When the average appraiser thinks about what has happened in the appraisal industry and what is on the horizon, it is so easy to limit our thinking to what has happened in our own backyards. But there are other nations who suffered their own financial crisis. Other countries have high foreclosure rates as well. Hopefully, we can learn from our own mistakes. But can we learn from the mistakes of others? Do other nations struggle with similar issues in the valuation space? How do other countries manage the appraisal process?
There are groups who monitor collateral risk on an international level and have accumulated data and are deciphering it to help forecast future trends. The American Enterprise Institute (AEI) is one of these organizations. Ed Pinto, a Resident Fellow of AEI, has organized the Third International Conference on Housing Risk: New Risk Measures and Their Applications, which will take place in Washington, DC on September 17th and 18th. This conference will focus on what’s going on in the valuation space in the US and abroad. Here’s what Ed had to say about the upcoming conference.
BUZZ: Ed, Can you let our readers know a little about your career history and your current position with AEI?
ED: 2014 marks my 40th year in housing finance. I started with the Michigan State Housing Development Authority and spent a total of 5 years with two different private mortgage insurers. I was with Fannie Mae for 5 years in the 1980s and had the position of executive vice president and chief credit officer. I then spent 20 years consulting to the industry. For the last 4 years I have been a resident fellow at the American Enterprise Institute (AEI). Last December I became the codirector of AEI's International Center on Housing Risk (ICHR).
BUZZ: What were the reasons for starting the international conference on Housing Risk?
ED: There were two reasons.
First, the financial crisis largely stemmed from a failure to understand build-up of housing risk:
- Mortgage risk
- House-price or collateral risk
- Capital adequacy
The ICHR (HousingRisk.org) is addressing this problem:
- Will provide objective and transparent risk measures
- Mortgage risk indices published monthly
- Monthly tracking of housing cycle risk for California metro areas and regions alongside mortgage risk indices
- Indices of collateral risk and capital adequacy to be released later this year
Second, for more than 50 years we have had a curious housing policy: putting low-income families with erratic incomes and impaired credit into homes located in price volatile neighborhoods using highly leveraged financing. And we wonder why low-income families haven't built wealth. It does not have to be this way! But more on this later.
BUZZ: How has the conference evolved since its inception 3 years ago?
ED: CRN's 2009 White Paper by Joan Trice was the inspiration for the initial conference in 2012 on collateral risk. As time progressed we realized the purview needed to be broadened to housing risk generally. The 2014 conference will cover housing risk from both a single- and multi-family prospective as well as continue the international focus we have had from the beginning.
BUZZ: What will be some of the hot topics discussed this year at the conference?
ED: John Burns of John Burns Estate Consulting and I will each be presenting ground breaking work on measuring mortgage risk. Appraisal Buzz readers won't want to miss John's discussion of his Housing Cycle Risk Index which covers 107 metro areas.
Andreas Kunert of vdpResearch and Stephen D. Oliner of AEI will each be presenting ground breaking work on measuring intrinsic property value, with a particular focus on land.
I will also be presenting on The Devolution of Appraisal Theory and Practice. Since last year's conference I have uncovered tens of thousands of pages on appraisal and underwriting theory and practice from the first half of the 20th century.
There is also a panel on informing the consumer about housing risk. There will be a presentation by Zillow economist Krishna Rao. I will discuss a new approach entitled: A Straight, Broad Highway to Building Wealth for Middle and Working Class Families through Home Ownership and Retirement Savings.
BUZZ: Who is the target audience of this conference and how can they register to attend?
ED: Anyone interesting in housing risk—be it mortgage or collateral—should attend. Attendees will be from the appraisal industry, the financial community, data companies, academia, and regulatory bodies. Space is limited so register here.
BUZZ: What are some other ways people can participate in the conference who are not able to attend in person?
ED: The conference will be live streamed (access here). A recorded version will be posted here with 24 hours. If anyone is interested in sponsoring this event please contact Joan Trice at firstname.lastname@example.org.
BUZZ: Is there anything else our readers should know about the conference?
ED: Yes, conference registration is complementary (register here).
BUZZ: We appreciate you taking to the time to talk about this with us. We are looking forward to attending the conference and hearing from speakers across the globe.
If you would like to attend this year’s International Conference on Housing Risk scheduled for September 17th and 18th at AEI’s offices in DC — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — you can click here to registration for Free.
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