on a primary-residence mortgage and order other modifications
in mortgage terms – moves the banking industry believes will force banks to summarily raise interest rates.
Passed by a 234-191 vote in the House, H.R. 1106 now sits with the Senate, which could vote as early as this week – although opposition from Republicans and conservative democrats is expected to be strong.
In addition to the aforementioned cramdown language, the Helping Families Save Their Homes Act contains provisions that would: give mortgage servicers that rework mortgages a “safe harbor” from lawsuits if a homeowner defaults on a revised loan or appears likely
to default; overhaul the Hope for Homeowners program; and permanently increase the limit on deposits insured by the Federal Deposit Insurance Corporation and the National Credit Union Administration to $250,000.
Appraisal Organizations Respond to Treasury Plan
In response to the underwriting details released by the Treasury Department outlining the Obama administration’s “Making Home Affordable” program, the nation’s four largest professional appraisal organizations issued a joint statement in which the groups criticized
the Treasury’s loan modification plan for including inadequate home valuation requirements that could leave taxpayers exposed to unnecessary losses.
According to the appraisal organizations’ March 4 statement,”[We are] deeply troubled that the Treasury Department’s $75 billion government guaranteed modification program fails to protect taxpayers from avoidable losses when reworked loans default in the future,
as some of them inevitably will; and fails to protect homeowners from mistakenly being declared ineligible for modification because they are told, erroneously, that the current market values of their homes do not meet plan underwriting criteria. Further, the
plan retreats from prudent and long-standing banking regulations that encourage the use of appraisals in loan modifications and refinancings.”
The appraisal organizations have stressed that reliable appraisals of the current values of homes are central to the success of the Treasury’s plan. The groups are also in opposition to valuation loopholes in the plan that would allow for opinions of value
to be derived via AVMs and BPOs.
“For reasons we find inexplicable, the Treasury’s plan… relies on computer-generated values and the opinions of real estate agents who are not subject to nationally accepted appraisal qualifications and standards to safeguard taxpayers and determine whether
homeowners are or are not eligible to decrease their mortgage burden,” reads the appraisal organizations’ statement. “The Treasury should do everything in its power to encourage the use of products prepared by regulated professionals in accordance with industry
standards that have the force of law, particularly where there have been material changes in market conditions, as we see in many parts of the country today.”
The joint letter to the Treasury was signed by the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers. To view the letter in its entirety,
Bernanke Calls for Overarching Regulator
Federal Reserve Chairman Ben Bernanke said the U.S. needs to have a powerful overarching regulator in order to prevent a repeat of the risks that built up in the banking system, leading to the financial crisis. Bernanke proposed that the central bank should
either take the lead or at least be involved. "This crisis has revealed some rather shocking gaps," Bernanke said. "Who was overseeing the subprime lenders, for example? Who was overseeing AIG? There simply wasn't enough adequate oversight in those cases."
Bernanke’s comments came in a March 10 speech to the Council on Foreign Relations on "Financial Reform to Address Systemic Risk." He touched on four key elements of such a strategy, including addressing the problem of financial institutions that are deemed
too big—or perhaps too interconnected—to fail; strengthening the financial infrastructure to ensure that it will perform well under stress; reviewing regulatory policies and accounting rules to ensure that they do not “overly magnify the ups and downs in the
financial system and the economy”; and considering whether the creation of “an authority specifically charged with monitoring and addressing systemic risks would help protect the system from financial crises like the one we are currently experiencing.”
For more of Bernanke’s remarks, visit www.reuters.com/article/businessNews/idUSTRE52939S20090310.
FDIC: Bank Deposit Insurance Fund May Become Insolvent by Year End
Federal Deposit Insurance Corp. Chair Sheila Bair warned that the fund insuring bank deposits could be wiped out this year because of the anticipated increase of bank failures over the next few months. The fund is at its lowest level in nearly 75 years, dropping
from $52.4 billion at the end of 2007 to $18.9 billion at the end of 2008. To replenish the fund, the FDIC recently approved a one-time emergency fee increase, along with other assessments, on U.S. banks and thrifts. “Without substantial amounts of additional
assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative,” Bair said.
Bair rejects the idea of using government aid to restore the fund. “Some have suggested that we should turn to taxpayers for funding. But banks—not taxpayers—are expected to fund the system, and I believe Congress would look skeptically on such a course of
action,” Bair said. The emergency premium imposed on banks and thrifts will increase from 6.3 cents for every $100 in deposits to 20 cents for every $100. The FDIC also raised the insurance premium range from 12–14 cents for every $100 in deposits to 12–16
cents for every $100. The agency estimates that the fees may generate $27 billion this year.
Banks and thrifts believe the additional fees will place an additional hardship on an already struggling industry. Small community banks have expressed concerns about the additional fees saying that an unfair burden is being placed on them. According to Camden
Fine, president of the Independent Community Bankers of America, the one-time fee could cost smaller banks 50 to 100 percent of their 2009 earnings. “Community bankers are feeling like they are paying for the incompetence and greed of Wall Street,” Fine said.
FDIC Pursuing Brokers
Blaming mortgage brokers and unscrupulous lenders for contributing to the current housing crisis, the head of the Federal Deposit Insurance Corporation announced last week that the agency is gearing up to pursue more than 100 home mortgage fraud cases and is
investigating some 4,000 more potential cases against mortgage brokers and other parties. FDIC Chair Sheila Bair justified the upcoming legal actions by stressing how borrowers are looking to government regulators and law enforcement to protect their money.
Her remarks came at a meeting of the National Association of Attorneys General in Washington, D.C.
The surge in civil cases against mortgage brokers and other third parties that defrauded lenders will be coordinated by the FDIC’s professional liability group, which handles claims in connection with failed banks.
According to Bair, “Cracking down on mortgage fraud in particular is a safety and soundness issue for both the banking industry and the housing markets."
Suspicious Activity Reports on Mortgage Fraud up 44 Percent; Expansion Proposed
Suspicious activity reports on suspected mortgage fraud cases increased by 44 percent through June 30, 2008, compared to the previous year, the Financial Crimes Enforcement Network reported. The 62,084 cases represent nine percent of all depository institution
SARs filed during the period starting July 1, 2007. As a result of the increase in mortgage fraud cases, FinCEN released revised rules and new guidance intended to expand the ability of financial institutions to share suspicious activity reports. While the
proposal focuses on depository institutions, brokers/dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities, the proposed rule and guidance could have broader implications for mortgage bankers.
FinCEN Director James Freis Jr. said fraudsters continue to try new methods to dupe mortgage lenders. One trend involves mortgage purchasers sending home loans back to originators for repurchase. Filing institutions referenced repurchase demands in eight percent
of SAR filings. Filing institutions referenced foreclosures in 13 percent of their SAR filings, insurers in eight percent and early default payments in two percent of filings as indications of suspected fraud. The report said these patterns generally involved
detection of suspected fraud after the mortgage had been granted.
The report also noted an increase in the percentage of SARs filed prior to granting the loan, 34 percent compared to 31 percent the previous year. The complete report can be found at www.fincen.gov/news_room/nr/pdf/20090225a.pdf.
FinCEN’s proposed rules and guidance would permit financial institutions to share a SAR, or information that would reveal the existence of the SAR, with an affiliate, provided that affiliate is subject to a SAR regulation issued by FinCEN or the federal banking
agencies, said Freis.
FinCEN seeks comment on whether the guidance should be applied to include other financial institutions, such as mortgage bankers, subject to Bank Secrecy Act regulations. The proposed rule and guidance has been submitted to the Federal Register, with the comment
period to run 90 days from date of publication.
Morgan Stanley Warns Investors of Large Write-Down for CRE Fund
In a letter to investors, Morgan Stanley warned that a write down of as much as 60 percent is needed for an $8.8 billion commercial real estate fund’s fourth quarter 2008 equity. The fund, MSREF VI International, was considered the largest real estate fund
when it debuted in 2007. The vehicle, which made high-level commercial real estate investments in Japan, Germany, China and Australia, was projected to have an average annual return of 22.4 percent. Within 18 months, however, the fund lost about two thirds
of its $6.5 billion in invested capital.
Over the past five years, opportunity funds, including Morgan Stanley’s MSREF fund, were among several tempting investment vehicles sold to large institutions. Unlike traditional real estate investments that leverage about 50 percent of borrowed money for purchases,
opportunity funds leveraged up to 70 percent, making it more profitable when values rise. However, falling values can quickly wipe out a fund’s equity. Several buildings that MSREF invested in are now worth less than their mortgages. Moreover, some of the
buildings no longer produce enough revenue to cover debts, which could lead to foreclosures.
Other investment banks, including Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc., offered opportunity funds as well, touting annual returns in excess of 30 percent. However, Colony Capital LLC recently wrote down its Colony Investors VIII fund by
45 percent for the first three quarters of 2008. According to Colony CEO Tom Barrack, more turbulence is expected. Industry experts say write-downs in excess of 50 percent will be typical for 2008.
RICS: Quarterly Survey Shows Global Commercial Market Meltdown
Commercial real estate values are declining in every region around the world, according to the Royal Institution of Chartered Surveyors’ fourth quarter 2008 Global Commercial Property Survey. “The effects of the global economic downturn are clearly illustrated
by the impact it is having on commercial property markets around the globe, with all sectors—retail, industrial and office—experiencing tremendous difficulties. No geographic area has escaped the wrath of the recession and the current sentiment suggests that
worse is yet to come,” said Simon Rubinsohn, RICS Chief Economist.
For the first time since data collection began, commercial space availability has risen across all sectors. As a result, property owners are offering higher incentives as well as shorter lease lengths in an attempt to fill vacant space. Purchasing activity
declined at a slower pace in fourth quarter 2008 compared with the previous quarter, with the office sector experiencing the greatest drop. Capital values, however, declined at a faster pace in the fourth quarter compared to the third quarter. Capital values
in the United Arab Emirates, which previously had a strong performance record, experienced significant declines. Because of concerns over macro stability, Russia has experienced reductions in commercial investments and capital values. Latin America has seen
prices fall across all sectors except in the rental market. Investment demand for commercial real estate in the emerging Europe and the emerging Asia regions has been particularly weak.
With the tight credit market and the faltering economic climate in the United States, investor interest in commercial real estate has taken a beating in fourth quarter 2008. Tenant demand has deteriorated, which can be seen with increasing space availability,
further increases in tenant incentives and declining rents. Moreover, capital values have plummeted while property yields and capitalization rates continue to increase.
S&P Takes Rating Actions on REITs
Standard & Poor's recently downgraded two Real Estate Investment Trusts and placed nine on credit watch, which affects roughly 16 percent of the 62 companies it rates. The firm’s actions were prompted by reduced cash flow as well as limited access to debt and
equity capital. Because REITs need to maintain liquidity, S&P said they place close attention on an REIT’s balance sheet strength.
According to S&P, most property sectors will come under stress this year because of the deteriorating economic conditions. With the sharp drop in consumer spending, the retail sector has been hit especially hard, which has caused the tenant default risk and
net-lease REIT portfolios to increase. Moreover, the increase in employment may now be contributing negatively to the multifamily and self-storage sectors. Healthcare REITs appear to be positioned well but could come under pressure if government and private
insurer reimbursement models are negatively altered.
As the recession continues to deepen, S&P expects that more REITs will come under pressure. However, in an effort to retain more capital, several REITs are either cutting dividends or considering stock dividends. Moreover, although property transaction volumes
continue to decrease, higher-quality REIT property holdings have enabled many companies to continue to sell assets and secure attractive mortgage financing.
New Distressed Commercial Appraising Seminar to Debut March 13
To help appraisers keep abreast of the cyclical nature of the commercial real estate market, the Appraisal Institute is premiering a new seminar, Appraising Distressed Commercial Real Estate: Here We Go Again. Designed for appraisers, lenders and investors,
this one-day seminar provides critical insights on valuing distressed commercial real estate in the current economic downturn.
After a four-city rollout – March 13 in San Francisco; April 1 in Ft. Washington, Penn; April 17 in Sandy, Utah; and May 20 in San Diego – the seminar will be offered nationwide through various chapters.
Participants will learn how to analyze current trends affecting real estate values, develop methods for arriving at a market-supported “as is” value forecast and explore how to evaluate land values accurately with limited direct comparables.
Appraising Distressed Commercial Real Estate: Here We Go Again is approved for seven continuing education hours. Cost is $139 for members, $239 for non-members. For more information and to register, visit www.appraisalinstitute.org/education/seminar_descrb/Default.aspx?sem_nbr=809&key_type=S
or call 312-335-4140.
Appraisal Institute Welcomes 4,000 New Members
In 2008, the Appraisal Institute welcomed 4,000 new members, more new members than in any year since the former American Institute of Real Estate Appraisers and the Society of Real Estate Appraisers merged to form AI in 1991. The new members who joined AI last
year brings the membership total to more than 25,000 members, the most since 1995.
“Our aggressive marketing campaign to recruit individuals into the profession, particularly younger appraisers, was a tremendous success,” said Jim Amorin, MAI, SRA, president of the Appraisal Institute. “It is encouraging to see so many young professionals
who care about their careers and who want to take advantage of all the great benefits the Appraisal Institute offers its members. Best of all, we expect this ‘flight to quality’ to continue in 2009” as appraisers seek to become the trusted advisors to their
clients, he said.
The record-breaking recruiting effort, which includes new Associate and Affiliate members added since the beginning of 2008, was brought on by special membership categories created for those just getting started in the profession. The Trainee Associate Membership
category was established for individuals pursuing an appraisal career, while the Affiliate Membership category was expanded to include university and college students.
In addition to welcoming 4,000 new members, the Appraisal Institute also awarded a high number of MAI and SRA designations to members. Last year, 173 members were awarded the MAI designation and 146 members were awarded the SRA designation.
For more information on Appraisal Institute membership categories, visit www.appraisalinstitute.org/membership.
AI Tenant Credit Analysis Webinar Set for March 25
The Appraisal Institute will present a webinar addressing commercial vacancy rate increases and how to analyze tenants and their creditworthiness for commercial appraisal assignments. The March 25 Tenant Credit Analysis webinar will cover topics including tenant
credit, tenant creditworthiness, warning signals that indicate potential credit problems and how credit impacts real estate valuations.
Presenters David Thiele, MAI, Director, Appraisal Services, TIAA-CREF; Marv Wolverton, PhD., MAI, Senior Director, Dispute Analysis and Litigation Support, Cushman & Wakefield of Texas, Inc.; and Timothy Mardell, MAI,CCIM, Principal, Mardell Partners Inc. will
discuss correct financial modeling of tenants in order to provide reliable commercial appraisal reports.
The 60-minute webinar will be presented at 10 a.m. PT on March 25. Cost is $25 for members; $75 for non-members. To register or for more information, visit www.appraisalinstitute.org/education/more_info.aspx?id=13436.
URS Corporation Hosts Free Green Building Strategies Webinar on March 18
URS Corporation will present a free March 18 webinar titled Cost-Effective Green Building Strategies: Healthcare and Federal Government Applications during which, the company will demonstrate its multi-disciplinary approach to implementing sustainable and holistic
strategies on several projects.
Speakers Jeff Hammond, Senior Architect, Facility Planning and Development Department, Spectrum Health; Ryan Archer, Sustainable Designer, URS Corporation; Angela Rivera, Sustainable Designer, URS Corporation; and Mark Wutz, Senior Mechanical Engineer/Project
Manager, URS Corporation will discuss design techniques and cost-effective strategies that achieve sustainability and energy-efficiency.
The 90-minute webinar will be presented at 10 a.m. PT on March 18. There is no fee for this webinar. To register or for more information, visit www.xtalks.com/events/xto326urscorp/reg1.html.
Administration Releases Loan Modification Guidelines; Drops Ball on Appraisals
The Obama Administration released guidelines outlining policies for the Home Affordable Refinance program for four to five million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac and the Home Affordable
Modification program, which intends to help between three and four million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. The program details can be found at www.ustreas.gov/press/releases/tg48.htm.
Elements of the overall program contain appraisal and valuation components for participation. For loans refinance program administered by Fannie Mae or Freddie Mac, the program will allow borrowers that currently owe up to 105 percent of the value of their
home to refinance their mortgages. With respect to the determination of property value for a refinance, the seller may elect one of the following three options provided the applicable requirements are met:
· Option 1 – Fannie Mae or Freddie Mac’s internal AVM
· Option 2 - New appraisal or AVM
· Option 3 - Appraisal or AVM from the Mortgage being refinanced
The other part of the program – a national loan modification effort – the Treasury Department released guidelines that are intended to standardize loan modification procedures with the program, effective immediately and through December 31, 2012. Participating
lenders will be required to consider refinancing through FHA’s Hope for Homeowners program and then conduct a standard “waterfall” test with regard to the loan modification. Part of this process involves a cost-benefit analysis on whether to foreclose or modify
the loan. As part of this test, the current property value is a factor, and because no new monies are being conveyed, the agencies are, apparently, applying an exemption to Title XI of FIRREA that allows for the use of evaluations or appraisals to establish
According to the guidelines, the servicer may use, at its discretion, either one of the government sponsored enterprises automated valuation models – provided that the AVM renders a reliable confidence score – or a broker price opinion. As an alternative, the
servicer may rely on the AVM it uses internally provided that (i) the servicer is subject to supervision by a federal regulatory agency, (ii) the servicer’s primary federal regulatory agency has reviewed the model and/or its validation and (iii) the AVM renders
a reliable confidence score.
According to the guidelines, “If the GSE or servicer AVM is unable to render a value with a reliable confidence score, the servicer must obtain an assessment of the property value utilizing a property valuation method acceptable to the servicer’s federal regulatory
agency, e.g. in accordance with the Interagency Appraisal and Evaluation Guidelines (as though such guidelines apply to loan modifications), or a BPO.” In all cases, the property valuation may not be more than 60 days old.
Bill Garber, Director of Government Relations for the Appraisal Institute commented, “Questions of value are best addressed by qualified real estate appraisers, and as such, members offering residential related services should reach out to lender and loan service
clients to discuss the range of services that can be provided by appraisers.”
Garber expressed concern, however, about the administration’s decision to rely heavily on unregulated valuation products in the loan modification program, when streamlined appraisal products are readily available in the marketplace. “The Interagency Appraisal
and Evaluation Guidelines have consistently encouraged lenders to obtain appraisals where there have been material changes in market conditions, even in cases of loan modification where no new monies have been conveyed,” said Garber. “Today’s announcement
rolls the dice on every homeowner’s equity as it retreats from meaningful bank regulations in favor of unregulated and exotic valuation products.”
Garber pointed out that professional real estate appraisers deliver a diverse menu of valuation services with many designed specifically to address distressed properties and others that can be used for most non-complex transactions. Examples of the types of
products that appraisers can deliver for loan modification or distressed asset purchases include:
· appraisal updates and reviews, or updates to existing appraisals
· drive-by appraisals, or appraisals of the exterior of the property
· desktop appraisals, or appraisals performed from the appraiser’s desktop without any exterior or interior inspection
Today’s technology and current methodology allow real estate appraisers to deliver necessary services quickly and securely. Given the advances in technology, these services are very cost effective and affordable with delivery from the thousands of designated,
certified, and licensed appraisers in every community in the country.
“Treasury should do everything in its power to encourage the use of products prepared by regulated individuals in accordance with industry standards that have the force of law, particularly where there have been material changes in market conditions, as we
see in many parts of the country today,” Garber said.
Appraisal Amendment Added to 'Cramdown' Bill; Vote Delayed
The House of Representatives has delayed to later this week consideration of H.R. 1106, a foreclosure mitigation bill. Among the language included in the bill is a recently added appraisal amendment that would “require courts to use FHA appraisal guidelines
where the fair market value of a home is in dispute; and deny relief to individuals who can afford to repay their mortgages without judicial mortgage modification.”
Additionally, leaders and lawmakers reached agreement March 3 on a revised version of the “cramdown” provision, adding limits designed to make it more likely that the courts intervene only as a last resort. Speaker Nancy Pelosi, D-Calif., worked with fellow
Democrats who had raised concerns about the scope of the provision, which would allow bankruptcy judges to modify the mortgages on the primary residences of homeowners who are in jeopardy of foreclosure. Under current law, bankruptcy judges are permitted to
modify mortgages on second homes, including through reductions in loan principal, but not on primary residences.
The banking industry has lobbied against the proposal to extend the authority to primary homes, asserting that it could raise mortgage interest rates for typical homebuyers and cause a rush to bankruptcy by some struggling homeowners. Proponents argue that
the move is needed to encourage lenders to rework loans before a court intervenes and to help stem the rising tide of foreclosures that is continuing to hamper the economy. Opponents are pushing for “voluntary” modifications wherever necessary.
To view H.R. 1106 in its entirety, visit http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1106ih.txt.pdf.
“Bad Bank” Plan Gets Fleshed Out
In conjunction with the Federal Reserve’s Term Asset-Backed Lending Facility program – launched March 3 and aimed at spurring consumer lending in areas such as credit cards and home loans – the Obama administration said it plans to partner with the private
sector to buy $500 billion to $1 trillion of distressed assets as part of last month’s revamping of the $700 billion bank bailout.
Under TALF, the Fed will offer cheap loans to investors to purchase securities backed by consumer debt like car loans and credit-card receivables. The Fed may expand TALF to existing distressed assets, such as distressed mortgage-backed securities or commercial
The Treasury has agreed to provide up to $100 billion of capital to the TALF, and the Fed will lend up to $1 trillion through the program. No decision has been made on the final structure of what the administration is calling a private-public financing partnership,
which grew out of the "bad bank" concept, an idea popular among some economists that would have required the government alone to buy up the troubled assets, but less popular among the public. Instead, the government wants to encourage private investors to
buy up the assets in a way that would come closer to setting a market price where no market currently exists. Some within the administration believe establishing multiple funds could help with that goal. The funds would most likely target all types of assets,
such as mortgage-backed securities, rather than focusing on one specific type of distressed security.
The TALF, which was announced in November, has taken months to get off the ground. To date, no deals have been done under the program. The first is expected to be launched later this month.
CitiGroup to Lower Mortgages for Jobless
Citigroup Inc. says it expects thousands of unemployed homeowners may qualify for assistance under its new Homeowner Unemployment Assist program, unveiled March 3. The program allows those who are 60 days or more past due on their mortgages or in foreclosure
to pay a reduced amount – $500 on average – for three months.
Those who partake in the program and are still without jobs after three months will have their mortgages handled on a case-by-case basis to come up with the best payment option, Citigroup said. Others that find work within the three-month period can go back
to paying their original mortgage amount or receive a long-term loan modification if qualified. The program may also be expanded to include customers that are in early delinquency stages or are current on their mortgage at a later point in time once an initial
evaluation of the program is complete.
Citigroup’s new mortgage efforts also come on the heels of the latest attempt to bail out the company, which includes the U.S. government’s exchange of up to $25 billion in emergency bailout money given to Citigroup for as much as a 36 percent equity stake
in the company. The deal between the Treasury Department and Citigroup represents the third rescue attempt for the bank in the past five months.
Obama Calls for Increased Scrutiny in New Regulatory Structure
House Financial Services Chairman Barney Frank, D-Mass., said both houses will soon begin working on overhauling the supervision of the U.S. financial system with the goal of reaching an "agreement in concept" by the end of the month. The announcement
came in response to a February 25 directive from President Barack Obama to move swiftly to create a new regulatory structure for 21st-century markets, a process many predict will insert the federal government more deeply into the economy.
At the February 25 meeting, Obama was short on specific details and instead offered a set of broad principles he would like to see expressed in legislation, including greater transparency, more-uniform supervision of financial products, "strict accountability"
for market players who engage in risky behavior; and perhaps merging or killing off ineffective regulatory agencies.
Even if Frank’s timeline is met, the legislation could take months to wend through Congress. Frank said he expects the effort will be done in stages, with action first on a bill that will empower a regulator, likely the Federal Reserve, to regulate risk across
the financial system. "It's either the Fed or you start from scratch," Frank said.
Banks Take Aim at Obama Plan to End Deduction
The banking industry is preparing to fight key provisions of President Obama's budget plan. Chief among the industry's concerns is a provision that would eliminate a tax deduction on mortgage interest for filers who earn more than $250,000 a year. The proposal,
which the White House says would save nearly $180 billion in the next nine years, is in line with President Obama's repeated promises to fix financial markets by tackling income inequality. But bankers argue that the plan would essentially make homeownership
unattractive. Officials from the Treasury Department said the tax code retains other incentives for homeownership.
The Obama administration's inaugural budget also calls for a reduced role for the private sector in student lending and sets aside an additional $250 billion that may be needed to stabilize markets through the Troubled Asset Relief Program. But the phaseout
of the tax deductions, which would begin in 2011, could be especially problematic for financial institutions. Rep. Michele Bachmann, R-Minn., said getting rid of the deduction would introduce more uncertainty into mortgage markets.
Chris Low, the chief economist for First Horizon National Corp.'s FTN Financial Capital Markets, said ending the deductions could end up hurting the quality of the mortgage market. "It's going to provide an incentive for higher-income individuals to pay down
their loans," he said. "If the pool of total loans shrinks and the good ones are paid off, then the ratio of bad loans is going to be higher, and bad loans are already at the heart of our banking crisis."
While not committing to the number, the administration set aside $250 billion in additional government funds, saying it could help spur purchases of $750 billion worth of toxic assets from banks. Provisions for the Small Business Administration include a $50
million increase from last year's budget.
Treasury Finds Fault with OTS Appraisal Oversight
The Treasury Department’s Office of the Inspector General claims that the Office of Thrift Supervision was too slow to react to the high-risk lending practices of IndyMac Bank and did not take aggressive enough actions to stop such practices from continuing
to proliferate. The Treasury’s audit report, released February 26, presented a review of the failure of IndyMac Bank and the supervision of the institution by the OTS.
According to the audit report’s findings, the OTS viewed growth and profitability as evidence that IndyMac management was capable of success while failing to recognize the unsafe and unsound manner in which the thrift was operated.
In addition, included in the Inspector General’s report were the findings that IndyMac relied too heavily on appraisals that were often supported by weak underlying collateral. According to the audit report, the Inspector General identified several instances
in which a borrower’s qualifications were not properly reviewed; where IndyMac officials accepted appraisals that were not in compliance with USPAP; and when the borrower was allowed to select the appraiser.
The Inspector General’s material loss review of IndyMac is the second such review the Treasury Department has performed of an OTS-regulated financial institution during the current financial crisis. In its first material loss review, of NetBank, FSB, the Treasury
Department was critical of the OTS for not taking stronger action when problems noted by examiners remained uncorrected through several examination cycles. There were also several problems noted by examiners with regard to the business practices of IndyMac,
however, these too went mostly uncorrected.
To read the Inspector General’s audit report, visit www.ustreas.gov/inspector-general/audit-reports/2009/oig09032.pdf.
AARO Executive Committee, ICAP Urges Caution on BPOs
The Executive Committee of Association of Appraiser Regulatory Officials and the Illinois Coalition of Appraisal Professionals have issued separate letters to Treasury Secretary Timothy Geithner voicing concerns about federal regulations and policies that allow
Broker Price Opinions to be used in establishing real property collateral values for mortgage modifications.
Of primary concern to both groups is the lack of required valuation qualifications needed by individuals who perform BPOs. As the AARO Executive Committee stated in their letter to the Treasury, “Individuals performing BPOs lack meaningful (or sometime, any)
valuations qualifications, may not be objective, and unbiased or even independent of the transaction for which they’re opining a value, and are not properly accountable to anyone for their BPO work.”
ICAP expressed similar sentiments in their letter, available at www.icapweb.com/upload/09%20Treasury%20ICAP.pdf, saying that they are “concerned that the use of shortcuts or alternate valuation products (like BPOs) by individuals lacking professional or regulatory
oversight poses an unacceptable risk to the financial industry, taxpayers, and the public.”
The AARO Executive Committee and ICAP letters add additional concern to a letter sent by the Appraisal Institute and other appraisal organizations to the Treasury Secretary last month that cautioned the government against the acceptance of BPOs and advocated
the use of professional, federally regulated real estate appraisers to perform all valuation assignments. To view the Appraisal Institute’s letter, visit www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2009/Homeowner_Stability_Plan.pdf.
New Legislative Coalition Formed in Nevada
The two Appraisal Institute chapters in Nevada – Las Vegas and Reno/Carson/Tahoe – have become founding sponsors of the Coalition of Appraisers in Nevada, which also includes representatives of several other real estate appraisal industry organizations. The
broad-based coalition was formed to give the real estate appraisal community a unified voice during the 2009 session of the Nevada legislature.
According to President Pamela Kinkade, SRA, CAN has identified as its first three major issues to address: 1) formalizing last year’s agreement regarding limiting the ability of brokers and sales people to perform brokers’ price opinions. The agreement was
reached with the real estate sales groups and the real estate regulators last year; 2) prohibiting anyone involved in a real estate transaction from improperly influencing the work of an appraiser; and 3) requiring appraisal management companies operating
in Nevada to be registered with, and overseen by, the Real Estate Division.
Prior to formalizing its structure, CAN had prepared draft legislation for the issues, and has now approached several legislators about the possibility of sponsoring the legislation. The BPO issue has also been under discussion by the BPO Task Force for several
months. The newly elected leadership of CAN has also developed an aggressive fundraising strategy to ensure that the group has all of the money that it needs to be successful in its aggressive legislative program.
In order to assist the group in achieving its legislative goals, they have hired a well known lobbyist in Carson City, who has engaged in substantive discussions on behalf of CAN with key legislators regarding support for the group’s legislative efforts.
For more information on the Coalition of Appraisers in Nevada, go to www.nvappraisers.net/home.
South Dakota Passes Appraiser Independence Legislation
A bill to prohibit improper influence regarding real estate appraisals in South Dakota was recently signed into law by Gov. Mike Rounds. The new law, H.B 1124, prohibits certain practices by mortgage brokers including bribery, extortion, coercion, withholding
payment for an appraisal that did not reach a predetermined level, or removing an appraiser from a panel if a requested value is not met. H.B 1124 also prohibits a supervising appraiser in South Dakota from improperly influencing an entry-level appraiser during
their initial mentoring period. Appraiser independence legislation, in one form or another, has now been signed into law in 20 states and is being considered in another 21 states.
Craig Steinely, SRA, indicated that the legislation is important to protect consumer safeguards. “The appraiser and home inspector, if one is involved, are often the only professionals in a real estate transaction whose compensation does not depend upon whether
it closes. Both are hired to help guide consumers and lenders in making informed real decisions and any act that threatens an appraiser’s independence ultimately puts both at a severe disadvantage,” said Steinely.
Appraisal Institute associate member Jim Dunlap echoes Steinely’s view. “Whether the property is a residence in Mobridge, a commercial building in Sioux Falls, or a 20,000-acre ranch outside of Pierre, all parties should expect that the real estate appraiser
has not been improperly influenced by anyone involved in the transaction.”
The legislation also clarifies the types of interactions between a mortgage broker and a real estate appraiser that are considered proper. For example, asking an appraiser to correct errors in a report or to consider additional comparable information, providing
an appraiser with a copy of the purchase agreement, or withholding payment for an appraisal in the event of a legitimate business dispute are all considered proper actions.
H.B. 1124, which takes effect July 1, grants the South Dakota Division of Banking, which regulates mortgage brokers, and the Appraiser Certification Program, which regulates appraisers, authority to discipline mortgage brokers or appraisers that violate the
act. Disciplinary action can include corrective education, fines, suspension or revocation of a mortgage broker or appraiser license.
Military Outlines its Base Closure Procedure
In a statement to the Committee on House Armed Services Subcommittee on Readiness, Deputy Undersecretary of Defense for Installations and Environment Wayne Arny outlined to Congressional representatives how the Department of Defense carries out authorized land
acquisitions and the role of the appraisal in such real estate transactions. In addition to explaining the procedures in place to ensure that owners of real property to be acquired for federal and federally-assisted projects are treated fairly and consistently,
Arny noted how appraisals are used before the negotiation process begins.
“Before the initiation of negotiations, DoD establishes the amount it believes is just compensation, which is not less than the approved appraisal of fair market value,” stated Arny. “That appraisal is prepared under the Uniform Standards of Professional Appraisal
Practice published by The Appraisal Foundation, and the Uniform Appraisal Standards for Federal Land Acquisitions, published by the Interagency Land Acquisition Conference and promulgated by the Department of Justice.”
Arny also explained the DoD’s base closure procedure, noting how it is the DoD’s policy to “fully utilize all appropriate means to transfer property at installations closed or realigned under a base closure law.”
The Committee on House Armed Services Subcommittee on Readiness held its hearing to reinforce the nation’s need for space to train members of its armed services. As stated in the opening statement of Solomon Ortiz, chairman of the committee, “The need to train
as we fight is fundamental to our armed forces. To this end, I am surprised that the Department is just now realizing that our ground forces are significantly short of adequate training space.”
Bill Introduced to Help Military Families Weather the Housing Storm
Congress has included language in the economic stimulus package to compensate service members who sell their home at a loss or have been foreclosed upon because they were forced to move after a base closure, reassignment or a combat wound required them to be
relocated near a health facility. The program also covers surviving spouses of those killed in combat. The program does not cover all military members facing a loss because of a home sale.
Under the new provision, the government will cover 95 percent of a loss if a service member is forced to sell. The government can also choose to acquire the home’s title by paying off the balance of a service member's mortgage or paying the owner up to 90 percent
of the home's previous value. No dollar ceiling has been set.
The $555 million undertaking expands the Defense Department's Homeowners Assistance Program. In an attempt to limit the number of claims, the program applies only to a service member's primary residence, and only to homes purchased before July 1, 2006, roughly
the time the market began its free-fall. The Army Corps of Engineers said it has not determined what proportion of families will be eligible.
Bill Garber, Appraisal Institute Director of Government and External Relations for the Appraisal Institute, said he expects increased demand for the services of professional real estate appraisers as a result of the program. “The professional appraisal community
is prepared to deliver the appraisal services required by the Army Corps of Engineers, the scope of which involves a significant number of appraisal assignments,” Garber said.
Freddie Mac’s CEO Moffett Resigns After Six Months
Freddie Mac Chief Executive Officer David Moffett resigned six months after being tapped by the government to lead the second-largest U.S. mortgage finance company amid the housing slump.
Freddie said that Moffett “indicated that he wants to return to a role in the financial-services sector,” and a spokeswoman said he wasn’t asked to step down by the company’s regulator or the Obama administration. A former Carlyle Group executive who was once
vice chairman of U.S. Bancorp, Moffett joined Freddie shortly after its September 7, 2008, takeover. Moffett replaced former CEO Richard Syron.
The exit leaves Freddie without a leader as the company – along with larger competitor Fannie Mae – struggle with deteriorating credit quality that is forcing them to seek U.S. aid. Both were taken over by regulators last year as their losses threatened to
further roil the housing market, and Fannie said it is having trouble meeting the “potentially conflicting” objectives under U.S. control.
The Federal Housing Finance Agency, the company’s regulator, “will work with the Freddie Mac board and management team to ensure a smooth transition and continuation of their important mission of supporting the housing market,” FHFA Director James Lockhart
said. Freddie expects to name an interim replacement before March 13.
Appraisal Institute Scholarship Deadlines Approaching Quickly
The Appraisal Institute Education Trust Scholarship and the Minority and Women Educational Scholarship deadlines are March 15 and April 15, respectively.
The Appraisal Institute Education Trust Scholarship is open to graduate and undergraduate students majoring in real estate appraisal, land economics, real estate or allied fields who are enrolled as full-time students for the academic year beginning August
2009 through June 2010. The scholarship is primarily awarded on the basis of academic excellence and is intended to help finance the educational endeavors of individuals concentrating their studies in the aforementioned areas.
The Minority and Women Educational Scholarship is awarded to minority and women college students who are enrolled as full-time or part-time students in real estate related courses in real estate or a related field within a degree granting college, university
or junior college. The applicant must have a demonstrated financial need.
To view the application, eligibility requirements and criteria, visit www.appraisalinstitute.org/education/scholarship.aspx. For more information, contact Hillary Richmond, Diversity Committee Staff Liaison, at firstname.lastname@example.org.
Moody's: Subprime-Mortgage Defaults to Surge Further
Amid continued deterioration in home prices, rising losses on liquidated loans and elevated default rates, Moody's Investors Service raised its loss estimates for $680 billion in U.S. subprime residential mortgage-backed securities issued between 2005 and 2007
and put them on risk for possible downgrade. The ratings agency also said by the end of the year, one-third of subprime borrowers who are currently paying on their mortgages will become delinquent and eventually default, representing 19 percent of outstanding
loans. Subprime loans have seen the highest levels of delinquencies and defaults.
Moody's revised its loss projection for 2006-vintage RMBS to 28 percent to 32 percent of the original balance of the securities, up from its prior estimate of 22 percent. For 2005 RMBS Moody's expects losses from 12 percent to 14 percent of the original balance,
and for 2007 it sees losses of 33 percent to 37 percent.
Moody's said that 42 percent of outstanding 2006-vintage subprime loans are at least 60 days delinquent, in foreclosure or held for sale. Without intervention, it said nearly all of those loans will eventually default. Furthermore, it said an additional 22
percent of current non-delinquent loans would default after this year. When added to the defaults expected from existing delinquencies and those expected by year-end, Moody's expects a total default rate on existing subprime loans to reach 72 percent for 2006-vintage
Moody's said President Barack Obama's homeowner plan, details of which were released March 4 (see top story), will likely mitigate some of the loss estimates.
Hanley Wood: New Home Sales Fall to Record Low
As reported in last week’s issue of Appraiser News Online, January’s existing home sales fell 5.3 percent to an annual rate of 4.49 million units. In a February 27 release, Hanley Wood Market Intelligence reports that new home sales also dropped in January
by 10.2 percent to a seasonally adjusted rate of 309,000 units, the lowest level since data collection began in 1963.
New home inventories declined in January to 341,000 units from December’s figure of 354,000 units, their lowest level since April 2003. However, the slow sales pace – attributed to rising unemployment and an unstable economy – means a new all-time high of inventory,
at 13.3 months. The number of existing homes available for sale at the end of January fell 2.7 percent to 3.60 million units, representing a 9.6-month supply.
Because of a high level of distressed home sales, the national medium existing sale price for all home types decreased in January to $170,300, down by 14.8 percent from last year’s median price of $199,800. Median new home prices in January fell 9.9 percent
from December’s figure of $223,200 to $201,100, the lowest they have been since December 2003.
The national average mortgage rates increased for the first time in three weeks to 5.07 percent according to Freddie Mac’s February 26 Primary Mortgage Market Survey. However, rates are still near the record levels achieved in January.
S&P: Housing Values Continue to Decline, Future Questionable
December 2008 home prices set record declines according to the latest Standard & Poor’s/Case-Shiller Home Price Indices released in February. Home prices dropped 18.2 percent in the fourth quarter of 2008 versus the same period in 2007, the largest drop since
data collection began 21 years ago. Both the 10-and 20-city composites also set record losses, declining 19.2 percent and 18.5 percent, respectively. From the housing market’s peak in 2006, home prices are down by 26.7 percent. Home prices are now at similar
levels to what they were in the third quarter of 2003.
“The broad downturn in the residential real estate market continues,” said David Blitzer, chairman of Standard & Poor’s Index Committee. “There are very few, if any, pockets of turnaround that one can see in the data. Most of the nation appears to remain on
a downward path.”
Denver, Dallas, Cleveland and Boston reported the lowest annual declines, with drops of only 4.0 percent, 4.3 percent, 6.1 percent and 7.0 percent, respectively. The worst performing cities reporting year-over-year declines continue to be from the Sunbelt,
with Phoenix down 34 percent, Las Vegas down 33 percent and San Francisco down 31.2 percent.
In a news conference following the index’s release, Karl Case of Case-Shiller noted that the markets having the most significant declines experienced the biggest increases during the boom. According to Case, the residential market may not contain much positive
news for the near future. “We’ll learn more in the spring market. Sales should pick up and we’ll begin to see how well the president’s program is working. There’s no evidence in the data to tell us that home prices will bottom out.”
Winter 2009 Appraisal Journal Spotlights Special Property Topics
The winter 2009 issue of The Appraisal Journal examines the distinctive characteristics of landfills and how they affect property values. Other articles in the winter issue look at techniques for valuing ground lease reversions, discount rates, leased fees
in custom-built commercial properties, and the component elements that make up overall property value.
The cover article in the winter issue, “Evaluating the Potential Impact of a Proposed Landfill,” by Shawn E. Wilson, MAI, is intended as a roadmap for appraisers who have landfill consulting assignments. Appraisers are sometimes called on to present evidence
and/or testimony for clients who support or oppose landfill improvements. The author shows how to gather landfill and market data for this type of assignment.
The feature article “A Reality Check on Ground Lease Reversions,” by David Rothermich, MAI, discusses valuations involving leased fee interests. It examines condominium projects in Hawaii as situations where the economic life of the improvements is likely to
extend well beyond the terms of the ground lease. In leased fee valuation, conventional appraisal practice often disregards the potential contributory value of improvements in the reversion. However, Rothermich shows that land-only reversion scenarios are
often inconsistent with the probable outcome and contrary to the known facts about physical, legal or economic characteristics of the subject property, which means that under the Uniform Standards of Professional Appraisal Practice, appraisers must disclose
the land-only reversion as a hypothetical condition.
Another feature article that addresses leased fee interests, “You Can’t Get the Value Right If You Get the Rights Wrong” by David C. Lennhoff, MAI, SRA, looks at how market value opinions are developed for the fee interest in custom-built commercial properties.
Lennhoff cautions that in these assignments, appraisers must understand the nuances between value in use and market value, and between fee simple estates and leased fees. Custom-built properties, such as a Walgreens or an LA Fitness, have value to the original
tenant that is not representative of the market value to other users. The cost to build and worth to the initial owner or tenant exceeds what the property would be able to command for either lease sale on the market. The article reviews the approaches to value
and discusses the misconceptions that lead to the wrong value for the property interest.
Rounding out the articles in the winter issue are “Bridging the Gap between Discount Rate Theory and Investor Surveys,” by Donald Sonneman and “Relationships between the Overall Property and Its Parts, and the Three Approaches to Value,” by Mark Pomykacz, MAI.
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.
For more information about The Appraisal Journal, visit www.appraisalinstute.org/taj.
ARES Co-Founder Jim Webb, 61, Dies
James R. Webb, Ph.D., past president and co-founder of the American Real Estate Society, died February 27. He was 61. Helping start ARES 25 years ago, Webb drafted their original constitution and bylaws, was the second President, the first and long-serving
Executive Director, and the Director of Development of ARES. Furthermore, he began the ARES Foundation, an organization dedicated to assisting doctoral students and academics throughout the world, and has been its only Executive Director. In recognition, ARES
had recently named the Foundation after Webb. In addition, Webb helped found sister societies and academic journals all over the globe as well as the International Real Estate Society of which he was President.
Webb was born in Granite City, Ill., and grew up in Central and Northern Illinois. He received his B.S. and M.B.A. from Northern Illinois University and his Ph.D. in Finance from the University of Illinois. He taught at Kent State University, University of
Akron, University of Texas, Austin and most recently at Cleveland State University. He was also Director of the Real Estate Institute at CSU.
Webb was an avid reader, amateur philosopher and an enthusiastic horticulturist with a love for all plants and flowers. He is survived by his wife of 30 years Anais (nee Brown); sons, Clinton of Chicago, and Stuart of Durham, N.C.; and a daughter, Carissa of
In lieu of flowers, memorials may be made to James R. Webb Foundation of American Real Estate Society, 10806 River Terrace, Austin, Texas 10806 or Children International, P.O. Box 219055, Kansas City, Missouri 64121.