Professional standards for the valuation of commercial and residential real
estate existed at that time of Mayer Lehman Brothers' bankruptcy.
However, bankruptcy Examiner Valukas demonstrates that Lehman showed little
interest in conforming to them or hiring those who knew how to apply them.
This chapter sets out the difficulties of valuing both complex financial
instruments and real estate, and especially commercial real estate and
development land. It describes the methodologies used to value commercial
real estate and complex financial instruments. The chapter draws on the
procedures as set out by the Royal Institution of Chartered Surveyors in
London, and the Appraisal Foundation, which sets the Uniform Standards of
Professional Appraisal Practice (USPAP), the standards required by the
Financial Institutions Reform, Recovery and Enforcement Act 1989. It also
examines some major derivatives in force when Lehman's collapsed,
including collateralized debt obligations (CDOs) and collateralized loan