IMPORTANT SURVEY

commercial appraiser, commercial appraisal

The Tax Credit Allocation Committee (TCAC) has been approached by several parties expressing concerns about TCAC conducting a first round competition in 2009 during a time of such great uncertainty in the tax credit investment market. TCAC is interested in hearing from tax credit stakeholders on this matter, and is therefore conducting a brief poll. Specifically, TCAC seeks your input as to the merits of holding a single funding round, rather than two, in 2009.

Please take a moment and complete the attached survey by Noon on Wednesday, November 26th. Click on the following link and to submit your response. Thank you for your participation. commercial appraiser, commercial appraisal

Important Survey Poll

November 18, 2008. By Heidi Turner tenants in common appraiser, tenants in common appraisal

San Diego, CA: Investors who put their money in TICs (Tenants In Common) investments may be wondering what happened to their money. Like many other people whose investments have lost value in recent times, people with TICs were told that their investments were safe, only to learn they were not. Part of the reason that TICs were pushed as a safe investment may have to do with the commissions associated with the TICs.

""There were billions and billions of dollars invested in TICs because brokers got huge commissions for recommending them," says Ron Marron, founder of Investors Advocates. "The commissions were probably the largest commission product the broker would have in his portfolio. There was both incentive and pressure to sell the TICs.

"People invested in 1031 TIC exchanges and those who invested in these TICs at the advice of their broker or advisor could be at a loss. A lot of these properties are now going to have higher vacancy rates, especially in the commercial arena. A lot of those properties will not be viable. Even with the properties that are residential, the cost to run them can be high. So people with TICs are in danger of losing their investment. The only person making money was the broker."

So, what are TICs? Well TICs are a way of holding a title to real estate. Essentially, the investor owns an undivided fractional interest in a property. Those who have 1031 TIC exchanges defer their capital gains and own real estate but do not have to manage the property. The investor gets to share in a portion of the income, tax shelters and growth of the property, as well as having a separate deed and title insurance for the TIC interest in the property. TICs are not for every investor. They have very limited liquidity and no active secondary market. They also come with long-term holding periods.

Finally, investors who cannot tolerate risk may not find TICs to be suitable investment options. How risky are TICs? Risky enough that DBSI, a real estate investment firm in Idaho, recently declared bankruptcy, despite having $2.6 billion in assets in 2008. The problem is that as the economy declined, income from rental properties failed to cover DBSI's debt. The company now faces at least 10 lawsuits from investors, some of whom invested millions of dollars in the company's properties.

Two companies that Marron is currently looking into are Triple Net NNN Realty and Linsco Private Ledger. Marron says those companies are major players in TICs.
"Investors were misled about what they were investing in and the risks were downplayed," Marron says. "Markets go up and go down, nothing seems risky when the markets are going up."
tenants in common appraiser, tenants in common appraisal

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Commercial Appraiser, Commercial Appraisal

Join Commercial Property News, Multi-Housing News and Contract tomorrow for this interactive web seminar and hear from leading economists how the current financial bailout strategy will impact your business.

The U.S. financial market is enduring one of the worst crises in its history. The investment banking model as we know it is effectively gone, and many commercial banks are spiraling downward as well.

The federal government has stepped in with a massive bailout plan as it strives to rescue the economy, establish calm in the financial markets and gain the confidence of consumers and businesses again. But there is no precedent for a government bailout of this size, leaving many commercial and multi-housing property owners, investors, developers and service providers wondering what it all means for their business.

Once the presidential election is over and the dust settles, there will be many questions that need to be answered. What will be the effects of the new financial package on the commercial and multi-family real estate sectors? What will the real estate finance market look like? How do you protect your business and avoid pitfalls? Commercial Appraiser, Commercial Appraisal

Attend this online-only event, and learn how to protect your investments and navigate through this challenging environment.

OSHA's Web site recorded more than 110 million visitor sessions from the public in FY 2008. Visitors viewed potentially lifesaving safety and health information on topics such as bloodborne pathogens and personal protective equipment from more than 180 million pages during this period. The OSHA Web site went online in 1995 and traffic has consistently increased by 12-15 percent annually. The Web site is considered one of the most valuable public outreach tools. It provides employers and employees with all the information they need to create and maintain healthful and safe workplaces.

commercial and industrial appraiser

Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision

Interagency Statement on Meeting the Needs of Creditworthy Borrowers

           The Department of the Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve have recently put into place several programs designed to promote financial stability and to mitigate procyclical effects of the current market conditions. These programs make new capital widely available to U.S. financial institutions, broaden and increase the guarantees on bank deposit accounts and certain liabilities, and provide backup liquidity to U.S. banking organizations. These efforts are designed to strengthen the capital foundation of our financial system and improve the overall functioning of credit markets.

            The ongoing financial and economic stress has highlighted the crucial role that prudent bank lending practices play in promoting the nation’s economic welfare. The recent policy actions are designed to help support responsible lending activities of banking organizations, enhance their ability to fund such lending, and enable banking organizations to better meet the credit needs of households and business. At this critical time, it is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met. As discussed below, to support this objective, consistent with safety and soundness principles and existing supervisory standards, each individual banking organization needs to ensure the adequacy of its capital base, engage in appropriate loss mitigation strategies and foreclosure prevention, and reassess the incentive implications of its compensation policies.

Lending to creditworthy borrowers
            The agencies expect all banking organizations to fulfill their fundamental role in the economy as intermediaries of credit to businesses, consumers, and other creditworthy borrowers. Moreover, as a result of problems in financial markets, the economy will likely become increasingly reliant on banking organizations to provide credit formerly provided or facilitated by purchasers of securities. Lending to creditworthy borrowers provides sustainable returns for the lending organization and is constructive for the economy as a whole.

            It is essential that banking organizations provide credit in a manner consistent with prudent lending practices and continue to ensure that they consider new lending opportunities on the basis of realistic asset valuations and a balanced assessment of borrowers’ repayment capacities. However, if underwriting standards tighten excessively or banking organizations retreat from making sound credit decisions, the current market conditions may be exacerbated, leading to slower growth and potential damage to the economy as well as the long-term interests and profitability of individual banking organizations. Banking organizations should strive to maintain healthy credit relationships with businesses, consumers, and other creditworthy borrowers to enhance their own financial well-being as well as to promote a sound economy. The agencies have directed supervisory staffs to be mindful of the procyclical effects of an excessive tightening of credit availability and to encourage banking organizations to practice economically viable and appropriate lending activities.

Strengthening capital
            Maintaining a strong capital position complements and facilitates a banking organization’s capacity and willingness to lend and bolsters its ability to withstand uncertain market conditions. Banking organizations should focus on effective and efficient capital planning and longer-term capital maintenance. An effective capital planning process requires a banking organization to assess both the risks to which it is exposed and the risk management processes in place to manage and mitigate those risks; evaluate its capital adequacy relative to its risks; and consider the potential impact on earnings and capital from economic downturns. Further, an effective capital planning process requires a banking organization to recognize losses on bank assets and activities in a timely manner; maintain adequate loan loss provisions; and adhere to prudent dividend policies.

            In particular, in setting dividend levels, a banking organization should consider its ongoing earnings capacity, the adequacy of its loan loss allowance, and the overall effect that a dividend payout would have on its cost of funding, its capital position, and, consequently, its ability to serve the expected needs of creditworthy borrowers,. Banking organizations should not maintain a level of cash dividends that is inconsistent with the organization’s capital position, that could weaken the organization’s overall financial health, or that could impair its ability to meet the needs of creditworthy borrowers. Supervisors will continue to review the dividend policies of individual banking organizations and will take action when dividend policies are found to be inconsistent with sound capital and lending policies.

Working with mortgage borrowers
            The agencies expect banking organizations to work with existing borrowers to avoid preventable foreclosures, which can be costly to both the organizations and to the communities they serve, and to mitigate other potential mortgage-related losses. To this end, banking organizations need to ensure that their mortgage servicing operations are sufficiently funded and staffed to work with borrowers while implementing effective risk-mitigation measures.

            Given escalating mortgage foreclosures, the agencies urge all lenders and servicers to adopt systematic, proactive, and streamlined mortgage loan modification protocols and to review troubled loans using these protocols. Lenders and servicers should first determine whether a loan modification would enhance the net present value of the loan before proceeding to foreclosure, and they should ensure that loans currently in foreclosure have been subject to such analysis. Such practices are not only consistent with sound risk management but are also in the long-term interests of lenders and servicers, as well as borrowers.

            Systematic efforts to address delinquent mortgages should seek to achieve modifications that result in mortgages that borrowers will be able to sustain over the remaining maturity of their loan. Supervisors will fully support banking organizations as they work to implement effective and sound loan modification programs. Banking organizations that experience challenges in implementing loss mitigation efforts on their mortgage portfolios or in making new loans to borrowers should work with their primary supervisors to address specific situations.

Structuring compensation
            Poorly-designed management compensation policies can create perverse incentives that can ultimately jeopardize the health of the banking organization. Management compensation policies should be aligned with the long-term prudential interests of the institution, should provide appropriate incentives for safe and sound behavior, and should structure compensation to prevent short-term payments for transactions with long-term horizons. Management compensation practices should balance the ongoing earnings capacity and financial resources of the banking organization, such as capital levels and reserves, with the need to retain and provide proper incentives for strong management. Further, it is important for banking organizations to have independent risk management and control functions.

            The agencies expect banking organizations to regularly review their management compensation policies to ensure they are consistent with the longer-run objectives of the organization and sound lending and risk management practices.

            The agencies will continue to take steps to promote programs that foster financial stability and mitigate procyclical effects of the current market conditions. However, regardless of their participation in particular programs, all banking organizations are expected to adhere to the principles in this statement. We will work with banking organizations to facilitate their active participation in those programs, consistent with safe and sound banking practices, and thus to support their central role in providing credit to support the health of the U.S. economy.

Joint Release

Office of the Comptroller of the Currency Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation Office of Thrift Supervision National Credit Union Administration

For Immediate Release

November 13, 2008

Agencies Seek Comment on Proposed Interagency Appraisal and Evaluation Guidelines

The federal bank, thrift and credit union regulatory agencies today jointly issued for comment proposed Interagency Appraisal and Evaluation Guidelines that reaffirm supervisory expectations for sound real estate appraisal and evaluation practices. The proposed guidance builds on the existing federal regulatory framework to clarify risk management principles and internal controls for ensuring that financial institutions' real estate collateral valuations (both appraisals and evaluations) are reliable and support their real estate-related transactions. The initiative is intended to respond to heightened concerns over appraisals and credit quality.

The proposed guidance would replace the 1994 Interagency Appraisal and Evaluation Guidelines to incorporate recent supervisory issuances and reflect changes in industry practice, uniform appraisal standards and available technologies. As with prior issuances, the proposed guidance would apply to all real estate lending functions within a federal financial institution, including commercial and residential lending departments, capital market groups, and asset securitization and sales units.

Volatility within certain real estate markets and associated credit risk underscore the importance of independent and reliable collateral valuations. In this regard, there is an expanded discussion of portfolio management techniques and circumstances under which an institution should update or replace a collateral valuation for an existing real estate transaction.

The proposed revisions address:

• Additional detail on the agencies' expectations for an independent appraisal and evaluation function.
• Greater explanation of the agencies' minimum appraisal standards, including clarification of requirements for appraisals of residential tract developments.
• Revisions to the Uniform Standards of Professional Appraisal Practice, which are incorporated by reference in the agencies' appraisal regulations.
• Risk-focused appraisal and evaluation reviews separate and apart from an institution's compliance function.
• New appendices – Appendix A provides further clarification on real estate transactions that are exempt from the agencies' appraisal regulations; Appendix B addresses acceptable evaluation alternatives and use of automated valuation models; and Appendix C contains a new glossary of terms.

The agencies request comments on all aspects of the proposed guidance. Comments are due to the agencies sixty days after publication in the Federal Register, which is expected shortly. A copy of the Federal Register notice with the proposed guidance is attached.

# # #

Attachment:
Proposed Interagency Appraisal and Evaluation Guidelines - PDF (PDF Help)

FDIC-PR-117-2008

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Bank Lending to Commercial Real Estate Plunged 73%
Published: November 13, 2008

By Anuradha Kher, Online News Editor

Washington, D.C.--Multifamily mortgage loan originations remained low in the third quarter, but witnessed a slight increase as compared to the second quarter of 2008, according to the Mortgage Bankers Association's (MBA) quarterly survey of commercial/multifamily mortgage bankers originations.

Third quarter originations for all commercial property types were 53 percent lower than during the same period last year. The year-over-year decrease was seen across all property types and most investor groups.
 
"Uncertainty stemming from the credit crunch, and now the deteriorating economy, has led to a continued pull-back among both lenders and borrowers," says Jamie Woodwell, MBA's vice president of Commercial Real Estate Research. "The need among most investor groups to conserve capital, and the uncertainty of how the slowing economy will affect property fundamentals, is fueling a prolonged pause in all aspects of commercial real estate activity."
 
Year-over-year, multifamily property loans in the third quarter 2008 saw a 30 percent decrease, a much smaller hit compared to most other property types, which saw over 50 percent decreases.

On the other hand, when compared to the second quarter of 2008, third quarter originations for multifamily properties saw a 9 percent increase. The only other commercial property types to see an increase were industrial and retail properties. Third quarter 2008 mortgage originations for all sectors were 11 percent lower than originations in the second quarter of 2008.

Decreases in overall commercial/multifamily mortgage originations were led by a drop in commercial mortgage-backed security (CMBS) conduit loans and loans for commercial bank portfolios. These numbers show the impact of the recent credit crunch and other market disruptions.
 
Year-over-year, among investor types, conduits for CMBS saw a significant decrease of 93 percent. There was also a 71 percent decrease in loans for commercial bank portfolios, and a 27 percent decrease in loans for life insurance companies. The dollar volume of loans for Government Sponsored Enterprises (or GSEs - Fannie Mae and Freddie Mac) saw an increase of 15 percent.
 
As compared to the second quarter, commercial bank portfolios saw a decrease in loan volume of 55 percent but loans for conduits and life insurance companies increased, by 67 and 27 percent respectively. GSE loan volume increased as well (12 percent). However, these increases were overwhelmed by the size of the decline in loans for commercial banks.

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