"Four national associations of real estate appraisers have asked Congress* for major regulatory reforms in the wake of an Associated Press investigation that identified key failings within the existing system."
*Thanks to Scott Austin, Austin Appraisal, LLC, I now have a copy of the letter sent by the AI, ASA, NAIFA, and ASFMRA
Naturally . . .the organizations suggest that the use of designated appraisers from a nationally recognized professional appraisal organization " . . .would help mitigate concerns about appraiser involvement in mortgage fraud.
But they go on to specifically address Title XI which, " . . . has several structural deficiencies that we previously identified, which are highlighted in the Associated Press article, as follows: "
Click here to continue reading . . .
- The one regulatory weapon the Appraisal Subcommittee has to ensure that enforcement activities of state appraisal boards are effective – decertification of the appraisal board – is too drastic a remedy. Intermediate sanctioning authority is essential to realistically conduct enforcement over state appraisal boards.
- While some state appraisal boards do a good job of enforcement, for whatever reason, whether it be lack of funding or lack of mandatory licensing requirements, more than a few do a poor job and fail to carry out their Title XI responsibilities. This cannot be allowed to continue. The Appraisal Subcommittee must hold the states responsible, and more resources must be given to state appraisal boards to conduct investigations and enforcement.
- While we have serious concerns about the lack of enforcement by state appraisal boards, we recognize that, without adequate funding and trained personnel, the agencies are not fully or properly equipped to deal with the problems.
- Appraisers must remain independent and free of coercion by lenders, mortgage brokers, realty agents, appraisal management companies, and others involved in the appraisal process. Recently, the Federal Reserve Board modified the Truth in Lending Act (Regulation Z) to strictly prohibit coercion of appraisers by mortgage lenders and mortgage brokers. While Regulation Z goes a long way toward addressing the problem, we believe that the Congress should enact appraiser independence requirements for all mortgage transactions, much as it did recently for appraisals performed for the new “Hope for Homeowners” program enacted last month.
- Too many federally related transactions require no appraisal at all. The current appraisal “de minimis,” whereby transactions below $250,000 are exempted from Title XI’s appraisal requirements, exposes consumers to unregulated valuation products. For collateral assessment to be meaningful, it is important that valuations for mortgage transactions be subject to uniform appraisal standards and effective oversight and enforcement.
In the MarketWatch.com story ASA, Other Professional Appraisal Organizations, Urge More Effective Federal and State Enforcement in Response to Press Reports they comment:
In a letter sent to the U.S. Senate Banking Committee, ASA urged legislators to modernize Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which established the existing federal and state regulatory structure for real estate appraisers. Title XI resulted from the federal Savings and Loan bail out of 1989. It mandated the licensing of residential real estate appraisers by the 50 states and territories; recognized the Appraisal Foundation as the legitimate source of appraisal standards and appraiser qualifications; and, established the federal Appraisal Subcommittee agency to oversee the system.
To see a complete copy of the letter, click below:
Download AI_ASA_ASFMRA_NAIFA_Response_Letter_AP.pdf
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