Thursday, October 8, 2009

"History is an account mostly false, of events mostly unimportant, which are brought about by rulers, mostly knaves, and soldiers, mostly fools."

Fannie, Freddie Provide Update on Status of IVPI

Fannie Mae and Freddie Mac provided a Sept. 30 update on development of the Independent Valuation Protection Institute that is to be created under the terms of the cooperation agreement that also established the Home Valuation Code of Conduct. Under the agreement signed by Freddie Mac and Fannie Mae, the IVPI is to receive complaints related to potential non-compliance with the HVCC.

While the IVPI has not yet been established, an interim Web site is being created to receive and register complaints from appraisers, individuals and other entities on non-compliance with the HVCC. That interim Web site, to be located at , will be launched in November. A sample complaint form that will be used for complaint submissions is now available for preview at . However, the form may not be used to submit complaints until the interim Web site is launched in November.

Federal Fraud Target of New Bill

Under new national legislation introduced last week in the Senate, local prosecutors, state attorney generals and Native American tribes could be getting an injection of capital to help investigate and prosecute mortgage and real estate fraud cases. The Fighting Real Estate Fraud Act of 2009, which is being co-sponsored by Sens. Jon Kyl, R-Ariz. and Charles Schumer, D-N.Y., calls for the establishment of $200 million in Federal funds that local and state groups could apply for in order to prosecute and investigate real estate fraud cases through the U.S. attorney general.

According to the proposed legislation, real estate fraud is defined as a ”crime involving purposeful misrepresentations, forgeries, omissions to general applications, tax returns, financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, credit reports, and any actions that may defraud a secured creditor."

In an interview with the Arizona Republic, Kyl described the Fighting Real Estate Fraud Act of 2009 as a “grant program (that) will give state prosecutors the resources needed to investigate and target those who fraudulently profited from predatory lending practices during the housing boom, as well as those who are illegally stripping homes during the downturn of the market."

The introduction of fraud investigation legislation comes as prosecutors, homeowner advocacy groups and state agencies across the country have complained about trouble investigating and prosecuting mortgage fraud cases due to lack of staff and funding. In the last year alone, mortgage fraud cases under investigation by the FBI are up nearly 63 percent.

Currently the FBI has more than 2,600 open fraud cases. According to FBI Director Robert Mueller, a majority of those open cases involve losses of more than $1 million.

Foreclosure Numbers Continue to Paint Bleak Picture

The latest Mortgage Metrics report released last week by the Office of the Comptroller of the Currency and the Office of Thrift Supervision showed that efforts to keep Americans in their homes grew by almost 22 percent during the second quarter 2009. Yet despite industry actions, the continuing sag in economic conditions actually resulted in higher rates of mortgage delinquencies and foreclosures in process, which increased to 8.5 percent and 2.9 percent of all serviced mortgages, respectively.

Among the key findings of the OCC and OTS second quarter report are:

The percentage of current and performing mortgages fell by 1.4 percent to 88.6 percent of the 34 million loans in the portfolios of reporting servicers.
Economic factors continued to adversely affect credit quality, with delinquencies up across all risk categories — prime, Alt-A and subprime. The percentage of serious delinquencies increased to 5.3 percent of all loans in the portfolio.
Although delinquencies rose, the number of new foreclosure actions remained about the same as in the previous quarter. Total foreclosures in process continued to grow and reached 993,000 mortgages, or about 2.9 percent of the portfolio.

The OCC/OTS Mortgage Metrics reports, which have been published quarterly since the beginning of 2009, cover 34 million loans totaling about $6 trillion in principal balances and representing about 64 percent of all first lien mortgages in the country. To access the OCC/OTS report in its entirety, visit . To view past reports, visit .

Bernanke Outlines Desired Fed, Regulatory Council Balance

Federal Reserve Chairman Ben Bernanke told lawmakers last week that he supports the creation of a council of regulators to oversee systemic risks to the economy, but he stressed that the council should be limited in power and not be involved in “micromanaging” any part of the system.

In testimony before the House Financial Services Committee, Bernanke told policymakers that his agency is in a good position to oversee the nation’s largest financial firms, but left room for the proposed council of regulators to monitor risks threatening the entire financial system.

"(The Fed’s) involvement in supervision is critical for ensuring that we have the necessary expertise, information and authorities to carry out our essential functions as a central bank of promoting financial stability and making effective monetary policy," Bernanke testified.

Later in his testimony, Bernanke added, "We should seek to marshal the collective expertise and information of all financial supervisors to identify and respond to developments that threaten the stability of the system as a whole."

Bernanke said that a council of regulators, composed of representatives from agencies that currently monitor various sectors of the financial system, could help identify regulatory gaps and detect excessive risks that are being taken by financial firms or that are emerging in the markets.

By endorsing a role for the regulatory council in monitoring wider threats, Bernanke gave acceptance to an idea advocated by elected officials who have expressed reluctance about the Obama administration's proposal in June to give the Fed increased regulatory authority.

It now appears that the discussion on Capitol Hill will be shifting from the Fed’s increased power to how to strike a balance between the Fed and a newly created council of regulators.

Some agency heads, such as Federal Deposit Insurance Corporation Chairman Sheila Bair and Securities and Exchange Commission Chairman Mary Schapiro, have said the council should have more power than the White House has proposed. Democrats such as Senate Banking Committee Chairman Christopher Dodd, D-Conn., and House Financial Services Committee Chairman Barney Frank, D-Mass., have publicly agreed with Bair and Schapiro.

For its part, the White House has warned that finding the right balance will be needed as giving a council too much power could lead to turf battles and agency fighting.

Democrats are planning to hold votes on parts of the financial system overhaul proposal in the next month and hope to have changes to financial market rules signed into law by the end of the year.

Delayed Public-Private Investment Program under Way with $12.27 Billion Available

The Treasury’s long-delayed program for buying toxic assets from financial firms has been officially launched, albeit as a scaled down version. The Public-Private Investment Program, known as the PPIP, kicked off last week with the government raising $4.5 billion to purchase troubled assets — about a quarter of which came from private investors.

When the PPIP was announced in March, the Treasury had hoped the funds raised would be enough to take up to $1 trillion of toxic assets from banks' balance sheets. But amid banks’ declining interest in selling off mortgage securities at bargain prices just as they are beginning to recover their value, that target is now around $40 billion, made up of private and public investment plus debt financing.

To date, five of the nine approved public-private investment funds have met the requirements to get government financing that will let them begin purchases of toxic assets. Altogether, the five participating private investment funds currently have $12.27 billion in purchasing power under the PPIP program, $3.07 billion of which is flowing in from private investors.

On Sept. 30, the Treasury announced that Invesco Ltd and Trust Company of the West, or TCW, had agreed to invest $1.13 billion in the program. Adding in the financial support from Treasury, those two funds will have $4.52 billion in purchasing power.

Earlier this week, the Treasury announced that three more investment funds have also raised the necessary capital to participate in the PPIP. BlackRock Inc.; Wellington Management Co.; and AllianceBernstein LP and its sub-advisers, Greenfield Partners LLC and Rialto Capital Management LLC, have collectively committed $1.94 billion to the program. The Treasury will match these investments dollar-for-dollar and will provide debt financing, which will bring the purchasing power of the three funds to $7.74 billion.

According to Treasury officials, the private money contributing to the PPIP is coming from a wide range of investors, including public pension funds, sovereign wealth funds, university endowments, insurance companies and other big investment funds. Any financial firm registered or regulated in the United States can sell toxic assets to the investment funds, the Treasury said.

Treasury officials also said they are working out a procedure for providing the public with information about who is selling toxic assets to the PPIP funds.

Fed Looks to Bring New Ratings Agencies into TALF

To promote competition among credit ratings agencies and spark more consumer and business lending, the Federal Reserve is considering expanding the field of credit ratings agencies that determine the eligibility of securities pledged for loans in the government’s Term-Asset-Backed Securities Loan Facility, or TALF, program.

Earlier this week, the Fed proposed allowing agencies that have registered with the Securities and Exchange Commission and that have experience with the securities being rated to start rating securities. Such a move would likely expand the number of ratings agencies beyond those that currently set ratings — Standard & Poor's, Moody's Investors Service and Fitch Ratings — and increase participation in the TALF program.

Started in March, the TALF program is intended to spur more lending to consumers and businesses at cheaper rates. However, to date the government program with the potential to generate up to $1 trillion in lending for households and businesses has only loaned out a fraction of the $200 billion it has made available during the first phase of its program.

The public and industry groups will now have an opportunity to weigh in on the Fed proposal, which could be revised before a final version is adopted.

CRE Significant Threat to 1 in 8 U.S. Banks

The International Monetary Fund has revised the amount of write-downs financial institutions are expected to take from $4 trillion to $3.4 trillion, but warned that growth in unemployment could push the figure back up. The revision was made in light of an increase in the value of securities as well as the implementation of a new methodology used for calculating write-downs. “Global financial stability has improved, but risks remain elevated and the risk of reversal remains significant,” the IMF said in a report, adding that the recovery would be extremely slow.

Although banks are returning to profitability, projected earnings are expected to fall short of fully offsetting projected write-downs over the next 18 months. According to the report, while banks have written off $1.3 trillion in toxic loans and worthless securities to date, an additional $1.5 trillion will be needed by the end of 2010. The report said U.S. institutions have addressed roughly 60 percent of their write-downs, while European counterparts have recognized only 40 percent. The IMF said loan losses are expected to account for around two thirds of total write-downs.

The report noted that bank rescue and stimulus programs provided great relief for banks. However, the IMF called on governments around the world to implement stricter bank capital regulations as well as develop policies for banks to clear toxic loans off balance sheets to help aid the economic recovery and prevent future crises from developing.

With global markets still suffering from a lack of credit availability, the report noted that the demand for credit by both the public and private sectors is expected to fall short of the projected supply.

According to the report, U.S. banks remain at risk because of the deteriorating commercial real estate market, noting that about 12 percent of the nation’s financial institutions have exposures to commercial real estate loans amounting to five times their available capital. To reach a 10 percent ratio for Tier 1 capital, U.S. banks need to raise an additional $80 billion while European banks need $380 billion.

Almost 1 in 3 Mortgage Applications Denied Last Year; FHA Financing over 20 Percent

Nearly one in three borrowers who applied for a home mortgage last year was denied, the Federal Reserve reported on Sept. 30. Overall loan applications were down by a third from a year earlier, and were half the level in 2006, the Fed added. The report found that loans backed by the Federal Housing Administration increased to 21 percent of all loans made last year from less than 5 percent in both 2005 and 2006.

In its annual look at mortgage practices among lending institutions, the Fed said the denial rate for all home loans was about 32 percent in 2008 — about the same as in 2007, but up from 29 percent in 2006. The denial rates for blacks and Hispanics were more than twice as high as the rate for white borrowers. However, for black borrowers, more than half of all loans were FHA-insured, more than triple a year earlier. For Hispanics, that number skyrocketed to 45 percent, more than four times as high as in 2007.

High-priced loans, with rates at least three percentage points above the rate for prime loans, declined to nearly 12 percent of the market from a high of 29 percent in 2006, according to the report. That figure mainly reflects unusually low interest rates during the recession and understates the disappearance from the market of high-priced subprime loans made to borrowers with poor credit, the report said.

Lenders also scaled back on the amount of "piggyback" mortgages, in which borrowers used second mortgages to avoid making a 20 percent down payment. The report documented that only 98,000 were made last year, down from 1.3 million in 2006.

Pending Home Sales Rise for 7th Straight Month; Mortgage Applications Dip

The number of signed sales contracts in August increased for the seventh consecutive month while home construction had its biggest jump in activity in nearly 16 years, signs that the housing market is beginning to recover from the real estate meltdown.

Driven by low mortgage rates, cheap foreclosures and the $8,000 first-time homebuyer tax credit, the National Association of Realtors sales agreement index reached its highest level since March 2007. Jumping 6.4 percent in August from the previous month to a 103.8 index – 12 percent above the figure recorded during the same period a year ago – the increase surpassed analysts’ forecasts of a 98.6 index. A pending home sales index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales, according to NAR.

In August, pending sales were up 16 percent in the West, 8 percent in the Northeast, 3 percent in the Midwest and nearly 1 percent in the South. Despite the increase in signed sales contracts, with new rules for home appraisals and rigid lending standards reportedly derailing potential sales, completed sales fell 2.7 percent in August. Existing home sales fell for the first time in four months despite hitting its second-highest pace in nearly two years. Conversely, new home sales increased for the fifth consecutive month. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales.

“Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being canceled,” Lawrence Yun, NAR’s chief economist, said in a statement. “Without historic precedents, it’s challenging to assess.”

Driven by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests, home loan applications fell in the last week of September to a seasonally adjusted 2.8 percent. According to the Mortgage Bankers Association, the average 30-year mortgage rate dropped 0.03 percent to 4.94 percent. During the same period a year ago, 30-year rates averaged 6.33 percent.

Housing experts remain divided on whether the market is on the upswing. Some industry experts predict another fall in sales while others believe the market is gradually recovering. “We’re going to see another leg down, and if we lose the tax credit it will be a significant leg down,” said John Burns, president of John Burns Real Estate Consulting.

Although Stuart Hoffman, chief economist at PNC Financial Services Group, does not expect another downturn, he’s not convinced that prices have hit bottom. “I would definitely characterize it as a slow recovery in housing out of a very deep hole,” Hoffman said. “We’ve gone from the sub-basement to the basement, and maybe we’re going to get to the ground floor on housing by next spring. At least I think the process has begun.”

Home Price Indices Show Broad Improvements

Although still in negative territory, September marks the sixth consecutive month of improvements in the 10-city and 20-city annual rate of decline, according to the latest Standard & Poor’s/Case-Shiller Home Price Indices. In July, the 10-city composite dropped 12.8 percent while the 20-city fell 13.3 percent compared to the same period a year ago. Moreover, the annual rate of decline in all 20 metropolitan statistical areas showed improvements in July compared to the previous month.

“The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets,” David Blitzer, chair of Standard & Poor’s Index Committee, said in a release. “The two composites and all metro areas are showing an improvement in the annual rates of return, as seen through a moderation in their annual declines.”

As of July, home prices across the country are back to levels reported during the same period in 2003. From when the indices peaked in the second quarter of 2006 through July 2009, the 10-city composite dropped 31.1 percent while the 20-city composite fell 30.2 percent.

In terms of annual declines, however, all MSAs and both composites are still in negative territory. Cleveland, Dallas and Denver are the strongest performing MSAs with July readings of -1.3 percent, -1.6 percent and -2.9 percent, respectively. With a peak-to-trough decline of 54.8 percent, Las Vegas came in at the bottom, posting its lowest index level in July since peaking in August 2006.

When analyzing the monthly data, 13 MSAs reported three or more consecutive positive returns. Both composites and 16 MSAs reported monthly returns greater than 1.0 percent. While the indices increased in July in both the 10-city and 20-city composites, as well as in 18 MSAs, Seattle and Las Vegas were the only areas with monthly declines.

AI to Host Residential Development Webinar on Oct. 28

An Oct. 28 Webinar from the Appraisal Institute will provide an overview of national housing market trends in home prices, foreclosures, interest rates, affordability, construction, inventory and employment during the past four years. “Residential Development: Valuation Trends, Issues and Challenges” will present valuable information to both residential and commercial appraisers, as well as other market participants.

This Webinar will provide insight on how housing trends are considered when resolving residential development valuation issues, including: sales comparison approach, real estate-owned/distressed sales, investor/speculator acquisitions, public builder acquisitions, builder/developer profit, equity multiples, marketing/exposure periods and liquidation and disposition values.

The Webinar will be led by Brian J. Curry, MAI, SRA, the managing director and national practice leader in the Residential Development Specialty Group with Cushman & Wakefield Valuation and Advisory Services. Curry has been providing valuation and counseling services involving residential development property for over 25 years. He is a nationally recognized expert in all types of residential development property, including: detached housing, attached housing, condominium product, military re-use plans, urban redevelopment, mixed-use and master-planned communities. He has been a real estate valuation instructor with the Appraisal Institute, California Community Colleges and the University of California, San Diego.

The 60-minute Webinar will be presented at 1 p.m. CT on Oct. 28. This Webinar is approved for one hour of Appraisal Institute continuing education credit. Cost is $30 for members; $75 for non-members. For more information and to register, visit

Barclays Says Investors Starting to Seek Real Estate Again

Bargain prices resulting from the economic downturn are likely to motivate investors to pursue real estate acquisitions over the next couple of years, according to Barclays Capital researchers. Mark Shapiro, head of global restructuring and finance at Barclays, said, “A lot of the investors I’m hearing about are now thinking of shifting their focus to real estate, because that’s where they see the opportunities.” He added that investors are unlikely to focus on a single property sector. His comments came at the Reuters Restructuring Summit held Oct. 1 in New York.

Although a market hasn’t been established yet for investors to dive into, the number of commercial real estate defaults is expected to climb as banks refuse to roll over debt or issue new financing in order to maintain sufficient regulatory capital levels. “What’s happening in distressed (investing) is that the more opportunistic investors (are) willing to take the risks around what is a situation that still lacks visibility, i.e., real estate, over the next couple of years,” Shapiro added.

“Commercial real estate remains a very serious problem,” Federal Reserve Chairman Ben Bernanke told the House Financial Services Committee at a recent hearing. “We are concerned, both because the fundamentals are weakening and because the financing situation is bad (and) could provide a source of a lot of stress, particularly for small and regional banks that have a very heavy concentration in commercial real estate.”

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, echoed Bernanke. “Lots of commercial construction is still in process, and until growth of supply stops, the industry statistics will continue to deteriorate,” Lockhart said.

International Real Estate Funds See 38 Percent Gain in 2009, Double from 2008

Renewed interest in real estate investment funds connected to commercial property is building momentum, according to fund analyst Lipper Inc. According to Tribune Media Services, the firm said international real estate funds were up 38 percent in 2009 and global real estate funds, which include U.S. companies, were up 28 percent. International real estate funds are now 100 percent above their market bottom reached in March 2009, Lipper Inc. stated.

“We’re seeing stronger pickup in economic growth outside the U.S., which will lead to stronger real estate fundamentals there as well,” said Paul Curbo, portfolio manager of AIM Global Real Estate Fund. “A portion of the U.S. and U.K. economic growth was fiscally stimulated, but there’s more sustainable organic growth in places like Australia, Hong Kong, China and Singapore.”

Most of the gains in REITs occurred in other countries. With investors remaining wary about the U.S. commercial real estate sector, the market increased only 17 percent compared to a 23 percent gain of the average U.S. diversified stock fund. Recently, Colony Financial and Apollo Commercial Real Estate Finance, two domestic REITs that plan to invest in troubled commercial real estate debt in the U.S., had less-than-stellar initial public offerings because of investor skepticism.

Industry insiders suggest that the recent gains should be taken in stride. “We’re coming off a fairly significant decline in global real estate securities, so a lot of the run-up has been making up for the previous decline,” Curbo said. “However, I think the valuations are reasonable for a long-term investor, and there is some upside to be gained from improvement in the economy.”

Tom Roseen, a research manager at Lipper Inc., noted that because of the tremendous gains over the past 12 months, the upswing may be short lived. “The real estate asset class is not for the faint of heart and should only be a small portion of investors’ asset allocation schemes,” Roseen cautioned.

Despite many companies suspending dividends to conserve and build cash, few deals have gone through. “You won’t find many people who are saying that the fundamental issues facing real estate have been addressed and solved,” said Andrew Gogerty, a research analyst at Morningstar. “We’re not nearly as positive on real estate as we used to be because of the direct headwinds of volatility in the sector and a lot of trading going on that isn’t tied to fundamental changes.”

REITs Post Biggest Gain Since 1989; Analysts Split over Future Trend

According to analysts, the steep rise in share prices of real-estate investment trusts has the sector trading at a premium to the value of the underlying assets – for the first time since the heyday of the real-estate boom. To some stock-pickers, that is one of several signs that REITs are overvalued and that a correction may be around the corner, according to The Wall Street Journal.

REITs posted a 33 percent return in the third quarter, according to the Dow Jones Equity All REIT Index. That is the biggest gain since the index's inception in 1989, beating out the previous record, which was set three months ago. The hotel and office sectors both delivered gains of about 45 percent. Only six stocks in the index of 114 companies posted a negative return, the Journal reported.

Research firm Green Street Advisors reports that REITs were trading at a 24 percent average premium to their net asset value as of late September. The firm attributes that to the fact that REITs are up nearly 90 percent from their March lows as well as to the fact that commercial real estate values are estimated to have fallen some 40 percent from their peak. But earlier this month Goldman Sachs analysts warned that REITs were overvalued by 15 percent, even after a 10 percent selloff in late September. Citigroup Inc. analysts downgraded office REITs because of concerns that high valuations limited potential gains.

REITs are still off around 35 percent from where they were trading a year ago. Overall, Green Street says that investors are valuing REITs fairly, and that the premium to net asset value is a sign that property values are due to increase. Investors may be willing to pay more for real-estate stocks if they expect the companies to be able to ride a rising market, they reason.

"I think real-estate prices have already troughed, and the numbers we're using show they've bounced back a little bit," Mike Kirby, Green Street's director of research, told the Journal. REITs can take advantage of the continuing dearth of capital in the private markets, Kirby said. While mortgage financing and private capital is still hard to come by for landlords, REITs have been able to get relatively good pricing in secondary stock sales and corporate-bond issues.

REITs raised more than $13 billion through secondary stock sales between March and June.
Outlet Center Vacancy Rates Tighter than Malls

According to CoStar Property Analytics, the current outlet center vacancy rate stands at 5.12 percent, far outperforming the 8 to 10 percent average vacancy rates currently found in the lifestyle, power, community and neighborhood shopping centers categories. A CoStar Property Analytics statistical forecast projects that outlet center vacancy could return to its lower, pre-recession level of less than 4 percent by the end of second quarter 2010.

CoStar attributed the low vacancy rate to the outlet center category’s level of positive net absorption, which measured 1.1 percent of the category's total square footage so far this year. This is a much higher level than other shopping center types, ranging in net absorption rates from .8 to -.3 percent.

In addition to a higher net absorption rate, the nation's top outlet center landlords are reporting steady leasing activity, which has led to the development of more outlet centers. Value Retail News’ annual State of the Outlet Industry report found that during 2008, 1,454 new outlet stores opened, bringing the total units in operation to 12,924, which represents a 12.6 percent growth rate. According to VRN, the average outlet center store is 4,702 square feet and pays $23 per square foot in rent.

Besides existing outlet center players, several high-profile retailers are considering entering the outlet channel, Steven Tanger, CEO of Tanger Outlet Centers, told CoStar. Tanger pointed out that excess inventory at retailers' full price stores is "backing up" and that companies are in need of a profitable sales channel to clear that merchandise.

NMHC: Student Housing Proves Recession Resistant

Historically, off-campus student housing has been one of the apartment industry’s most important niche markets, and it has long been touted as recession-proof, according to Jim Arbury, senior vice president of the National Multi Housing Council, told the site that even in the economic and housing downturn, the trend is holding true, mainly because the U.S. continues to produce an increasing number of high school graduates.

According to Arbury, NMHC’s recent report “Special Student Housing Report: Has the Recession Had an Impact?” indicates that applications and enrollments are up at most universities. "The only places we generally find declining or flat enrollments are in states where the higher education budget has been dramatically reduced or where the university itself is geographically constrained from any further growth," Arbury told

For more information, and to order ($800), visit:

Appraisal Institute Launches Another Member-Only Benefit

As rapidly as the profession is evolving, appraisers must be informed to prepare for tomorrow. To help members stay on top of the latest developments, the Appraisal Institute has launched a new member benefit providing national media coverage spotlighting industry trends, Appraisal Institute members and featured articles with topics ranging from sustainable properties to legislative issues and regulatory developments affecting the residential and commercial markets.

With “AI in the News,” members now have access to the latest newspaper, magazine, online, radio and television coverage from across the country on issues important to appraisers. “AI in the News” is updated daily so members can get breaking news when it happens.

Since “AI in the News” is a member-only benefit, a member login name and password are required. Stay informed about the latest developments within the industry and access “AI in the News” from the “My Appraisal Institute” Web page at

BOMA Releases New Online Resource for Commercial Building Valuations

The Building Owners and Managers Association International’s recently released 2009 Experience Exchange Report aggregates and analyzes detailed income and expense information from 4,000+ commercial office buildings throughout the United States and Canada. The data provides appraisers with key operating performance metrics that can help determine a building’s value when market comparisons are dated or unavailable. The EER also contains trend data for prior years to allow for more detailed analysis of specific markets’ performance.

“With transaction volumes severely curtailed, market comparisons are now dated and reflect purchase prices and asset values that no longer hold in the market place. Instead of relying on those comparisons, we are now valuing buildings based on an assessment of how the property’s financial performance compares to the income and expense performance of the larger market,” said BOMA International Chair and Chief Elected Officer James A. Peck. “The EER is the perfect tool for determining how an asset stacks up in the market, giving appraisers a clear picture of building income and expense trends in close to 300 markets.”

Developed in collaboration with commercial real estate research firm Kingsley Associates, the EER’s data set comprises both private and public sector buildings and tracks such key measures as rents (for office, retail and other areas), and expenses such as utilities, repairs/maintenance, cleaning, security, administrative and roads/grounds, as well as fixed expenses including real estate taxes. Each major income and expense category also includes line-item detail, so subscribers can drill down to see what comprises each major income or expense, or roll them up for a more general analysis.

The new EER is available online and new custom search toolsmake it easy to generate reports and analysis for specific property profiles, such as various building uses, types of owners and types of tenants. Users have the ability to import data tables in both PDF and Excel formats in order to expedite budgeting and analysis, and create reports and presentations. Performance for any income or expense item can be charted graphically and trends can be tracked over time.

The EER is available by individual market or by full access to all markets. The cost is $125 for a single market, $25 for each market after that, or $250 for full access to all markets. For group and company-wide subscriptions, call 202-326-6314. For more information,

MISMO Releases Version 3.0 Reference Model for Public Feedback

The Mortgage Industry Standards Maintenance Organization released its Version 3.0 Reference Modelfor a 30-day intellectual property review on Oct. 1. Version 3.0, which simplifies the ability to combine different types of data into the same electronic package, will also give investors the ability to mine any data type in loan packages, streamline data management across all business transactions in the loan life cycle and simplify the application of electronic signatures.

MISMO invites lenders and vendors across the board to download the model, review it and adapt it to their organizations as they see fit, according to Ron Duff, MISMO governance committee chair and senior vice president at Fiserv. The Version 3.0 Reference Model and associated Logical Data Directory can be downloaded at percent203.0 percent20Candidate percent20Recommendation.aspx. Feedback can be submitted to

MISMO is a not-for-profit subsidiary of the Mortgage Bankers Associationand managed by MERSCORP, is a technology standards development body for both the residential and commercial industry segments. Visit for more information.

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