B&T August 13, 2018 by The Warren Group

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THE FINANCIAL SERVICES AND REAL ESTATE WEEKLY FOR MASSACHUSETTS BY THE NUMBERS

PAGE 6

County close-up: Franklin Spotlight: Colrain

IN PERSON

PAGE 9

When Laura Portney graduated from Clemson University, she faced a pivotal decision: pursue her master’s degree at Boston Architectural College, or enter the workforce full-time at architects Prellwitz Chilinski Assoc. Portney chose to do both. It made for an “intense” four years, she recalls, but in hindsight it was the right decision.

WEEK OF MONDAY, AUGUST 13, 2018

BANKING & LENDING BY THE NUMBERS

$800 million A conservative estimate of the amount of money lost for credit card users due to U.S. synthetic identity fraud in 2017. See Julie Conroy’s column on page 10. Source: The Aite Group

3.1% The amount consumer credit grew in June of this year, a slow growth compared to May which surged 7.5 percent at a seasonally adjusted annual rate. See Week on the Web on page 2 for more. Source: Federal Reserve

$36 million

COMMERCIAL INTERESTS

SEAPORT REIGNS SUPREME After Multiple Rebrand Attempts, the Waterfront Neighborhood is Still the Seaport

The decline of commercial construction loans the parent company of Rockland Trust sustained from the second quarter of 2018. See Bram Berkowitz’s story for more information on page 7. Source: Rockland Trust

8.8% The growth year-over-year of the overall cost of construction materials in May, the largest annual increase in almost seven years. See Bram Berkowitz’s story on page 7. Source: Associated General Contractors of America

$600 million The amount of assets Merrimack Valley Credit Union had at the end of 2017. See Week on the Web on page 2. Source: Merrimack Valley Credit Union

$29 million

BY SCOTT VAN VOORHIS

The volume added during the second quarter of 2018 to Rockland Trust’s parent company. See Bram Berkowitz’s story on page 7. Source: Rockland Trust

BANKER & TRADESMAN COLUMNIST

hat’s in a name? Apparently not much if it happens to be the “Innovation District.” Boston City Hall’s years-long, headscratching attempt to rename the booming Seaport is officially dead. When I caught up with him the other day, Brian Golden, head of the Boston Planning and Develop-

$500,000 The amount of drugs proceeds Juan Peguero, a Boston resident, transferred into his account. He has been charged in an indictment with two counts of money laundering. See Week on the Web for more on page 2. Source: U.S. Attorney’s Office

44.5% The price increase for diesel fuel in May of this year. See Bram Berkowitz’s story on page 7 for more. Source: Associated General Contractors of America

Unless otherwise noted, all data is sourced from The Warren Group’s Mortgage Market Share Module, Loan Originator Module, Statistics Module and/or proprietary database. For more information please visit www.thewarrengroup.com/business/datasolutions.

ment Agency, took the opportunity to put the final nail in a very dumb idea. Golden noted his agency no longer uses the Innovation District name moniker in its voluminous marketing and planning materials. After eight years, this experiment in top-down rebranding, in which City Hall attempted to rename an entire neighborhood by edict, has come mercifully to an end. Continued on Page 3

TRADE POLICY

INK BLOCK EAST?

Developers Fix Cost of Materials with Suppliers or Pass Down to Buyers

Changes Are Coming to Dot Ave. Corridor

By Bram Berkowitz | Banker & Tradesman Staff

By Steve Adams | Banker & Tradesman Staff

Impacts of Tariffs and Trade Big Developer Eyes South Policy Begin to Trickle Down Boston for Acquisitions

Banking & Lending PAGE 7

Commercial Real Estate PAGE 8

2 | BANKER & TRADESMAN

AUGUST 13, 2018

The Week on the Web

Timothy M. Warren Jr., CEO and Publisher David B. Lovins, President and COO

BANKER & TRADESMAN

A ROUNDUP OF OUR MOST POPULAR STORIES FROM THE PAST WEEK

ESTABLISHED 1872

A SLENDER TRIANGLE TOPS OFF IN BACK BAY

Published by The Warren Group

• A topping-off ceremony was scheduled today for the 742-foot Four Seasons Hotel & Private Residences at One Dalton St. in Boston’s Back Bay, a luxury condominium and hotel tower developed by Carpenter & Co. of Cambridge. • In a recent interview, Carpenter & Co. CEO Richard Friedman told Banker & Tradesman that two of the building’s three penthouses are under agreement, one for $40 million. Units on the top 12 floors have balconies providing views to Cape Cod, and penthouses come with 600-square-foot terraces. • Designed by Henry Cobb of Pei Cobb Freed & Partners and Cambridge Seven Assoc., the triangular tower next to Christian Science Plaza will be the tallest residential building in New England, with 160 residences managed by Four Seasons and 215 hotel rooms on the lower floors. Completion by Bostonbased Suffolk Construction is scheduled for early 2019. • The foundation of the concrete-framed building is sunk 165 feet into bedrock, and a 40,000-gallon “slosh tank damper” in the rooftop mechanicals minimizes the movement of the tower during high winds.

PUBLISHING

Associate Publisher: Cassidy Murphy Associate Editors: Steve Adams, Jess Pitocco Reporter: Bram Berkowitz Contributing Writer: Scott Van Voorhis Audience Solution Specialists: Jenell James, Sarah Ahlgren Advertising Account Manager: Steve Ketler

CONSUMER CREDIT SLOWS IN JUNE DATA SOLUTIONS

Director of Sales & Marketing: John Bottini Communications Manager: Mike Breed Executive Data Solutions Account Manager: William Visconti Data Solutions Account Managers: Kevin Bartlett, Chris Mirakian

INFORMATION SERVICES

Director of Operations & Product Strategy: Samantha Bullock Data Operations Supervisor: Tammy Dandurant Data Services Project Coordinator: John Keith Acquisitions Coordinator: Linda MacDonald Transaction Acquisition Coordinators: Wally Bullock, Ellen Gendron

READVILLE DEVELOPER DROPS 157 APARTMENTS, ADDS 128 CONDOS • The developer of a large multifamily project in Readville has submitted a revamped proposal that eliminates 157 apartments and adds 128 condominiums in one of four buildings. • Boston-based Noannet Group originally submitted plans in 2016 to redevelop a 6.6-acre site at 36-40 and 50-70 Sprague St. that currently houses warehouses and maintenance buildings. Following a series of community meetings, it’s agreed to reduce the apartment count from 521 to 364, while reserving the largest building for 128 condos. • The changes would reduce the square footage of the development by 74,700 square feet. Buildings would range from five to eight stories. The building at the northern corner of the property would include a two-story pavilion with shared workspace, coffee house and lounge. • Parking plans call for 458 garaged spaces and 53 surfaces space, reflecting the proximity to the Readville station on the MBTA commuter rail’s Fairmount line.

MERRIMACK VALLEY CU TO CHANGE CHARTERS

HR Coordinator: Andy Wells

INFORMATION TECHNOLOGY

Senior Applications Developer: Joe Chan Software Developers: Tatyana Lisyanaya, Michael Paul, Priyadarshini Velayudam

• Merrimack Valley Credit Union has proposed to change its charter. • The organization has filed an application with the Massachusetts Division of Banks to convert from a federally-chartered credit union to a state-chartered credit union, according to a recent activity report from the DOB. • The move would change MVCU’s regulator from the National Credit Union Administration to the Massachusetts Division of Banks. • MVCU had about $600 million in assets at the end of 2017, about 200 employees and branches in Lawrence, North Andover, Methuen, Haverhill, Plaistow, New Hampshire and Seabrook, New Hampshire.

FINANCE & ADMINISTRATION

BOSTON MAN CHARGED WITH MONEY LAUNDERING

Accounting Manager: Mark DiSerio Accounts Payable: Olga Khalaydovsky Accounts Receivable Clerk: Stephanie Griffin Human Resources Manager: Linnea Blair

• A Boston man was arrested yesterday and charged in federal court in Boston with money laundering. • Juan Peguero, 28, was charged in an indictment with two counts of money laundering. • According to the indictment unsealed yesterday, on two occasions in 2015, Peguero transferred almost $500,000 worth of drug proceeds – over $398,000 in April and $90,000 in June. • The charge of money laundering provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $500,000 or twice the value of the laundered funds.

HERE’S WHAT YOUR PEERS WERE INTERESTED IN LAST WEEK: BANKE R & TR AD ESMA N

New Allston Apartment Complex Sold for $42.5M

What’s to Become of the Old Boston Garden Scoreboard?

Boston Home Health Agency Convicted of Stealing Millions from MassHealth

Boston Man Charged with Money Laundering

Weymouth Multifamily Properties Get $24M in Financing

Broker Sentenced for Role in Sweeping Mortgage Fraud Conspiracy

Readville Developer Drops 157 Apartments, Adds 128 Condos

A Slender Triangle Tops off in Back Bay

Eastern Bank Donates $1.7M to Women-Focused Nonprofits

(ISSN 0005-5409)

Volume 199, Number 33 Published each Monday. ©2018 The Warren Group Inc., 280 Summer Street, Boston, MA 02210-1131. All rights reserved. No part of this publication may be reproduced without the written consent of the publisher. Banker & Tradesman™ and The Warren Group™ are trademarks of The Warren Group Inc. Subscriptions to Banker & Tradesman: Premium: One year – $379 Two year – $679 Single copies are $10.00 each and are on sale at the offices of the publisher. POSTMASTER: Send address changes to: Banker & Tradesman The Warren Group 280 Summer Street, Boston, MA 02210-1131 Phone: 617-428-5100. Fax: 617-428-5119. www.bankerandtradesman.com Periodicals postage paid at Boston, MA

Beals and Thomas Adds Boston Office to Bolster Current Projects

POLL RESULTS B&T readers think that Mayor Marty Walsh’s success with building in Boston is due to his delegation to the BPDA. What’s behind Mayor Marty Walsh’s success with building in Boston?

not a micromanager; 44% He’s he lets the BPDA do its job. entire region is in an 22% The economic upswing; he’s just riding the wave.

housing crisis demands 16% The more building; a robot could

sign off on developments and they’d get built.

19% He’s not Menino!

AUGUST 13, 2018

BANKER & TRADESMAN | 3

COMMERCIAL REAL ESTATE COMMERCIAL INTERESTS

‘Bland and Boring’ Innovation District Name Fades from Use Continued from Page 1 “‘Innovation District’ defines that part of the world in much narrower terms than is reflected in the word ‘Seaport,’” Golden said. “In reality, it is more than just that.” Golden added that Seaport is a much more all-encompassing name that makes it a better fit for the area itself, a mix of office high-rises, condos, hotels and yes, tech companies, along with traditional maritime uses. It would be a stretch to call the Seaport name a stroke of marketing genius, but it has certainly stood the test of time. It made its debut in the late 1990s, back when Boston planning officials were trying to jumpstart the redevelopment of what was then a vast expanse of waterfront parking lots and rotting piers in the shadow of the Financial District. And the Seaport name has withstood more than one attempt to replace or alter it, with new names flowing out of City Hall seemingly every few – Brian Golden, years with each new plan for redeveloping the city’s old industrial waterfront. When developers and city officials were trying in the early 2000s to win over South Boston residents and pols to proposals for millions of square feet of new development in what was then a little-used backwater, simply calling the area the “Seaport” was judged to be inadequate. Seaport for a time became the South Boston Seaport, at least in planning documents and press releases pumped out by various city officials. But that wasn’t enough for the late James Kelly, the years-long city councilor from South Boston. Kelly took things a step further and had the council vote to officially rename the whole area the South Boston Waterfront. Kelly immediately rang me up at my desk at the Herald after the vote to inform me that I was now all but legally required to use the South Boston Waterfront moniker in all my stories about development in the area. No more using the Southie-dissing Seaport name, he insisted. I tried but failed to explain to Kelly that the Herald could call the area anything it darn well pleased, but that’s neither here nor there. While Boston planning officials still feel obliged to use the name – and apparently

Massport too, with its new 1,500 space garage, the South Boston Waterfront Transportation Center – it’s not exactly taken the waterfront by storm. Do a Google News search and the closest thing you will find is “South Boston’s Seaport District.”

The Innovation District

In fact, there’s real monetary value to the Seaport name, as can be seen in a lawsuit by Fidelity Investments to protect the name of its Seaport Hotel from plans by developers with plans to build their own “Seaport” hotel two blocks away. You don’t spend money suing to protect a worthless or generic name, which brings us back to the good old Innovation District. Like other failed attempts to rename the waterfront, Boston officials seized upon the Innovation District label in response to the challenges of the moment. Under the late Thomas M. Menino, director, BPDA the city’s longestreigning mayor, city development officials circa 2010 were making a big play to lure fast-growing bio-tech and tech firms from Cambridge over to the Seaport. The plan was to further spur the redevelopment of the area and it certainly achieved some notable successes, including landing Vertex. But that success was based on an overheated and expensive Cambridge office and lab market and a still largely empty stretch expanse of undeveloped land near the waterfront in Boston, not the renaming of the area the Innovation District. Frankly, Innovation District has got to be the least imaginative name possible for one of the most dynamic new sections of Boston, a generic place name akin to renaming the Fenway the “sports district” or the area around the MFA the “arts district.” Worst of all, the whole experiment in rebranding the waterfront was entirely unneeded. The new neighborhood already had a name, the Seaport. There was no need to replace it, and certainly not to make way for the bland and boring Innovation District.

“‘Innovation District’ defines that part of the world in much narrower terms than is reflected in the word ‘Seaport.’ In reality, it is more than just that.”

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.

Operation Welcome Home

E Q UA L H O U S I N G

O P P O RT U N I T Y

This powerful mortgage product created for active duty military members, members of the Reserves and National Guard, Veterans and Gold Star Families now comes with $2,500 closing cost assistance.

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Closing Cost Assistance Now Available!

Just one more way MassHousing is helping Massachusetts buyers overcome challenges to home ownership. Income and purchase price limits apply. Subject to credit approval, not all applicants will qualify. Must be a first-time homebuyer.

888.843.6432 www.masshousing.com/owh

4 | BANKER & TRADESMAN

AUGUST 13, 2018

OPINION EDITORIAL

EDITORIAL CARTOON

Summer in the Cities

id-August is not the Greater Boston area’s best season. The weather is variable (as it always is in New England), swinging from disgusting muggy days – it’s not the heat, it’s the humidity – to cold gray rain, back to searing hot skies and sticky nights. Summer camps are winding down but school is not yet back in session. Boston proper is choked with tourists. Vacation destinations are overrun with beachgoers desperately seeking the last of the summer sun and fun. October’s cool days and chilly nights seem far away to those who hate the heat, but depressingly close for sun worshippers. Though it’s natural to reflect on the year gone by and the one ahead at the end of December, the dog days of summer are a good time to take a break at mid-year and gear up for the rest of 2018.

Word to the wise: don’t try to refi in any kind of hurry right now, 80 percent of the area’s loan originators are on a well-deserved vacation. This year boasted a record-breaking spring selling season. Statewide in Q2, the median sale price for a single-family home was $399,900, easily beating the state’s pre-recession high of $354,900 for the same time in 2007. As has been the case for the past few years since peaking in 2016, the number of homes sold dropped for the quarter to 16,652. The condo market saw similar trends. The median sale price for the months of April, May and June this year was $380,000; the median for the linked quarter hit a record high in 2012 and has continued to climb every year since then, making impressive strides in recent years. Condo sales were up over last year at 7,374, though still well under 2005’s record of 9,955. Late summer is the time to rest and recuperate from that hectic selling season, especially for real estate and finance professionals. (Word to the wise: don’t try to refi in any kind of hurry right now, 80 percent of the area’s loan originators are on a welldeserved vacation.) And despite the weather, there’s also a lot to celebrate in Boston and beyond. Craft breweries are thriving in the area, and more good beer is never a bad thing. The Boston Public Health Commission has worked to incorporate wellness into the fabric of the city’s society. In celebration of its 10th anniversary and mission of inclusion, the Highland Street Foundation continued its series with 10 free things to do in Massachusetts each Friday this summer. Those are just three examples; there’s a whole lot more do in and around the city. Developers, nonprofit, government agencies and more are engaging with residents and visitors in new and innovative ways, working to bring people together in celebration of summer and the cities. However you choose to recuperate this summer season, we hope you get a chance to do so. Come the fall, it will be time to hustle again. Right now it’s just too hot, so take a break and get ready for another record-breaking year.

Banker & Tradesman Cassidy Murphy

Associate Publisher c m u r p h y @th e w a r r e n gr ou p . c om

Timothy M. Warren Jr.

Publisher T i m o t h y M. W a r r e n

Publisher 1975-1988 Keith F. Warren

Publisher 1928-1975 W i l l a r d C. W a r r e n

Publisher 1901-1928

T H E N AT I O N ’ S H O U S I N G

‘Score Planner’ Tool Offers Customized Path to Better Credit A Better Credit Score Equals Savings Over the Life of a Loan BY KENNETH R. HARNEY WASHINGTON POST COLUMNIST

f you’re seriously thinking about buying a home in the months ahead, you almost certainly know how important your FICO credit score will be in getting a mortgage. And you probably know the score range you’ll need for the type of loan you want – somewhere in the low- to mid-700s for a conventional mortgage eligible for sale to investors Fannie Mae or Freddie Mac, or a score in the mid to upper 600s for a Federal Housing Administration (FHA) insured loan. The actual minimum score for approval also will depend on your debt-to-income ratio, down payment and other factors in your application. But let’s say you’re like many other would-be buyers – your FICO score isn’t quite where it needs to be. The question then becomes: How do I push my score high enough for a mortgage? You may know the credit missteps that caused your score to be low, but you lack a precise set of steps to move your score up. There are dozens of websites online that can offer you “credit repair” suggestions and scores, but none has access to proprietary FICO-score algorithms. As a result, they’re not reliable when you apply to a lender, who will only be interested in your FICO score, not some credit site’s in-house score. That’s all about to change. FICO has created a new prescriptive “Score Planner” tool that the company says will allow you to improve your score within a set time period by following a customized, detailed set of steps. Though it’s only in the pilot stage with one of the three national credit bureaus, Experian, FICO officials told me last week that in the months ahead it should become widely available through participating banks, mortgage companies, brokers and others. Tom Quinn, FICO’s vice president of scores, said in an interview that it may be offered “for a fee or free of charge,” depending on the source. How does it work? For this column, FICO prepared an example based on a hypothetical consumer’s credit report. The borrower currently has a sub-par 623 score but needs a 675 or higher for a mortgage at an affordable interest rate. As with all the Score Planner’s scenarios, the homebuyer sets a deadline – anywhere from a few months to as long as a year – to achieve a desired score.

In this case, the buyer opted for a nine-month time frame. Here’s the remedial course of action the Score Planner prescribed. Note the significance of factors most of us ignore that go into the formulation of FICO scores, such as “aging” of positive and negative items in your credit report. • Stay current on your payments so that your most recent delinquency ages to 19 months. • Do not open any new accounts so that your most recently opened account ages to one year and two months. • Do not open any new accounts so that your average length of established credit history ages to four years and three months. • Reduce your total revolving credit-card balances of $7,250 by $805 each month for nine months. • Continue to make monthly loan payments on time to reduce the total installment loan balance of $163,780 that you owe. • Do not apply for any new credit and pay all bills on time for nine months.

But let’s say you’re like many other would-be buyers – your FICO score isn’t quite where it needs to be. The question then becomes: How do I push my score high enough for a mortgage?

Could you raise your score by more than the 52 points above? Absolutely, says Quinn. In FICO’s simulations of score improvements, some jumped by more than 100 points in 12 months. Every individual’s credit report is unique, but by paying down debts – such as on creditcard balances – “substantial” improvements in score are feasible. Doing so before you apply for a mortgage not only will improve your chances for approval, it should also save you thousands of dollars. A new study from LendingTree, the online network that allows lenders to bid for applicants’ mortgage business, found that moving from a FICO score between 580 and 669 to a 740 score would save the borrower more than $29,000 over the life of a $234,000 loan. To access the Score Planner pilot on Experian you can visit: https://www.experian.com/consumer-products/credit-score.html. Note, however, that the FICO planner is part of a package that will cost you $4.99 the first month and $24.99 per month thereafter, cancelable anytime. As an alternative, you could wait until lenders and mortgage brokers offer the planner at a more modest cost or free of charge.

Ken Harney’s email address is harneycolumn@gmail.com

AUGUST 13, 2018

BANKER & TRADESMAN | 5

OPINION ULI PERSPECTIVES

Steps to Mitigate Development Challenges Action Planning for Urban Development Can Mitigate Site Issues and Building Impact BY HEATHER B. SCRANTON SPECIAL TO BANKER & TRADESMAN

igh land and construction costs coupled with limited, undeveloped land are familiar challenges for most urban developers. And when a lot for re-development is acquired, other issues can significantly impact the project schedule and outcome, potentially costing millions of dollars. An issue that can derail a project’s schedule are adjacencies. An adjacency means the site is next to or over critical public infrastructure such as tunnels, bridges, highways, rail and air rights. The site could also be next to historic or concerned building owners that may see impacts, such as building settlement, because of the new development. Another potential impactful issue are brownfields. A site having a brownfield means it contains contaminated soil and/or groundwater, and the contamination needs to be remediated to meet regulatory or litigation requirements. This may cause a need for increased safety for workers and future tenant or resident risks. The development will also generate vibration, dust, noise, traffic or shade to the area during construction or in its final condition. This could cause potential tension within the neighborhood and impact public perception of the project. There is the potential for flooding from coastal or rainfall events, for excessive temperatures, or for energy blackouts. These environmental issues mean that the site needs to be accessible and its function sustainable during emergencies. In my work as a geotechnical consultant for development projects in the Boston area, I’ve witnessed the effect these types of challenges can have if potential impact and mitigation measures are not thoroughly assessed. The good news is that these issues can be addressed with proper planning and engineering in de-

sign and construction. When developers go through the process of formally assessing the vulnerabilities of a site, they can gauge potential risks as well as the success of mitigation options. The process works best when stakeholders – including project team members, contractors, neighbors or public agencies – are engaged during the process of assessing vulnerabilities. They can help select preferred alternatives, and ultimately agree on desired outcomes and design and construction approaches. When project goals are made clear and relationships are already established, expectations are made clear and costly surprises can be addressed immediately, thus saving time and money down the road.

Although the specific approach and solution will be different depending on the type and complexity of the issue at hand, a little planning and forward-thinking goes a long way to make an urban development project more successful. I saw this approach lead to a successful outcome during a project that had adjacency issues. The site was adjacent to an existing bridge, which supported a major highway. Before construction began, we identified the potential for settlement of the bridge’s foundations because of the adjacent construction. The project team worked with stakeholders to develop and imple-

ment a program prior to construction to monitor the bridge and install jacking systems in the event it became necessary to maintain alignment. Also, before construction began, the project team and the controlling highway agency identified and agreed upon protocols and criteria for when to jack the foundations. When an adjacent foundation eventually settled during construction, the team reacted quickly, jacking the foundation back into place. Without such pre-planning, the highway agency would have shut down the bridge, impacting traffic and safety and causing expensive delays and claims. Developers also need to consider how to mitigate longterm project vulnerabilities, like whether their building will be impacted by flooding from increased precipitation rates or from more frequent and severe coastal storms. Already permitting agencies are beginning to require that developers include vulnerability reviews and some mitigation measures in the project designs. However, we expect future regulations will require projects perform rigorous site and project-specific risk assessments and require projects implement mitigation measures for a more resilient design, even those that may help protect the neighborhood, not just the building. For existing buildings, insurance companies are also providing rate incentives for retrofitting buildings to make their buildings more resilient. Although the specific approach and solution will be different depending on the type and complexity of the issue at hand, a little planning and forward-thinking goes a long way to make an urban development project more successful. Like the old saying goes, “Practice and planning lead to performance.”

Heather Scranton is a senior associate/program manager at Haley & Aldrich Inc. and co-chair of the ULI Boston/New England Climate Resilience Committee.

C O M P E L L I N G R E S U LT S

MassHousing’s Mortgage Product Aids Families in Path to Homeownership Low- and Moderate-Income Buyers Settle Across the Commonwealth BY CHRYSTAL KORNEGAY SPECIAL TO BANKER & TRADESMAN

s MassHousing watched the economy swing back into high gear, we witnessed first-hand the impact on the housing market. Rising home prices, low inventory, high rents and student debt burdens combined to exclude entire populations out of the state’s housing market. We knew from experience that if we could help potential buyers overcome these forces, creditworthy commonwealth residents would get into a home where they would not only stay, but thrive. MassHousing responded by launching the only sustainable, conventional statewide mortgage product allowing buyers to achieve homeownership without making a down payment. And several months in, MassHousing’s down payment assistance program is delivering exactly the kind of results we intended. Our high loan standards and flexible financial tools are combining to empower residents who had been marginalized by the current housing market. MassHousing’s mission is to improve the lives of the commonwealth’s residents by confronting the housing challenges they face. A fundamental way in which we meet our mission is helping the state’s workforce achieve homeownership. Over the past decade alone, MassHousing has helped more than 13,000 lower-income families become homeowners. In recent years, though, we have seen average Massachusetts families struggle to afford the average home in Massachusetts. Skyrocketing prices – the product of decades of inadequate housing production across the state – have created a housing market that is tough on most buyers, but especially difficult for low- and moderate-income homebuyers to navigate. Working-class

homebuying power has eroded, weakening a core pillar of economic security and upward mobility. In this environment, down payment requirements represent a significant hurdle to first-time homeownership. Recent college graduates are juggling student loan payments and rents that are among the nation’s priciest, while moderate-income families face expensive child care, and wages that haven’t grown nearly as quickly as housing prices. Against those pressures, even a 3 percent down payment requirement can become a prohibitive barrier.

Homebuyers have already used MassHousing’s down payment assistance to buy a home in 87 of the state’s 351 cities and towns. MassHousing’s low-cost, fully-amortizing subordinate mortgage allows first-time homebuyers with incomes at or below the area median to buy a home with little or no down payment. We’ve seen over the years that successful, sustainable homeownership is far less connected to loan-to-value ratios than it is to a borrower’s creditworthiness and preparation to succeed. We combine down payment assistance loans with strong underwriting, homebuyer education, low-cost mortgage insurance with unemployment insurance benefit, and high-touch mortgage servicing.

Several months in, the results are compelling. Down payment assistance has allowed Massachusetts residents to reengage with a housing market they had been priced out of. We are now creating more homeownership opportunities for lower-income residents, without lowering loan quality standards. To date, MassHousing’s down payment assistance program has helped 200 families purchase their first home. MassHousing has closed on $49 million in home purchases utilizing down payment assistance, and the loan pipeline is healthy. Since the product’s launch, three of every 10 MassHousing mortgages have utilized down payment assistance. Down payment assistance is helping to drive an uptick in home purchases in Gateway Cities like Worcester, Fitchburg and Springfield. But it’s also encouraging that homebuyers have already used MassHousing’s down payment assistance to buy a home in 87 of the state’s 351 cities and towns, from Agawam and Andover, to Hingham and Plymouth. Most of the first-time homebuyers utilizing down payment assistance are under the age of 35. These are folks who want to sink down roots in Massachusetts, but had not been able to, because student debt made saving for a substantial down payment impossible. And, in a state where white residents account for 88 percent of all homeowners, we are especially proud that more than one in every five mortgages with down payment assistance have enabled a buyer of color to purchase a first home. This is what sustainable homeownership looks like – high-quality mortgages allowing high-quality buyers to sink roots in their community and build equity for their futures.

Chrystal Kornegay is the executive director of MassHousing

6 | BANKER & TRADESMAN

AUGUST 13, 2018

BY THE NUMBERS COUNTY CLOSE-UP

FRANKLIN

SPOTLIGHT Colrain Colrain was the first town in the U.S. to fly the U.S. flag over a public schoolhouse in May 1812. The schoolhouse was in the hilltop village of Catamount.

STATISTICAL SNAPSHOT MEDIAN SALES PRICE

Community

Jan.-June 2018

Ashfield

n/a

Bernardston

Change from 2017

$207,500 7.78%

n/a

6 33.33%

Buckland

n/a

Charlemont

n/a

Colrain

n/a

Conway

n/a

Deerfield

$275,000 0.00%

17 58.82%

Erving

n/a

Gill

n/a

Greenfield

$179,700 -0.39%

YEAR SETTLED 1735 YEAR INCORPORATED 1761

TOTAL NUMBER OF HOUSING UNITS 776

MEDIAN SALES PRICES 500000 $500,000 400000 $400,000 $300,000 300000

64 1.56%

$200,000 200000

n/a

$100,000 100000

Heath

n/a

Leverett

n/a

Leyden

n/a

Monroe

n/a n/a n/a n/a

New Salem

n/a

$238,700 -9.93%

20 5.00%

Orange

$168,900 -14.21%

n/a

2010 ’10

2011 ’11

2012 ’12

n/a

6 -50.00%

Shutesbury

$237,500 20.00%

6 150.00%

Sunderland

$268,500 -10.24%

Warwick

$212,500 -5.88%

Franklin County

$200,000

1.25%

2015 ’15

2016 ’16

2017 ’17

2018 ’18

Franklin Massachusetts

• Source: The Warren Group

SALE VOLUME

TOP 3 MORTGAGE LENDERS Rank

400 400 320 320

240 240 160 160

7.14%

5 -40.00%

271

17.34%

• Statistics based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

% of Market Share

Greenfield Savings Bank

Greenfield 14.85% Cooperative Bank

Quicken Loan Inc.

15.32%

6.04%

TOP 3 LOAN ORIGINATORS

8080

5 120.00%

Lender

Rankings and Mortgage Market Share stats include purchase and refinance mortgages for single-family homes through June 2018 Market share percentage based on volume of mortgages • Source: The Warren Group

n/a n/a n/a n/a $365,000 -25.48%

2014 ’14

• Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds

n/a

$212,500 18.12%

Whately

2013 ’13

• All sales thru June YTD

2.17%

Shelburne

Wendell

2009 ’09

24 25.00%

Northfield

Rowe

$20.24 $20.24

— Elizabeth Perkins, Hollywood actress and former Colrain resident

n/a

$200,000 -8.50%

DENSITY 39 per square mile TAX RATES Residential: Commercial:

Hawley

Montague

POPULATION 1,671

“And there is a different mentality to the people of New England – a stronger sense of community and kinship that’s rooted in its own strength and history. You feel it innately in local celebrations and customs and traditions.”

SALES VOLUME Jan.-June Change from 2018 2017

n/a

TOTAL AREA 43.4 square miles

Rank

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ’09

’10

’11

’12

’13

’14

’15

’16

’17

’18

• All sales thru June YTD • Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

Lender

Organization

Caryl L. Connor

Greenfield Savings Bank

April Healey

Greenfield Cooperative Bank

Clay Herbert

Academy Mortgage Corp.

Ranked by volume of loans through June 2018

TOP 10 EXISTING HOME SALES

Rank

Street Address Community

Buyer Seller

Date Price

Rank

Street Address Community

Buyer Seller

Date Price

537 Greenfield Rd. Deerfield

Charles S. Sanford David J. Koeppel

6/28/2018 $1,000,000.00

10 Lead Mine Rd. Leverett

Michael A. Wissemann Langley RT

6/7/2018 $380,000.00

83 Russell St. Sunderland

James R. Cherewatti Thomas J. Russo

6/29/2018 $460,000.00

193 Norton Hill Rd. Ashfield

Carolyn B. Johnson Pamela J. Poissant

5/22/2018 $365,000.00

48 Peabody Ln. Greenfield

Alistair N. Shurman Whitney K. Robbins RET

5/1/2018 $415,000.00

335 Long Plain Rd. Leverett

Lorraine Re James M. Douglas T

4/4/2018 $350,000.00

442 Turners Falls Rd. Montague

Clifford C. Spatcher Gary H. Gardner

5/2018/2018 $402,000.00

107 Plain Rd. W Deerfield

Karen K. Murphy Cheryl A. Bohonowicz

6/1/2018 $345,000.00

14 King Philip Ave. Deerfield

Elizabeth S. Fieldsteel Tatiana A. Goclowski

6/29/2018 $385,000.00

158 Old Sunderland Rd. Montague

Barbara E. Folan Justin D. Killeen

6/19/2018 $343,500.00

• Statistics from April-June 2018 • New Construction Excluded • Source: The Warren Group

AUGUST 13, 2018

BANKER & TRADESMAN | 7

BANKING & LENDING TRADE POLICY

Impacts of Tariffs and Trade Policy Begin to Trickle Down Developers Fix Cost of Materials with Suppliers or Pass Down to Buyers BY BRAM BERKOWITZ BANKER & TRADESMAN STAFF

arlier this year, President Donald Trump and his administration imposed a wide range of tariffs – and have since threatened to inflict more – stoking trade wars with allies and countries that do an immense amount of business with the U.S. such as China. The effects of the policies have begun to trickle down and are now even catching the attention of some community banks. Tariffs on steel and aluminum and uncertainty regarding the future has driven up the cost of construction materials, prompting some to question how this will impact commercial real estate activity. “We are seeing some changes to development contracts where developers are looking to either fix the cost of goods and materials in those contracts, or they are requiring any buyers to pay for changes in the cost of materials,” Robert Cozzone, CFO of Rockland Trust, said on a recent earnings call. “They are either fixing with suppliers or passing it on to buyers, so that is a new dynamic we have just seen this quarter that we haven’t seen previously.” While experts agree this change in habit has certainly been prompted by tariffs and trade worries, they are unclear on whether it has actually impacted demand.

“We have heard that trade policies are increasing the cost of materials from outside the country, so we have heard that materials coming domestically have also increased because they can charge more to keep on par with the competition from international sources,” Lauren O’Neil, a senior managing director in the Boston office of the commercial real estate firm HFF, told Banker & Tradesman.

“We are seeing some changes to development contracts where developers are looking to either fix the cost of goods and materials in those contracts, or they are requiring any buyers to pay for changes in the cost of materials.” – Robert Cozzone, CFO, Rockland Trust “It seems to have impacted the supply chain, which in turn is driving up pricing because there is no slowdown in demand.” Commercial real estate activity at the parent company of Rockland Trust only added about $29 million in volume in the second

quarter of 2018, although year-over-year growth in this loan category was less than $50 million. Commercial construction loans at the company declined by $36 million from the linked quarter. Cozzone told investors on the earnings call that the decrease in commercial construction was due to many of those loans moving into the commercial real estate bucket, but he also acknowledged that commercial real estate would have been down in the quarter without them. He did not, however, say demand had been down and added that he expects to see good construction loan growth in the third quarter. The tariffs also do not appear to have had a major impact on loan activity in Massachusetts overall.

While second quarter data is not available, between the first quarter of 2018 and the linked quarter and year-over-year, statechartered banks in Massachusetts increased loan volume in construction and land development, nonfarm, nonresidential properties and multifamily residential real estate, according to FDIC data. “I am not hearing about the slowdowns because it (commercial real estate) has been gangbusters,” said Robert Ashbaugh, a senior risk management consultant at the North Carolina-based firm Sageworks. “I am not hearing about deals that are not getting done. If anything, I am hearing about projects that are taking too long.” The question is whether tariffs now – or looming threat of tariffs in the future – impact the industry down the road. Continued on Page 10

GOSSIP REPORT 1

WESTON

Address: 44 Young Rd., Weston Price: $5,400,000 Size: 10,500 square feet on 3.1 acres Buyer: 44 Young Road T and Anjan Mukherjee Seller: Elizabeth F. Jones and Michael A. Jones Agent: Paige Yates, Coldwell Banker Residential Brokerage Sold: 7/27/2018

4,5

Just three miles from Harvard Square and close to nature trails, the third property on this week’s Gossip Report list is a 16-room Colonial in Belmont with two studios – one for exercise, and one for art.

2 2

EDGARTOWN

Address: 37 Cooke St., Edgartown Price: $4,550,000 Size: 5,585 square feet on 0.17 acres Buyer: Cooke 3 7 LLC Seller: 37 Cooke Street LLC Agent: Gerret Conover, LandVest MV Sold: 7/26/2018

BELMONT

Address: 16 Rockmont Rd., Belmont Price: $4,170,000 Size: 7,947 square feet on 0.71 acres Buyer: Catherine A. Fullerton and Thomas R. Hancock Seller: 16 Rockmont Road RT and Shulin Liu Agent: Sarah DeStefano, Belmont Homes Realty Sold: 7/27/2018

BOSTON

Address: 201 W Brookline St. #203, Boston Price: $4,150,000 Size: 2,937 square feet Buyer: Arvind Navaratnam and Nita Prasad Seller: 201 W Brookline St LLC Agent: Tracy Campion, Campion & Co. Fine Homes Real Estate Sold: 7/27/2018

BOSTON

Address: 187 Beacon St. #1, Boston Price: $4,050,000 Size: 2,665 square feet Buyer: Gianni Marostica and Regina Gaiotti Seller: Anne R. Stoeckle and Mark E. Stoeckle Agent: Kim Baccari, Gibson Sotheby’s International Realty Sold: 7/26/2018

8 | BANKER & TRADESMAN

AUGUST 13, 2018

COMMERCIAL REAL ESTATE INK BLOCK EAST?

Big Developer Eyes South Boston for Acquisitions Changes Are Coming to the Dot Ave. Corridor BY STEVE ADAMS BANKER & TRADESMAN STAFF

s a gritty industrial corridor in South Boston destined to become the next Ink Block-style development cluster? Newton-based National Development is trying to acquire a group of commercial parcels along Dorchester Avenue, real estate industry sources say, as city officials draw up new zoning that would permit residential towers, office and lab space. A 2016 Boston Planning and Development Agency study estimated the rezoning could generate up to 16 million square feet of new development on 144 acres between the MBTA’s Broadway and Andrew stations over the next 20 years. Daniel Marr, CEO of construction equipment supplier Marr Cos., confirmed that National Development has approached him about buying the company’s Dorchester Avenue properties, which house various divisions serving the construction industry. So far, the sticking point has been finding up to 4 acres of industrial land for the company to relocate within Boston.

“We’re listening, but we’re hard-pressed to move without finding a suitable replacement. I can’t service the Boston (building) industry if I move to Methuen or Bridgewater,” Marr said. Ted Tye, managing partner at National Development, declined to comment on specific properties but said in an email that the firm is “very enthusiastic about South Boston and sees it as an exciting area for new development in the city.” A real estate industry source said other properties on National Development’s wish list include the former Cole Hersee factory at 20 Old Colony Ave. and the Karas & Karas Glass Co. property at 297 Dorchester Ave. Boston-based Cole Development’s 5-acre holdings include the former Cole Hersee factory, which made electric switches for vehicles before shifting production to Mexico nearly a decade ago. The four-building complex was converted to a mix of office and industrial space, Cole Development’s Steven Mayer said this week. Mayer declined to comment on the potential sale of the property, but said the neighborhood is on the cusp of a development boom. “We’ve owned these buildings forever and this has always been a protected industrial zone since the (Mayor) Menino era,” he said. “It looks like the city is going to pull it off as

One major change from the draft report will be the approval of larger floor plates for office and lab space.

HOT PROPERTY Each week, Banker & Tradesman commercial real estate reporter Steve Adams spotlights a commercial real estate property in Massachusetts notable for its high deal activity, unique design or one-of-a-kind special features.

South Boston’s industrial zone along Dorchester Avenue could support up to 16 million square feet of new development under zoning changes being drawn up by the Boston Planning and Development Agency.

long as the market remains robust.” Karas & Karas Glass has received multiple offers from qualified developers to buy its five Dorchester Avenue properties, President Joey Karas said. Unlike Marr Cos., its business model doesn’t require a Boston address, so it’s considering a move to the Stoughton and Canton area, he said. He declined to comment on talks with specific developers, but pointed to National Development’s Ink Block in South End as a model for Dorchester Avenue. “I’m optimistic and very excited about the opportunities coming to this part of the city. I know what I envision this property to look like in a few years, and Ink Block is an outstanding representation,” he said.

WHAT: THE BEVERLY WHERE: 101 BEVERLY ST., BOSTON OWNER: RELATED BEAL COS. BUILT: 2016-2018 • More than 6,000 Boston residents applied to live in The Beverly, the city’s first all-workforce and affordable housing development completed in 25 years. • The 14-story tower which officially opened July 24 includes 239 pet-friendly apartments, including 48 reserved for households earning 30 to 50 percent of the area median income. The remaining 191 units were leased to households with incomes between 110 and 167 percent of AMI. • The project includes a 220-room Courtyard by Marriott hotel developed by Related Beal and Turnberry Assoc. • Worcester-based Central Rock Gym will open its first climbing fitness facility in Boston late this year in part of the Beverly’s ground-floor retail space. The gym will include cardio and strength training equipment, yoga classes and a bouldering area. The first Boston location of A&B Burgers will open in late summer.

THEY SAID IT:

“Cities benefit from diversity in housing to attract and keep the families, talent and companies that make our city great. We are proud of our affordable housing roots and thrilled to build on that legacy with these new workforce and affordable homes in downtown Boston.” — Kimberly Sherman Stamler, president, Related Beal

THINK YOUR PROPERTY IS HOT? Drop Steve a line at sadams@thewarrengroup.com

National Development spearheaded the lower South End’s rapid change after acquiring the former Boston Herald property, building hundreds of high-end condominiums, apartments and a Whole Foods Market at Ink Block.

Rezoning for Increased Height and Density

Many real estate investors see the South Boston Dot Ave. corridor as a logical next step for development south of downtown. Boston-based developer Cincotta Cos. received BPDA approval in January for a 159room boutique hotel, to be built on the former Enterprise Rent-a-Car property at 248 Dorchester Ave. Developer Jason Cincotta said the neighborhood has potential to support a wide range of development including housing, offices and lab space. “Dot Ave. is an underutilized route into downtown Boston, with Broadway and Andrew stations being within a couple of stops of Downtown Crossing and the Financial District,” Cincotta said. “With the potential for office and lab space, the corridor is such an obvious place for it.” The BPDA board of directors in late 2016 approved a draft report that spells out broad guidelines for development in the South Boston Dot Ave. corridor, which is bounded to the west by I-93, rail lines and the MBTA’s Cabot Yard maintenance facility. The study anticipates up to 8 million square feet of residential development and up to 7 million square feet of office, lab and industrial space, with 1 million square feet of retail and cultural space on ground floors. Developers could build towers up to 300 feet on the western edge of the district. The final zoning regulations are still being drawn up by BPDA staff, and not expected to be enacted until late 2018 or early 2019 following another round of public comment, said Viktorija Abolina, a BPDA senior planner. But in the absence of final approval, the BPDA board has been approving projects that comply with the general goals of the draft plan, Abolina said. “We’ve been seeing an influx of projects that comply with these guidelines,” she said. One major change from the draft report will be the approval of larger floor plates for office and lab space, she said. In public comments, property owners said the maximum 20,000-square-foot floor plates are too small for life science and modern industrial companies’ current requirements. Cole Development’s Mayer said the BPDA’s goals for housing creation may be too aggressive but noted that the city’s building boom is rewriting the rules of what’s possible on the urban fringe. “When you look at the Fenway and the Orange Line corridor, these things are happening,” he said.

Email: sadams@thewarrengroup.com

AUGUST 13, 2018

BANKER & TRADESMAN | 9

IN PERSON

A Walkable New Gateway to Watertown

Q: How did the Arsenal Yards development plans evolve during the drawnout permitting process?

We worked very closely with Boylston Properties and The Wilder Cos. on the best uses for the site. There are a lot of amenities and benefits for the site. You have the Charles River. You have a town-owned park right behind it. There was a 1983 addition that connected to existing buildings and cut off the site from Arsenal Park, a great amenity in the back. We were looking into how to create this great experience and connect to existing amenities. We worked with AthenaHealth understanding their campus plans, because they’re right next door and would utilize the amenities as well. We did a lot of shadow studies on the residential buildings to help us determine heights and the right capacity for the residential component. The tallest residential building is seven stories. That sits on the southern portion of the site bordered by Arsenal Park and the park we’re creating called River Green. The other two residential buildings are centered around the Bond Square. We worked with the history of the site on the branding. Being part of this military production facility dating back to the late 18th and early 19th centuries helped us name the streets that tie back to the history.

Q: Is the business model for multifamily housing next to retail properties proving itself?

The idea of mixed-use development has really been growing. You can see a lot of it with Assembly Row and Ink Block, and Arsenal Yards is following suit: the idea of live-work-play where centers thrive off different types of uses and multiple users who access the site at different times of day, so you can extend the life of the space. It creates an active dynamic space for itself and the town that it’s in.

Q: What are the goals of the design for the “woonerf” plaza? A:

The “woonerf” is a Dutch term. It’s this idea of a shared street that is pedestrianfocused. The cars do have the ability to travel on it and we have about 20 parallel parking spots in the woonerf, but the focus is on the pedestrian. The idea is that Bond Square is a highly activated hardscape in contrast to River Green. This is a place where restaurants can have outdoor seating. You can shut down either end and have farmer’s markets and festivals or movie night. It’s a more flexible space. To enter onto that portion of the site, you are bermed up onto a raised table, like a speed bump. Catenary lights extend over the roadway and the paving pattern alludes to the fact that this is not car-focused, it’s pedestrian-focused. It is a newer concept. To do it will require a lot of planning and new construction techniques to get the dimensions and materiality to be just right.

LAURA PORTNEY Title: Senior Associate, Prellwitz Chilinski Assoc.

Q: When did you first become interested in architecture? A:

Age: 34 Industry experience: 12 years

BY STEVE ADAMS BANKER & TRADESMAN STAFF

hen Laura Portney graduated from Clemson University, she faced a pivotal decision: pursue her master’s degree at Boston Architectural College, or enter the workforce fulltime at architects Prellwitz Chilinski Assoc. Portney chose to do both. It made for an “intense” four years, she recalls, but in hindsight it was the right decision. These days Portney has her hands full as project manager at PCA for one of Greater Boston’s most dramatic repositioning projects: Arsenal Yards in Watertown. Boston-based Boylston Properties is partially demolishing the former Arsenal Mall and redeveloping the property as a mixed-use project, including 250,000 square feet of retail and restaurant space, 200,000 square feet of office and lab facilities, a 150-room Hampton Inn by Hilton hotel and 425 apartments and condos.

It was about my junior year in high school, in art class, the teacher gave us a special assignment. I said I wanted to draw corners of buildings. It highlighted the fact that I really loved buildings. It was during undergraduate years in college that I fell in love with architecture. Once I really understood it, I said it was what I wanted to do. After graduation, I moved up here to go to Boston Architectural College.

Rendering courtesy of Prellwitz Chilinski Associate

The idea is to create live-work-play where centers thrive off different types of uses and multiple users who access the site at different times of day, so you can extend the life of the space.

Arsenal Yards, Watertown

PORTNEY’S FIVE FAVORITE MUSIC VENUES:

Blue Hills Bank Pavilion

The Sinclair

Brighton Music Hall

Beat Brasserie

Paradise Rock Club

10 | BANKER & TRADESMAN

AUGUST 13, 2018

BANKING & LENDING FRAUD PREVENTION TOOLS

Synthetic Identity Fraud: The Elephant in the Room Data Breaches Run Rampant BY JULIE CONROY SPECIAL TO BANKER & TRADESMAN

ynthetic identity fraud is nothing new. However, modern criminals have been able to exploit the underpinnings of the current and admittedly flawed personal identity regime to take synthetic identity fraud to a whole new level. As a result, this form of fraud is the new elephant in the room – a problem that is rising to epic proportions but that many have yet to acknowledge. Synthetic identity fraud results when criminals fabricate identities to establish new bank accounts or lines of credit and use those fake identities to steal money. The problem manifests differently across the globe, depending on local Know Your Customer regulations and identity management constructs. Synthetic identity fraud is acute and growing in the U.S. market, where the stakes for consumers are higher than ever. To better understand the rapid growth of synthetic identity fraud, Aite Group conducted a study interviewing 33 executives from U.S. financial services firms and fraud vendors. The study from July 2017 to April 2018 helped Aite Group define synthetic

identity fraud, establish a sizing for its impact on the U.S. credit card market and discuss emerging vendor solutions. Rampant data breaches, loosening credit standards, and SSN randomization are market trends that have all contributed to the synthetic fraud problem. With 9.7 billion records breached since 2013, organized crime rings have an unprecedented amount of data at their disposal to fuel their identity-compilation and identity-manipulation efforts. As the economic recovery has progressed, U.S. financial services firms have loosened credit requirements, which makes it easier for synthetic identities to take hold and build from a thin file to an established credit holder. EMV is effective at reducing counterfeit card fraud, and more readily adopted as an implication of increased breaches. As the industry saw in the other 19 G-20 countries in a move to EMV, criminal elements do not sit back and absorb the hit to their balance sheet that EMV represents; instead they migrate their attacks to other forms of fraud, including new account fraud and account takeover. In its infinite wisdom, the U.S. Social Security Office began randomizing the issuance of SSNs in 2011, rather than having a specific issuance formula based on the date and geographic region. This randomization eliminated a valuable tool from the arsenal of financial institutions that they could use to check the

The scope and size of the synthetic identity fraud problem is elusive.

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validity of an SSN at the time of account onboarding, making it easier for fraud to occur.

How Credit Issuers Can Better Find and Eliminate Fraud

Aite Group found in its study a steady increase in synthetic identity fraud and suggest that credit issuers improve their means of detection and remediation to combat this dangerous trend. The scope and size of the synthetic identity fraud problem is elusive. Based on the data provided by the issuers interviewed in the study, Aite Group conservatively estimates that U.S. synthetic identity fraud losses for credit card exceeded $800 million in 2017. Aite Group recommends that credit issuers apply a multipronged detection strategy. As with most types of fraud, there is no silver bullet for synthetic identity fraud. Financial services providers need to combine the analysis of credit file data, public record data and digital identity data to effectively detect potential synthetic identities.

Once a fraud is detected, Aite Group suggests that credit grantors adopt a segmented remediation process for synthetic versus third-party fraud, since the criminals that take the time to cultivate synthetic identities will often be able to effectively navigate traditional stepped-up authentication processes. Credit grantors should also analyze collections queues. Many synthetic identities are written off as credit losses. Credit issuers should analyze their existing credit write-offs to determine what proportion of them are synthetic. Not only will this help better inform analytic routines to help detect future synthetic fraud, but it also will remove the synthetic identities from collections queues, thus freeing up valuable resources to focus on actual recovery opportunities.

Julie Conroy is research director on Aite Group’s retail banking team. To learn more about Aite Group’s research coverage of retail banking and payments, please contact Aite Group at info@ aitegroup.com.

NAIOP Names Two to Succeed Begelfer

AIOP Massachusetts has named Tamara Small its new CEO and appointed Reesa Fischer executive director after longtime CEO David Begelfer retires in December. The 1,600-member Tamara Small trade group that represents commercial developers said Small, currently senior vice president of government affairs, will oversee lobbying, public relations and research. Fischer, now its chief operating officer, will lead NAIOP’s operations, finances, programming and membership and marketing initiatives. Begelfer on Tuesday announced his inten-

tion to retire at year’s end. “I am very proud of all that has been accomplished over my time leading NAIOP Massachusetts. We have developed exceptional programming, educational and networking Reesa Fischer offerings,” Begelfer said in a statement. “However, my proudest accomplishment is that NAIOP is best known for its advocacy efforts and its work to encourage policies that support economic growth and development in Massachusetts.” Begelfer will receive the Edward H. Linde Public Service award at NAIOP’s annual awards dinner on Nov. 15.

Future of CRE Activity Uncertain

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Banker & Tradesman

www.bankerandtradesman.com

Continued from Page 7 Well, nobody has a crystal ball, but it’s certainly a possibility; the construction industry has already borne and is expected to incur even more of the brunt of tariffs. The overall cost of construction materials grew 8.8 percent year-over-year in May, the largest annual increase in nearly seven years, according to an analysis of new U.S. Labor Department data by the Associated General Contractors of America. During the same time period, the producer price index – a measure of all materials used in construction projects including items consumed by contractors – jumped by 17.3 percent for aluminum mill shapes, 13.9 percent for lumber and plywood, 13.8 percent for copper and brass mill shapes and 10.5 percent for steel mill products. Other price increases include 44.5 percent for diesel fuel, 8.9 percent for asphalt felts and

coatings, 6.5 percent for ready-mixed concrete and 5.2 percent for paving mixtures and blocks, according to the association’s analysis. “Anything based on commodities is going to be affected to some degree,” said Ashbaugh. The increase in the cost of materials, according to O’Neil, has resulted in lower yields, but because of the booming demand in the commercial real estate sector, especially in Boston, projects continue to move forward anyway. “People believe in the long-term fundamentals, so they are okay living with lower yields initially in order to get into the market,” she said. “We will see if that changes as costs continue to increase and yields continue to compress. There will likely be an inflection point eventually, but so far, we aren’t seeing it.”

Email: bberkowitz@thewarrengroup.com

AUGUST 13, 2018

BANKER & TRADESMAN | 11

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12 | BANKER & TRADESMAN

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