Zaio Responds to Wall Street Journal Article

    Need for National Appraisal Database Now in the Spotlight

    SCOTTSDALE, AZ, Feb. 27 /CNW/ - Zaio Corporation's (TSX-V: ZAO) U.S.
subsidiary, Zaio Inc., responded today to a Wall Street Journal story that
highlighted the need to establish a national appraisal database repository,
remarkably similar to the database already being built by Zaio.
    From its start Zaio has held to the goal of eliminating undue influence
and pressure in the valuation process. As a company with an executive team
comprised primarily of seasoned appraisers and data professionals, Zaio is
very far along in creating a national appraisal database repository and
currently has 140 million property records in its national "Appraisal
Knowledge Warehouse(TM)" database. Appraisal data is being added by local
appraisers every day at a rapid pace. "How many more people need to lose their
homes to foreclosure, before reforms fully addressing appraiser independence
are put in place?" asked Thomas Inserra, Zaio CEO. The FBI and Justice
Department report that mortgage fraud and abuses in the appraisal process is
the fastest growing crime in America. "The time to fix this national problem
is now," stated Inserra.
    Zaio pointed out that the prior mortgage crisis from 1980 to 1995
resulted in the failure of 2,912 financial institutions with combined assets
of $924 billion. More than $168 million per day in distressed loan assets were
being sold in the market over a 15 year period at a time when real estate
prices were declining, resulting in record numbers of loan losses and
    Today's mortgage crisis shares a similar path and root cause, as both the
last mortgage crisis and today's sub-prime mortgage crisis were caused by
breakdowns in the credit and appraisal processes, and both resulted in record
numbers of foreclosures. Thus, the only way to fix this current mortgage
crisis is with reforms that address the underlying outdated and flawed
appraisal process.
    While other companies may be in the "idea" stage of creating a national
appraisal database, Zaio has been working on its creation and implementation
for years. In addition to building what is believed to be among the first
national appraisal databases, Zaio's national appraisal database has five
compelling competitive strengths:

    1.  Other database concepts suggest collecting appraisals from sale
        transactions. However, each year less than 15% of all homes are sold.
        That means the appraisal data for 85% of the remaining homes in the
        country would be omitted. Zaio is systematically inspecting and
        appraising all homes in the USA in a consistent manner for inclusion
        in a comprehensive national database.
    2.  Zaio finds that 65% or more of the property data records needs to be
        updated or corrected. Zaio is not aware of any other effort to
        inspect all US homes and to correct and update the database. Real
        estate changes every day and thus an appraisal database must have a
        process of capturing changes in the field every day as homes change.
        Zaio's patented hand-held technology is in use by hundreds of
        appraisers every day as they add appraisal data to Zaio's rapidly
        growing database. Better and more timely data translates into
        improved results.
    3.  A database of backward looking historical appraisals is meaningless
        unless the database also has a process to efficiently update the
        appraisals in real time as properties and markets change. Zaio has
        filed patents on this process, and Zaio's affiliated appraisers are
        currently in the field and updating the value of homes in the
        database every day in real time.
    4.  Mortgage fraud likely will not be defeated unless the appraisal
        process is reengineered to remove all external pressure against the
        appraiser. This can only be accomplished with a database that has a
        process of collecting the appraisal data in advance of any
        transaction, similar to how credit bureaus are operated. Storing the
        completed appraisals in a secure database ensures that any attempts
        to change, alter or inflate the appraisal can be detected. Loan
        officers and mortgage brokers are never given the chance to pressure
        an appraiser because the appraisal was completed in advance of the
        loan transaction.
    5.  Recent lawsuits have questioned the appropriateness of using
        proprietary corrected and improved appraiser produced appraisal data
        which many believe is owned and subject to copyright by appraisers.
        Zaio has solved this problem with written agreements with large
        numbers of appraisers and with a viable business model that
        compensates appraisers economically for their important services.
        Forcing appraisers to include their intellectual capital into a
        national database without their consent or appropriate compensation
        is likely not going to work and potentially at odds with intellectual
        property laws.

    Zaio is pleased to learn that publications, including the Wall Street
Journal, are now focusing national attention on the mortgage crisis, and that
the solution lies with Zaio's already deployed appraisal database. While some
companies may only be in the idea phase, Zaio has successfully started to
implement these solutions. In fact, consumers and lenders are already
benefiting from Zaio's patented "Appraisal Knowledge Warehouse(TM)" solution.
Within the last year, Zaio has acquired approximately 500 lender clients, and
Zaio and its network of appraisers is now supplying these lenders with a full
range of appraisal services nationwide.

    About Zaio

    Zaio is a technology and database company. Zaio maintains a secure
database of 140 million properties known as the national "Appraisal Knowledge
Warehouse(TM)" and is now site verifying and correcting property data, photos
and appraisals of virtually every property in America. Zaio's network of local
appraiser experts photograph, inspect, and appraise entire cities, one
building at a time using a proprietary "GeoScore(TM)" rating system. Zaio is
ranked among the top 50 best performing companies of more than 2,000
corporations on the TSX-V Exchange, and trades under the symbol "ZAO".
Additional information is available under the symbol "ZAOFF".
    For investors who would like to be added to Zaio's investor distribution
list or receive a 2006 annual report, please contact Chris Gustafson at

    The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press release. This press
release contains forward-looking statements which may include financial and
business prospects, as well as statements regarding the Company's future
plans, objectives or economic performance and financial outlooks. Such
statements are subject to risk factors associated with the real estate
industry, and the overall economy in both Canada and the United States. The
Company believes that the expectations reflected in this press release are
reasonable, but actual results may be affected by a variety of variables and
may be materially different from the results or events predicted in the
forward-looking statements. Readers are therefore cautioned not to place undue
reliance on these forward-looking statements.
    In evaluating forward-looking statements readers should consider the risk
factors which could cause actual results or events to differ materially from
those indicated by such forward-looking statements. These forward-looking
statements are made as of the date hereof, and unless otherwise required by
applicable securities laws, the Company does not intend nor does it undertake
any obligation to update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or otherwise.

    %SEDAR: 00020572E

For further information:

For further information: For more company information, visit or please contact: Thomas Inserra, CEO, (480) 575-5111,; Don Kelly, Chief Communications Officer, (202) 302-3870,

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