As you know, the residential and commercial real estate markets in many areas of the United States increased exponentially in value from 1997 to 2007. After 2007, values in some areas of the country plummeted by up to 50%. Fortunately, in recent years real estate values have been on the rise. With that knowledge in mind, why is the appraisal process in both initial purchases and in refinance transactions so important (whether it is the Direct Sales Comparison Approach, the Cost Approach, or the Income Capitalization Approach)?

Why are credit reports and income and employment checks important too?

Can you see situations where appraisals, credit reports, and employment checks can derail refinance transactions? Please discuss.

QUESTION 2

Please conduct independent Internet research on the most recent mortgage foreclosure crisis. This crisis impacted both the residential and commercial real estate finance markets. 1. Real estate foreclosures in some areas climbed to very large percentages (as high as 50%) of the housing stock. 2. Banks voluntarily attempted mortgage modification programs for some real estate owners. 3. The federal government required mortgage modifications programs, or provided funds for such programs, in an effort to lessen the impact of the foreclosure crisis. How did the traditional foreclosure process fail under these unusual circumstances? Please discuss this question along with one of the three points listed above.