CERTIFICATE OF SERVICE

I hereby certify that I have served the foregoing Plaintiff's Response to the First Set of Interrogatories of the Defendant Mortgage Bankers Association of America together with the Attachments thereto consisting of seven volumes of documents, upon counsel for the parties, by mailing copies of them, postage prepaid, as follows:

*/ Attachments held for pick-up by messenger at request of counsel.

The United States of America, plaintiff herein, by its undersigned attorneys, hereby answers the First Set of Interrogatories served on it by the defendant American Institute of Real Estate Appraisers.

INTRODUCTORY STATEMENT

As we will describe in greater detail in later portions of these answers, each of the defendants herein is a nationwide organization with thousands of members who are engaged in the business of appraising real estate for home loan purposes and/or making commercial home loans. Each defendant conducts technical training programs for members and for the lending and appraising

employees of members. These programs constitute a major vehicle in the private sector for the setting of appraising and underwriting standards and for assuring that the persons who engage in the day to day business of lending and appraising, are familiar with and rely upon these standards in their

practices.

The United States contends that each defendant, has promulgated standards, criteria and practices pursuant to which the ethnic homogeneity of neighborhoods has been established as an important consideration in measuring the values of homes in an area. That is, that they have instructed the lending and appraising personnel of their members that the value of real property will be highest in areas which are racially, ethnically or "socially" homogeneous and will be lower in areas which are not. This has been accomplished not only through direct statements to that effect in the course of technical training and instruction programs but also by the development and application of appraisal methodologies and techniques which necessarily, by the very definitions they employ, rely upon

a presumed relationship between homogeneity and value, in working through the three traditional approaches to value.

The American Institute of Real Estate Appraisers (hereafter the Institute) and the Society of Real Estate Appraisers (hereafter

the Society) each train real estate appraisers and award certi-
fications and designations to members who successfully complete
the appraisal courses offered by the respective organizations.
In order to obtain these designations, members must learn
appraisal technique and methodology as it is presented in the
materials and technical instructions of the defendant and then
pass examinations based upon their knowledge of the materials.
Members are bound by a code of ethics to conduct their appraisal
practice in accordance with the "professional standards" as
set forth in the training programs, and failure to do so can
subject a member to professional censure and potential loss of
standing as a designated member. Designation and continued
good standing in the two organizations carry with them important
economic benefits to members, inasmuch as designation permits
them to hold themselves out to the public, and, to employers
and to Courts as "experts".

Accordingly, the loss or threatened loss of designation, or the threat of censure as well as the members' simple good faith reliance on the organization's expertise, effectively motivates members to observe the organization's standards.

The Society and the Institute have collaborated in the establishment of standard appraisal definitions and methodologies